Course Contents

• Why study financial markets and institution: Debt Markets and Interest Rates, the Stock Market, the Foreign Exchange Market, financial institutions • Overview of the financial system: Functions of financial markets, structure, function of financial intermediaries, risk sharing, Asymmetric Information: Adverse Selection and Moral Hazard, types of financial intermediaries, ensuring the Soundness of Financial Intermediaries • Interest rate mean and its role in valuation: Measuring interest rate, four Types of Credit Market Instruments, Yield to Maturity, the distinction between nominal and real interest rate, the distinction between interest rate and return, Reinvestment Risk • Interest rate changes: Determinants of Asset demand, supply and demand in bond market, changes in equilibrium interest rate • Monetary policy: tools, goals, strategy and tactics: The federal reserve balance sheet, the market for reserve and federal fund rate, tools of monetary policy, discount policy, reserve requirements, other goals of monetary policy, inflation targeting • The Money Market: The money market defined, the purpose, participants, money market instruments, treasury bills, Federal Funds, Repurchase Agreements, Negotiable Certificates of Deposit, Commercial Paper, Banker’s Acceptances, Eurodollars, comparing money market securities • The Bond market: Purpose of capital market, capital market participant and trading, types of bonds, treasury notes and bonds, municipal bonds, corporate bonds, financial guarantee for bonds, current yield calculation, finding the value of coupon bonds • The stock market: Investing in stocks, computing the price of common stock, how market sets security prices, errors in valuation, stock market indexes, buying foreign stocks • The mortgage Market: What are mortgage, characteristics, types of mortgage loans, mortgage lending institutions, loan servicing • Banking and Management of financial institution: The Bank Balance sheet, basic banking, general principles of banking management, measuring bank performance.

Course Synopsis

This course introduces the theory and practice of financial markets to students who are largely unfamiliar with financial operations. The course covers the money markets and capital markets tools and techniques for doing business in financial markets. The introduction to the role of central banks and its working in distinction to other commercial banks it also enables students to get in hand knowledge about their activities in supply of funds.

Course Learning Outcomes

After the completion of this course, students will be able to: • Analyze financial markets • Conduct trend analysis. • Understand basics of financial markets • Make calculation associated with risk and return.