AUTUMN SEMESTER, 2013-2014 1

FINANCIAL MARKETS AND INSTITUTIONS

Course code
FIN105
Course title Financial Markets and Institutions
Course type Main
Year of study 3
rd

Semester Autumn
ECTS 6
Coordinating lecturer Dr. Silviu Ursu
Study form Intensive
Course prerequisites
Microeconomics, Macroeconomics
Language of instruction English


Course Description
This course is designed to provide a unified framework for understanding financial markets, institutions and instruments.
It focuses on several topics, including the structure and regulation of various markets in financial instruments, operation
of banks and non-bank financial institutions, central bank operations and their effect on financial institutions, risks faced
by the managers of financial institutions and the methods, markets and instruments for managing these risks.
On completion of the course, the students will be familiar with notions and concepts specific to the markets in financial
instruments, both securities and derivatives, and will be able to identify and use the financial instruments specific to
various transactions carried out on financial markets.

Course Aim and Learning Outcomes
This course aims to provide an understanding of the fundamentals of financial markets: structure, participants, operations
and instruments, and associated theoretical and empirical issues.

Subject learning outcomes (SLO) Study methods Assessment methods
SLO-01: Explain the role and the functions of financial
markets, institutions and instruments in a market economy
Lectures, seminars, individual
study
Midterm test, final exam
SLO-02: Describe the methods of issuing stocks in
primary markets and their advantages and disadvantages
Lectures, seminars, self-study
in groups
Midterm test, group
report
SLO-03: Describe the process of trading stocks in
secondary markets
Lectures, seminars, self-study
in groups
Midterm test, group
report
SLO-04: Apply basic pricing models to evaluate stocks
and bonds
Lectures, seminars, solving
exercises, self-study in groups
Midterm test, group
report
SLO-05: Describe the theoretical determinants of the level
and term structure of interest rates
Lectures, seminars, solving
exercises, self-study in groups
Final exam, group report
SLO-06: Analyze the types and roles of monetary and
non-bank financial institutions
Lectures, seminars, individual
study, self-study in groups
Final exam, group report
SLO-07: Calculate the profit / loss of a basic transaction
with forward, futures, options and swaps
Lectures, seminars, solving
exercises, self-study in groups
Final exam, group report
SLO-08: Work in teams, present work results both in
writing and orally, and substantiate decisions taken
Seminars, individual study,
self-study in groups
Group report and its
presentation
SLO-09: Critically evaluate the recent financial news
articles and relevant research in financial markets
Seminars, individual study,
self-study in groups
Group report and its
presentation

Quality issues
The lecturer assures a variety of teaching and testing methods. Critical thinking and discussions are encouraged. The
feedback from students is always highly valued and appreciated.

Cheating issues
The teaching and testing methods are chosen taking into account the purpose of the minimization of cheating
opportunities. The ISM regulations on academic ethics are fully applied in the course.

AUTUMN SEMESTER, 2013-2014 2

Topics:
No Topic
In-Class Hours
Readings
Lectures Seminars
1 Introduction to Financial Markets, Institutions and Instruments 4 - VM (1) / FMJ (1, 2)
2 Equity Markets: Primary Markets and Underwriting of Stocks 2 4 VM (8) / FMJ (13)
3 Equity Markets: Secondary Markets and Trading of Stocks 2 2 VM (8) / FMJ (14, 17-18)
4 Equity Markets: Risk, Return, and Valuation of Stocks 2 2 FMJ (9, 12)
5 Debt Markets: Structure, Participants and Instruments 4 - VM (7) / FMJ (19, 20)
MIDTERM TEST
6 Debt Markets: Interest Rates and Valuation of Bonds 4 2 VM (7) / FMJ (9, 10, 11)
7 Derivatives Markets: Forward and Futures 2 2 VM (14) / FMJ (26)
8 Derivatives Markets: Options 2 2 VM (13) / FMJ (27, 28)
9 Derivatives Markets: Swaps and Other Derivatives 2 - VM (15) / FMJ (29)
10 Monetary Financial Institutions: Types and Roles 2 2 VM (2, 3) / FMJ (3, 4, 5)
11 Non-Bank Financial Institutions: Types and Roles 2 - VM (9) / FMJ (6, 7, 8)
12 Crises and Regulation of Financial Markets and Institutions 2 - VM (6, 10, 17)
13 Roles and Responsibilities in the Financial System 2 - S (1-18)
FINAL EXAM
TOTAL 32 16

Individual work and assessment:
TYPE TOPICS
TOTAL
HOURS
EVALUATION, %
Midterm test 1-5 35 30
Group report 1-13 32 30
Final exam 6-13 45 40
Consultations 1-13 2 -
TOTAL 114 100


Course requirements:

1. Midterm test
Midterm test is given in class during the semester and will test your theoretical and practical knowledge and skills from
the topics discussed in previous lectures and seminars. It counts towards 30% of the final grade. More details on the
examination date and specific topics to be covered will be provided during the first lecture.

2. Group report
Report is intended to stimulate your interest in the real financial world by reading current financial newspapers,
magazines, journals, databases, and also to help you with the learning of course materials by seeing how theory applies
to real-world data and examples. Students will work in groups and will provide solutions to quizzes and problem sets
given in class or as homework, taking the responsibility for tasks specific to the role in a team. Group report is a
combination of all assignments given throughout the course and will be prepared in a written form. Files must be
uploaded on the ISM E-learning System prior to class time on the due date. Late submission is not accepted. During the
last sessions of the course, each group should give a 10-minute presentation of their report. Specific details about
composition of the groups, topics, deadlines and template will be provided during the first lecture. Group report counts
towards 30% of the final grade.

3. Final exam
A final written examination is held according to ISM regulations and counts towards 40% of the final grade. The exam
consists of open and closed questions covering the topics from the remaining (after the midterm test) course material.

AUTUMN SEMESTER, 2013-2014 3


Class Participation
Positive contributions to class are encouraged and rewarded. Consistent positive contributions will help you if you are on
a grade border at the end of the course and may be added as bonus points.

Midterm test and final exam are made up of multiple-choice questions, calculations and short-answer questions. All are
closed book, but formulas will be provided. Additionally, you may bring a calculator, provided it doesnt allow the storage
of text. Cell phones must be turned off and put away during exams.


The final grade will be calculated according to the following formula:
P = 0,30 M+0,30 R+0,40 E
P final grade
M midterm test grade
R group report grade
E final exam grade

Students who receive a failing final grade will have the right to resit exam. Exam retake covers all course material and
the weight of retake is 70% of the final grade. Group report cannot be rewritten / retaken, but its evaluation (if positive) is
not annulled.


Main readings:
1. Valdez, S & Molyneux, P 2013, An Introduction to Global Financial Markets, 7th edn, Palgrave Macmillan,
Basingstoke, Hampshire (VM)
2. Fabozzi, FJ, Modigliani, F & Jones F 2013, Foundations of Financial Markets and Institutions: Pearson New
International Edition, 4th edn, Pearson, Upper Saddle River, N.J (FMJ)
3. Shiller, RJ 2012, Finance and the Good Society, Princeton University Press, Princeton, N.J (S)

Additional readings:
May be provided periodically throughout the course via the ISM E-learning System.

Role of the subject in reaching learning outcomes of Economics study programme
Special learning outcomes
Subjects
learning
outcomes
(CLO)
EKO. To describe the main economic theories and theoretical models, to adapt them to the theoretical and
practical issues (for example, demand and supply elasticity theory, economic cycles, classical economic
theory, Keynesianism, monetarism, rational expectations theory, cost-benefit analysis);
SLO-05
EKO. To explain the link between economic theory and practice, to apply that knowledge in assessing
statistical data and economic information on both micro- and macroeconomic level;
SLO-04, SLO-
09
EKO. To explain and to analyze the role of government in financial politics, to model the impact of
governments fiscal and monetary policy decisions on countrys economy and social welfare;
SLO-05
EKO. To describe and to analyze economic, legal, political and social environment of companies and other
organizations; to identify and to evaluate internal and external changes and to make necessary decisions to
keep the firms or organizations economic and financial stability;

EKO. To forecast the influence of economic and financial decisions not only in a financial context, but also
in the wider context of business or organization management, to estimate the effect of economic and
financial decisions on the processes of a company or an organization, the motivation of companys human
resources, product and service quality, customer satisfaction, brand strength, corporate social
responsibility;
SLO-05
EKO. To select mathematical, statistical, econometric and other appropriate research methods and to
conduct individually a simple economic analysis of a country, a sector or a company (to collect, to organize
and to interpret the data).
SLO-04
MNG. To be able to analyze a company or an organization as an integral unit, which strives for certain
goals in a market or social environment by effectively distributing their finite resources among objects and
business activities and obtains synergies from coordinated function planning, organization and
management;


AUTUMN SEMESTER, 2013-2014 4
MNG. To describe and to analyze financial management and financial decision making processes in
companies and other organizations, to solve problems of different levels of complexity in financial and
management accounting ;
SLO-02, SLO-
03, SLO-04
FIN. To describe the basic financial theories and theoretical models, to adapt them to the theoretical and
practical issues (for example, time value of money, evaluation of investment projects, risk-return
relationship, investment portfolio theory, stock and other securities pricing models, capital costs, risk
management, exchange rates, financial intermediaries);
SLO-04, SLO-
05
FIN. To explain the link between financial theories and practice, to apply that knowledge in assessing the
financial information (such as efficient markets hypothesis, anomalies, capital structure);
SLO-01, SLO-
03, SLO-04,
SLO-09
FIN. To describe the functions of financial markets and institutions, and to analyze their activities;
SLO-01, SLO-
06
FIN. To describe the main financial products and services, to assess their strengths and weaknesses from
both the customers and the suppliers perspective;
SLO-01, SLO-
02, SLO-03,
SLO-07
General learning outcomes

G1. To apply modern information technologies in the data gathering, analysis and communication;

G2. To apply a systematic, critical and constructive thinking in problem identification and solving;

G3. To be able to communicate well and express thoughts in writing and orally, both in English and native
language; to communicate with specialists and non-professional audiences;
SLO-08
G4. To prepare research papers according to proper language, writing style and general bibliographic
citation requirements;
SLO-08
G5. To develop independent learning skills necessary to continue studies on a higher level;
SLO-08
G6. To communicate and to work effectively in an intercultural and interdisciplinary group or team.
SLO-08
G7. To know and to apply in practice certain aspects of various social sciences (history, geography,
sociology, logics, philosophy, arts, etc.), to supplement effectively the education of business or economics
by general knowledge.