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									           FNCE 3020 – FINANCIAL MARKETS AND INSTITUTIONS
          SPRING SEMESTER 2008 – LEEDS SCHOOL OF BUSINESS
                 SECTION 003 MWF 1:00 – 1:50 KOBL S110
                 SECTION 004 MWF 2:00 – 2:50 KOBL S110

Professor Michael Palmer
Office: KOBL S419
Office Phone: (303) 492-4241
E-Mail: Michael.Palmer@Colorado.EDU

COURSE DESCRIPTION:

FNCE 3020 (Financial Markets and Institutions) examines the economics of financial markets
and the management of financial institutions. The course will focus on both U.S. financial
markets and international financial markets. Topics include the functions and structure of
financial markets, interest rate fundamentals including the term structure of interest rates,
central banking including the conduct and impact of monetary policy on financial markets, the
money and capital markets, equity and debt markets, foreign exchange markets, major financial
institutions, and the management issues of these institutions. Throughout this course the
globalization of today’s financial markets will be emphasized. The course will also monitor
current events in the area of finance, financial markets, and business during the semester
through links to various web sites and to the financial press. Prerequisite, BCOR 2100 or
BCOR 2200. Restricted to students with 52 hours completed.

COURSE TOPICS:

1) AN OVERVIEW OF FINANCIAL M ARKETS
    Functions of financial market
    Overview of trends in world’s major financial markets
    Structure of financial markets
         o Debt and equity
         o Primary and secondary
         o Money and capital
         o Domestic and international
    The globalization of financial markets.

2) INTEREST RATE FUNMDEMENTALS
     Interest rate measures (par value, coupon rate, yield to maturity)
     Interest rate risk (relationship of prices to interest rate changes)
     The behavior of short and long term interest rates
          o Central bank and inflationary expectations impacts
          o Cyclical (business cycle) movements
     The term structure of interest rates
          o Understanding and explaining yield curves
          o Forecasting interest rates with yield curves

3) CENTRAL BANKING, CENTRAL BANK TARGETING, AND MONETARY POLICY IMPACTS
    The U.S. Federal Reserve System
        o Structure and policy implementation
          o What has the Fed been up to recently?
      Foreign central banks
          o Japan, the U.K. and the ECB
          o Recent monetary policy actions
      Impacts of monetary policy actions on financial markets

4) FINANCIAL M ARKETS
    Money and capital markets
         o Characteristics and types of securities
         o Participants in markets and why are they there?
    The foreign exchange market

5) MAJOR FINANCIAL INSTITUTIONS
     Commercial banks
     Investment banks
     (Traditional) Investment firms: Mutual funds, asset managers, pension funds.
     Hedge funds, private equity firms

REQUIRED TEXT:

Financial Markets and Institutions, by Fredric S. Mishkin and Stanley G. Eakins (Addison
Wesley, fifth edition, 2006).

SUGGESTED READINGS: FINANCIAL PRESS and ON-LINE SITES

It is strongly suggested that you read either (or both) the Wall Street Journal or the Financial
Times on a regular basis as they will help to keep you current on financial market and business
issues. I also recommend that you review Bloomberg.com on line each day before class for the
latest breaking business/financial news.

OFFICE INFORMATION:

Office: S419 (new addition; south side of building)
Phone: 303-492-4241 (please leave voice message if I’m not there).
E-Mail: michael.palmer@colorado.edu (I check this on a regular basis).
Office Hours: Monday and Wednesday 10:30 – 12:00 and by appointment.

COURSE SCHEDULE:

Week 1: Chapter 1: Why Study Financial Markets and Institutions?
Week 2: Chapter 2: Overview of the Financial System
Week 2: Monday, January 21, No Classes – Martin Luther King, Jr. Holiday
Week 3: Chapter 3: What do Interest Rates Mean?
Week 4: Chapter 4: Why do Interest Rates Change?
Week 4: Friday, February 8th: Quiz 1 (lectures, power point slides, posted articles, and emailed
articles to date).
Week 5: Chapter 5: How do Risk and Term Structure Affect Interest Rates?
Week 6: Chapter 6: Are Financial Markets Efficient?
Week 7: Chapter 7: Structure of Central Banks and the Federal Reserve




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Week 7: Friday, February 29th, Quiz 2 (lectures, power point slides, posted articles, and
emailed articles since quiz 1).
Week 8: Chapter 8: Conduct of Monetary Policy; Tools, Goals, and Targets
Week 9: Chapter 9: The Money Markets
Week 9: Friday, March 14th Mid-Term Exam (text chapters, lectures and power point slides
since week 1)
Week 10: Chapter 10: The Bond Markets
Week 11: No Classes – Spring Break
Week 12: Chapter 11: The Stock Market
Week 12: Friday, April 4th, Quiz 3 (lectures, power point slides, posted articles, and emailed
articles since quiz 2)
Week 13: Chapter 13: The Foreign Exchange Market
Week 14: Chapter 14: The International Financial System
Week 15: Chapter 15: Why do Financial Institutions Exist?
Week 16: Monday, April 28th, Quiz 4 (lectures, power point slides, posted articles, and emailed
articles since quiz 3)
Final Exam Section 003: Tuesday, May 6th, 4:30 – 7:00
Final Exam Section 004: Saturday, May 3rd , 1:30 – 4:00
Note: Final Exam will cover text chapters since the mid-term and lectures and power
point slides since week 1

Note: Above chapter and lecture schedule is subject to change based on the pace of this
semester’s work. Quiz and exam dates, however, will not be changed.

OTHER IMPORTANT DATES:

January 30th: Deadline for dropping this course without professor’s signature.
February 27th: Deadline for dropping this course without Dean’s signature.

For more information on these deadlines and others please see:
http://registrar.colorado.edu/calendar/calendar_Spring08.html

QUIZZES AND EXAMINATIONS:

FNCE 3020 test schedule will consist of the following:

   1) Four quizzes given approximately every third week on dates noted. These quizzes will
      cover daily lectures (including power point slides), assigned readings (on my web
      site), and any emailed articles. Quizzes will not be cumulative. Quizzes may
      include true/false, multiple choice, definitions, calculations, and short essay questions.
      These quizzes are designed to keep you current with the course material. Make up
      quizzes will not be offered. Please make every effort to meet this quiz schedule (if you
      have a conflict with this schedule please see me as soon as possible).

   2) Two Major Exams; a mid-term and a final exam: (consisting of true/false, multiple
      choice questions, calculation questions, and short essay questions from the lecture
      material and the text book. These exams will be cumulative with regards to lecture
      material but not with regard to text material. Exams will be given only on the days
      indicate. Make up exams will not be offered. Please make every effort to meet this
      exam schedule (if you have a conflict with this exam schedule please see me as soon as
      possible).


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   3) Note: Absences from quizzes or exams due to documented medical reasons will
      be handled on an individual basis.

   4) Pop quizzes (for extra credit) will also be given during the semester. The number of pop
      quizzes will vary depending upon course circumstances. In the past, they have ranged
      between 2 and 4. Under no circumstances can a missed pop quiz be made up.

EMAILING THE CLASS

Please check your CU email on a regular basis for class updates from me. Occasionally, I will
email the class information about upcoming quizzes or exams, or information about new
postings to my web site. I will also be emailing you articles pertinent to the class (e.g., articles
from sites such as Bloomberg; please note that you are responsible for these emailed articles
with regard to the announced quizzes.) You are encouraged to print up these articles for future.

HOME PAGE -- LECTURE NOTES AND ASSIGNED READINGS:

Power point lecture slides and assigned reading will be available on my CU home page:
http://leeds-faculty.colorado.edu/palmerm/ Link to “Current Courses,” and then to FNCE 3020
and finally to Power Point Lecture Slides (make sure you link to Spring 2008 slides). You are
encouraged to bring your lap tops to class for the purpose of following along with these
slides during my lectures; any other use of lap tops during the class period are not
appropriate and can result in a student being asked to withdraw from the class.

GRADING SYSTEM:

FNCE 3020 final course grades will be based on the following:
                                                            Points           Percent of Total
1) Four quizzes (30 points each)                          120 points         30%
2) Midterm Exam                                           120 points         30%
3) Final Exam                                             120 points         30%
4) On time attendance (32 days @ 1.25 points each)         40 points         10%
Total Possible Course Points                              400 points

POP QUIZZES AND THE GRADING SCALE:

Pop quiz scores will be added to your individual cumulative points, but they are not added to the
400 total possible course points.

FINAL COURSE LETTER GRADES:

Based upon 400 possible points for the course, final letter grades will be determined as follows:
A     =      90%                    (400 to 360 points)
B     =      80%                    (359 to 320 points)
C     =      70%                    (319 to 280 points)
D     =      60%                    (279 to 240 points)
F     =                             (239 and below)




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ATTENDANCE POLICY AND ATTENDANCE GRADE:

Attendance will be taken on other than the four quiz days and on the day of the midterm (see
schedule). I will start taking attendance on Wednesday, January 23rd, ending on Friday, May
2nd. During this time there will be 36 attendance days. You are entitled to four (unexcused)
absences during this time, bring the total to 32. Each attendance day is worth 1.25 points (or a
total of 40 points for all 32 days).

Sign in sheets will be used to take attendance; these sign-in sheets will be distributed during the
class period. Please note that it is your responsibility to sign these attendance sheets. Also
Note: Attending all 36 classes, will result in 5 extra credit points (35 will result in 3.75 extra credit
points, 34 in 2.5 and 23 in 1.25 extra credit points)

All students will be provided with name cards by the end of the first week of class. Please be
responsible for these and bring them to class with you on a daily basis.

ATTENDANCE AND BEHAVIOR EXPECTATION FOR THIS CLASS:

I require that you do not leave the classroom in the middle of a lecture (if you need to
leave early please notify me at the beginning of class). Please prepare yourself for this
expectation. I also ask that you refrain from engaging in activities which may prove disruptive to
your fellow students or to me.

COURSE LEARNING OBJECTIVES:

    1. To develop an understanding and appreciation of the role of financial markets within in
       the context of business activities.
    2. To develop an understanding of the global forces affecting financial markets.
    3. To develop a practical framework for the analysis of the interest rates including an
       understanding of forces affecting interest rates and possible models and approaches for
       forecasting interest rates.

USEFUL WEB SITES:

1. Real Time Financial/Business News and Financial Data
      http://www.bloomberg.com/

2. Links to Business News
       http://news.bbc.co.uk/1/hi/business/
       http://www.reuters.com/business

3. On Line Business/Finance Commentary
       http://w3.cantos.com/cantos/dyn/main.php?t=a

4. Market Calendar (Data to be released during the most recent week)
      http://www.theonlineinvestor.com/market_calendar.phtml

5. US Historical Financial Data (including most recent data)
      http://www.federalreserve.gov/releases/
      http://research.stlouisfed.org/fred2/



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7. United States and Foreign Stock Markets
       http://finance.yahoo.com/intlindices?u
       http://www.wallstreetsoftware.com/stocks.html

8. Charts of US Stock Market Indexes (e.g., DJIA)
      http://moneycentral.msn.com/investor/charts/chartdl.aspx?Symbol=%24INDU&CP=0&P
T=5
      http://stockcharts.com/charts/historical/djia1900.html

8. American Depository Receipts
      http://www.adr.com/

9. Interest Rate Charts
        http://www.moneycafe.com/library/compare.htm

10. US Treasury Interest Rate Auction Results
      http://www.treasurydirect.gov/RT/RTGateway?page=institAnnceRes

11. Federal Funds Interest Rate and Federal Reserve Discount Rate (Historical Table back to
1971, with explanations for changes)
       http://www.newyorkfed.org/markets/statistics/dlyrates/fedrate.html

12. Yield Curves (Illustrations)
       http://stockcharts.com/charts/YieldCurve.html
       http://www.smartmoney.com/onebond/index.cfm?story=yieldcurve

13. Yield Curves (Data)
        http://www.treasury.gov/offices/domestic-finance/debt-management/interest-
rate/yield.shtml

14. Real Time Foreign Exchange Quotes (spot rates)
      http://www.fxstreet.com/rates-charts/forex-charts/

15. Foreign News (including business news)
       Japan: http://www.japantimes.co.jp/
       United Kingdom: http://www.timesonline.co.uk/tol/global/
       China: http://www.chinadaily.com.cn/

16. Links to Central Banks
       http://www.bis.org/cbanks.htm

17. IMF Global Finance Reports
      http://www.imf.org/external/pubs/ft/gfsr/index.htm

STATEMENTS REQUIRED/RECOMMENDED BY THE OFFICE OF UNDERGRADUATE
EDUCATION:

(1) If you qualify for accommodations because of a disability, please submit to me a letter from
Disability Services in a timely manner so that your needs may be addressed. Disability Services
determines accommodations based on documented disabilities. Contact: 303-492-8671, Willard


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322, and www.Colorado.EDU/disabilityservices. Disability Services' letters for students with
disabilities indicate legally mandated reasonable accommodations. The syllabus statements and
answers to Frequently Asked Questions can be found at www.colorado.edu/disabilityservices.

(2) Campus policy regarding religious observances requires that faculty make every effort to
reasonably and fairly deal with all students who, because of religious obligations, have conflicts
with scheduled exams, assignments or required attendance. Please call to my attention any
religious observances which will conflict with assigned work, including, but not limited to,
scheduled exams.

(3) Students and faculty each have responsibility for maintaining an appropriate learning
environment. Students who fail to adhere to such behavioral standards may be subject to
discipline. Faculty has the professional responsibility to treat all students with understanding,
dignity and respect, to guide classroom discussion and to set reasonable limits on the manner in
which they and their students express opinions. Professional courtesy and sensitivity are
especially important with respect to individuals and topics dealing with differences of race,
culture, religion, politics, sexual orientation, gender variance, and nationalities. Class rosters
are provided to the instructor with the student's legal name. I will gladly honor your request to
address you by an alternate name or gender pronoun. Please advise me of this preference early
in the semester so that I may make appropriate changes to my records. See polices
at: http://www.colorado.edu/policies/classbehavior.html and at
http://www.colorado.edu/studentaffairs/judicialaffairs/code.html#student_code

Campus "Classroom Behavior" policy describes examples of unacceptable classroom behavior.
Please see http://www.colorado.edu/policies/classbehavior.html

(4) The University of Colorado at Boulder policy on Discrimination and Harassment
(http://www.colorado.edu/policies/discrimination.html, the University of Colorado policy on
Sexual Harassment and the University of Colorado policy on Amorous Relationships applies to
all students, staff and faculty. Any student, staff or faculty member who believes s/he has been
the subject of discrimination or harassment based upon race, color, national origin, sex, age,
disability, religion, sexual orientation, or veteran status should contact the Office of
Discrimination and Harassment (ODH) at 303-492-2127 or the Office of Judicial Affairs at 303-
492-5550. Information about the ODH and the campus resources available to assist individuals
regarding discrimination or harassment can be obtained at http://www.colorado.edu/odh

(5) All students of the University of Colorado at Boulder are responsible for knowing and
adhering to the academic integrity policy of this institution. Violations of this policy may include:
cheating, plagiarism, aid of academic dishonesty, fabrication, lying, bribery, and threatening
behavior. All incidents of academic misconduct shall be reported to the Honor Code Council
(honor@colorado.edu; 303-725-2273). Students who are found to be in violation of the
academic integrity policy will be subject to both academic sanctions from the faculty member
and non-academic sanctions (including but not limited to university probation, suspension, or
expulsion). Other information on the Honor Code can be found at
http://www.colorado.edu/policies/honor.html and at
http://www.colorado.edu/academics/honorcode/




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