Department of Economics
Penn State University
Money and Banking
026 Hosler Building
MWF 2:30 – 3:20 pm
Instructor: Dr. Russell P. Chuderewicz
Office: 506 Kern Graduate Building
Home Page http://grizzly.la.psu.edu/~rxc122/
(note: user name and password are case sensitive)
Office Hours: Office Hours: Thursdays: 12 noon – 2:30 pm: Fridays 12:30 – 2:00 pm, and by
appointment. I will have additional office hours prior to exams.
Customized Material for Chuderewicz‟s Econ 351 class – a separate packet of over 100 pages
with three holes pre-punched (ready for a 3 ring binder). We will be following this packet quite
Textbook: The Economics of Money, Banking, and Financial Markets, by Frederic S. Mishkin,
Eighth Edition, 2007, Addison Wesley
Stock-Trak Portfolio Game – We will be playing the markets with lots of money! We will
begin the semester with $100,000 each. After we review a sufficient amount of financial market
material, we will add $400,000 to the fun. The cost is roughly $15 and more details will be
discussed in class. The game itself is worth 10 percent of your grade. To get a perfect score,
you need to make sure complete each of the following (I expect most everyone to get a perfect
Make 20 or more trades during the trading period (currently 1/20 – 4/30). Trades must
be made during January, February, March, and April (no cramming for this assignment)
otherwise 10 points will be taken off for each month missed.
Within the 20 trades, you MUST: Trade stocks by taking a 1) long and a 2) short
position, purchase stock 3) call options, 4) put options, 5) go long on interest rate futures,
6) go short on interest rate futures, 7) bet on a currency of your choice, and 8) purchase
futures options(calls or puts, your choice).
Finally, you must type up a one to two page summary of all the 8 specific trades
contained in the bullet above explaining why you did what you did and how you could
(expected) make money. That is, give specific scenarios consistent with you making
some cash. On the back of your assignment, attach the specific information on each of the
trades you refer to including the dates and quantity of each trade. This project is DUE
FRIDAY April 17 before class. No late papers accepted. Please note that the ‘game’
continues beyond this due date, that is, the last trading day of the game is almost
two full weeks after the due date. PLEASE DON’T CONFUSE THE TWO!
Incentive Structure of the Stock-Trak Portfolio Game – In addition to the above
requirements, I have added a way for you to add three percentage points to your final average.
Here is how it works. During the first (or second) class, we will throw darts at the WSJ stock
pages that will determine the initial “DART PORTFOLIO.” Subsequently, when we add the
$400,000, we will throw more darts and add to the dart portfolio. If you beat the dart portfolio
then you get the ONE extra percentage point added to your final average! Another way to add an
extra percentage point to finish in the top 10% of the class. And the final way to add a
percentage point to your final average is to “Beat the Market,” that is, obtain a higher rate of
return than the S&P 500 during the trading period.
Suggested Reading (highly recommended)
“Wall Street Journal Guide to Understanding Money and Investing”
Simply search for this title on the internet using any search engine –
very very reasonable (around $5) and a book that you will want to
keep if you are the least bit interested in financial markets.
The Wall Street Journal, Discount student subscriptions will be available during the first week
of class. With a subscription you will have free access to the Wall Street Journal Interactive
Edition on the Internet.
Welcome to ECON 351, Money and Banking!
The following tips will help you succeed in this class as well as make the class more enjoyable
and useful for all concerned.
MOST IMPORTANT: Attend class! I basically test you on what I teach in the classroom. With
this in mind, you should think of the textbook as a compliment to the lectures (rather than a
substitute). Specifically, a substantial amount of the material that you are tested is not in the text
(i.e., current events, extensions of book material, etc.). By attending class daily, you will have a
good feel for what I think is important and what I don't.
Participate in Class. Nothing is worse than an economics course without dialogue. For my part,
I will continuously ask questions during class. I encourage you to ask questions and/or share
personal economic experiences with the class. Over the years I have learned a great deal from
students such as yourself!
Keep up on current events and statistics. One important facet of the course will be discussion
and applications of current events virtually every class period. Typically, questions regarding
current events account for a significant portion of each exam.
Frequently check the home page. I take advantage of today's technology and use it extensively
in conducting this course. I will use the home page to provide you with lecture notes, practice
tests, study notes, homework assignments, summaries, articles on current events, etc. Keep in
mind that you will be tested on articles that I post on the home page. If you have any trouble or
questions in these matters, please see me or send me an Email.
Keep in touch throughout the semester. I basically have an open door policy and would love
to chat with you. Many students have lots of trouble with Economics in general and in particular;
this course. Remember, I am here to serve you.
RULES/REGULATIONS – Don’t leave early – if you must, let me know before class. BE
POLITE to me and your classmates – no talking during class. TURN OFF ALL CELL
PHONES BEFORE CLASS.
Academic Integrity: Dishonesty of any kind is not tolerated in this course. Dishonesty includes, but is not limited
to, cheating, plagiarizing, fabricating information or citations, facilitating acts of academic dishonesty by others,
having unauthorized possession of examinations, submitting work of another person or work previously used
without informing the instructor, or tampering with academic work of other students. Students who are found
dishonest will receive the most severe academic sanction consistent with PSU polices. A minimum penalty for any
breach of academic integrity is the grade of “F” for the course. For more on academic integrity, click on or type in
the following URL address:
Disability Access Policy: The Pennsylvania State University encourages qualified persons with disabilities to
participate in its programs and activities and is committed to the policy that all people shall have equal access to
programs, facilities, and admissions without regard to personal characteristics not related to ability, performance, or
qualifications as determined by University policy or by state or federal authorities. If you anticipate needing any
type of accommodation in this course or have questions about physical access, please tell the instructor as soon as
You are required to take all the exams. If one of the midterm exams is missed due to a University Approved
Excuse, the typical policy is for a make-up exam to be administered at another, agreed upon time. In „special‟
cases, weight for that exam will be shifted to the subsequent exam. If you do not have a valid excuse, you will
receive a zero for that exam. No exceptions will be made. Job interviews and travel plans (except as required by
university-sponsored activities) DO NOT constitute valid excuses for missing an exam. Students should plan to be in
town until they take the final exam. For more information on valid excuses, please see the Department of Economics
policy on valid excuses, which is available at the department web site at:
If you have a documented medical emergency and hence are unable to take an exam or a quiz please e-mail me in
advance, if possible.
Please see me if you have concerns or comments about the course. In special circumstances, you may contact the
Director of Undergraduate Studies in Economics or provide feedback via a comment box that the Department
maintains in 608 Kern.
Tentative Course Outline (Subject to Change)
We will be following the customized material quite closely, so this is by far the most important component of
the textbook materials. I suggest buying an inexpensive binder and placing the customized material in it.
UNLESS OTHERWISE INDICATED, THE CHAPTERS REFERENCED BELOW ARE FROM THE
CUSTOMIZED MATERIAL AND NOT FROM THE TEXTBOOK!
First third of class (roughly): Introduction, we will do Chapters 1 and 2 together with Chapter 1 being the „Fed‟
chapter and chapter 2 being the finance chapter (part 1) that needs to be done early so that we can all play the stock
market game with a clue. Chapter 3 takes us further into the world of finance.
EXAM 1: TWO DATES: Essay/Problem portion of exam 1: Wednesday February 11
True/False/Multiple Choice portion: Friday February 13
Second third of class (roughly): Chapter 4 is a review of principles with some rigor. In this chapter we dig deeper
into the question: „what makes the economy tick?” Chapter 5 contains a cruise ship example that helps us
understand some of the intricate details when it comes to steering the world‟s largest economy into „port.‟
EXAM 2: TWO DATES: Essay/Problem portion of exam 2: Wednesday March 25
True/False/Multiple Choice portion: Friday March 27
Third and Final Section of class (roughly): Chapter 6: Keynesian vs. Classical Economics, the loss function and
the Taylor Rule. The East Asian financial crisis, the Russian financial crisis (again, lots of terms). The notes on
financial crises will be posted on our home page.
NOTE – Stock Trak Assignment DUE Friday, April 17, 2009
FINAL EXAM WILL BE ADMINISTERD DURING FINAL EXAM WEEK AND WILL BE
Grading Policy: I basically follow a traditional grading scale (see below). “Plusses” and “minuses” will be
determined according to the distribution of the grades at the end of the semester. There are three exams, the first
and second worth 20% of your grade and the final exam worth 30%. Another 20% of your grade is accounted for by
quizzes and/or homework assignments throughout the semester. NOTE THAT QUIZZES MAY BE ANNOUNCED
OR UNANNOUNCED and homework may or may not be collected. The remaining 10% of your grade is accounted
for by the Stock-Trak portfolio game that was previously explained. Note that there are no make-ups for the quizzes
and late homework assignments will not be accepted. Best of luck to all!
Grading Scale: 90% + = A or A - ; 80 - 89% = B-, B or B+; 70 - 79% = C or C+; 60 - 69% = D