SYLLABUS OF FINANCE
Academic Year：2012/2013
Instructor: Yu Yi
Module Level： 1; Credit rating: 3
Lectures: 32 (2 lectures every Tuesday )
Pre-requisites: None
Email: Yi.Yu@nuim.ie
Office: Room 823, Teaching Building, Hong Kou Campus
RECOMMENDED TEXT
The primary textbook for this module is
Mishiki, Frederic, (Translated by Qian Weiqing), 2009, The Economics of Money,
Banking and Financial Markets, 8th edition, Tsinghua University Press.
DESCRIPTION OF THE MODULE
This module is divided in two parts. The first part introduces student to the basic concepts, theories and structure of the financial institutions and financial markets. The second part focuses on the Monetary theory that includes demand for money,the IS-LM model and AD-AS analysis.
OBJECTIVES/LEARNING OUTCOME
Students should:
Be able to understand the concepts and principles of money, banking and financial markets.
Be able to understand the monetary theory
Enhance their ability to analyze and solve economic problems
COURSE ASSESSMENT
Class Attendance: 5%. Responsible attendance is expected of each individual enrolled in this course. I will circulate a sign-up sheet every day that we are scheduled to meet and you will forfeit one full percentage point for every unexcused absence beyond three. If you miss a lecture you are responsible for obtaining any missed notes and/or handouts on your own unless you are officially excused.
Assignment: 15%. The problem set will be distributed on the 30th of April. The assignments will be collected on the 4th of June.
Mid-term exam: 20%. The mid-term multiple choice exam will be held on the 30th of April. All lecturer notes (chapters) by the 23rd of April will be covered for the MCQ exam.
Final exam: 60%. Exam paper will be presented with defining, short essay, and long essay questions.
COURSE OUTLINE
Week 1 An overview of the financial system and the concept of money
Week 2 Financial markets-- Understanding interest rates
Measuring interest rates: Present value; Yield to maturity, the distinction between interest rate and returns.
Week 3 Financial markets—The behaviour of interest rates
Determinants of asset demand; Expected returns; Supply and demand in the bond market; Changes in equilibrium interest rates; Supply and demand in the market for money.
Week 4 Financial markets—The term structure of interest rates
Risk structure of interest rates; Term structure of interest rates; Expectations theory.
Week 5 Financial markets—The stock market, the theory of rational expectations, and the efficient market hypothesis
Computing the price of common stock; the theory of rational expectations; the efficient markets hypothesis.
Week 6 Financial institutions—An economic analysis of financial structure
Asymmetric information; the lemons’ problem; case study of financial crisis
Week7 Financial institutions—Banking and the management of financial institutions; economic analysis of banking regulation.
Week 8-9 Financial Derivatives
Hedging; interest rate forward contracts; futures..
Week 10 Mid-term exam
Week 11 International finance and monetary policy
Determinants of the money supply; the foreign exchange market.
Week 12-16 Monetary theory
The demand for money; the Keynesian and the IS-LM model; Monetary and fiscal policy in the IS-LM model; aggregate demand and supply analysis.
Week 17-18 Revision and Final examination