Financial Institutions and Markets

Course Code: FIN 421

Credit Hour: 3

Course Group: Specialization Course: Finance

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Introduction: Overview of Ongoing Financial Crisis, Asymmetric Information Problems (Moral Hazard/Adverse Selection), Overview of Financial System 1 Types of Assets, Markets, Introduction to Derivatives, Regulations and Financial Innovation, Overview of Institutions, Overview of Risk "

Interest Rates and Asset Prices: Key Characteristics of Securities, Measuring Interest Rates, Present Value, Yield to Maturity, Rate of Return, The Discount Rate, Real Vs. Nominal Interest Rates, Stock Price and Return Calculations, Determining the Level of Market Interest Rates Asset and Loanable Funds Market Models.

Structures Of Interest Rates, Market Pricing Models: Structures Of Interest Rates, Risk Structure Spreads And Premiums, Interest Rate And Reinvestment Risk Duration Term Structure And Yield Curve, Theories Calculating Forward Rates ,Interpreting The Yield Curve , Default Risk , Diversification , Types Of Risk, Measuring Risk With Beta , CAPM And APT Models , Conventional Risk Management , The Efficient Markets Hypothesis.

Debt and Equity Securities: Overview , Example: Iowa Electronic Markets , Growth and importance of financial markets , Primary markets ,Secondary markets , Money markets , Instruments , Treasury Bills , Commercial Paper, Repurchase agreements , Instruments issued by banks , Bond capital markets , Treasury securities , Federal Agency securities ,Corporate bonds and preferred stock , Medium-term corporate notes ,, Common Stock markets , Overview, types of trades, costs, indexes , Types of markets.

Derivative Securities: Securitization, Asset-backed securities, Collateralized debt obligations, Credit default swaps, Role in recent financial crisis, Financial futures, Overview, Pricing, Uses, Options, Overview, Pricing, Uses, Interest rate swaps.

Financial Regulators In Financial Crisis: Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), Federal Reserve System (Fed), Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), Office of Thrift Supervision (OTS).

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Texts:

Jeff Madura, Financial Markets and Institutions – 5 th Edition, South-Western College Publishing, Australia, 2000.

Fabozzi, Modiglani and Ferri, Foundations of Financial Markets and Institutions – 2 nd Edition, Prentice-Hall International Inc., New Jersey, 1997.