Face-to-face , second term, 30 hours of theory and 15 hours of exercises.

Second term
Thursday from 08:30 to 10:30 at 119 Marais 3100

English

Students will obtain knowledge about the financial markets and will learn how to define and identify fundamental financial concepts, among which e.g. financial products. After having learned the basic terminology of the financial world, they will be able to understand financial economic newspaper articles (and reports) and explain them in their own words. They will also learn how to apply the theoretical concepts during exercise sessions during which financial problems will be solved (e.g. with respect to time value of money, the term structure of interest rates, pricing of financial instruments and the risk-return trade off) and graphical representations will have to be made.

None

None

In a first part, money and the financial system will be introduced. In order to enable the pricing of financial instruments, the time value of money will be addressed. Present and future value calculations of a single cash flow, of cash flow streams, annuities and perpetuities will be taught.
Both money market (treasury bills, commercial paper, repo) and capital market products (bonds, stocks) will be discussed. We will go into the pricing and the risk of bonds and stocks.
Finally the importance of financial intermediaries is addressed, focusing on the structure of the financial industry, the depository institutions and the regulator.

Contents in detail:

Part 1: Introduction:
Why study money, banking and financial markets?
An overview of the financial system with a focus on the European and Belgian Markets
What is money?

Part 2: Financial Markets
The meaning of interest rates, annuities, perpetuities and loan tables
The behavior of interest rates
Risk structure of interest rates
Stock markets and the efficient market hypothesis

Part 3: Financial Institutions
An economic analysis of financial structure
An introduction to banking and general principles of bank management
Financial crises in advanced economies
Financial crises in emerging economies

The lectures
During the lectures the theoretical concepts will be explained. Students will be encouraged to participate to class, answering to questions that will be raised (e.g. using Wooclap). Financial examples applying theoretical concepts will be demonstrated, together with a (virtual) trading example and financial applications in MS Excel.

TA sessions
Students will have the opportunity to solve problems under the guidance of an assistant, who will demonstrate the exercises. Students are encouraged to review the lecture before attending exercise classes.

During a two-hour written exam students will need to identify, define and explain theoretical concepts as well as solve numerical problems (90% of the final grade).
Students will be asked to take a group assignment: participate in a (virtual) trading game (using a trading platform) and explain their trades in a final group report (10% of the final grade).

Reference work: The Economics of Money, Banking and Financial Markets (11th Edition) (The Pearson Series in Economics) - Frederic S. Mishkin
It should be noted that for this course students are expected to follow the financial news. All documents (newspaper articles e.g.) that are mentioned in class will also be part of the exam material.

On the university's electronic platform the following additional information will be offered:
- a copy of the slides used in class
- the exercises that will be solved during the exercise classes. Additional exercises will be added (partially with solutions)
- (simple) MCQ tests that will enable students to verify whether they can identify key concepts in financial markets.