Financial Institutions and Markets Saunders and Cornett

							                            FINANCIAL MARKETS AND INSTITUTIONS
                            BUS 468 - UNIVERSITY OF MICHIGAN-FLINT
                                       FALL SEMESTER 2006


Professor:      Dr. Mark J. Perry
Office:         4173 WSW Building (Inside 4166 WSW)
Phone:          424-5413
email:          mjperry@umich.edu
Office Hrs.:    All the time
Website:        http://www.umflint.edu/~mjperry

Prerequisites: BUS 361

Required Materials:      Financial Markets and Institutions, 3rd Edition, by Saunders and Cornett
                         Financial calculator (e.g. HP-10B II), Please review my “Calculator Keystroke Guide” on
                         my course website as soon as possible.

Recommended: Wall Street Journal subscription.

Course Objective: This course provides an overview of the global financial system in which financial managers
and investors operate. The purpose of the course material is to apply general finance concepts specifically to the
management of financial institutions. We will examine the evolving structure and role of financial markets and
financial institutions in providing financial intermediary services to the economy in the dynamic Information Age.
Attention will be given to financial markets in the context of intense global competition, increased capital mobility
and global harmonization due to the recent domestic and international deregulation of financial intermediaries.
Additionally, the various forms of risks faced by financial intermediaries will be covered, with an emphasis on the
risk management techniques available to managers of financial institutions like commercial banks.

Grading Policy: With acceptable attendance, letter grades will be assigned according to the following adjusted,
bonus grading scale: A 85-100%, B 75-85%, C 65-75%, D 50-65%, F 50% or less; otherwise students will be
graded according to a traditional grading scale (A 90-100%, B 80-90%, etc.). Pluses and minuses will be given.

Material Covered: Chapters 1-4, 6-11 and 19-23 in the textbook

Graded Material:         Midterm Exam I, Chapters 1-4 and 6-7 and 9                             90 points
                         Problem Sets (8 @ 15 points each) Please review guidelines
                         on my website for preparing the Problem Sets                           120 points
                         Final Examination, Chapters 8, 10-11 and 19-23 (December 19)            90 points
                                                                            TOTAL               300 points

Exams: Examinations will be a combination of multiple choice questions, short essays, T-F-U/explain essays, and
problems. There may be extra credit points on the exams, but no other extra credit will be available. A study
guide will be handed out one week before each exam.

Website and Blackboard: I have a web site at: http://www.umflint.edu/~mjperry, which contains class materials
including the syllabus, lecture notes, study guides, an email feature, and links to other web sites. There is also a
Blackboard course website at: http://online.umflint.edu, where scores and grades will be posted.

Attendance: Regular attendance is required, will be taken at each class, and will affect your grade as outlined
above. To receive full credit for attendance, you will not be allowed to study or work on assignments for other
courses during the lectures for BUS 468.
                            TENTATIVE COURSE SCHEDULE


Week 1 (8/31)      Introduction and Chapter 1 - Financial Markets and Institutions

Week 2 (9/5)       Chapter 2 - Determinants of Interest Rates
                   Problem Set #1 (Please prepare according to the “Guidelines for Problem Sets”)

Week 3 (9/12)      Chapter 3 – Interest Rates and Security Valuation, including Appendix 3B
                   Problem Set #2 (Please prepare according to the “Guidelines for Problem Sets”)

Week 4 (9/19)      Chapters 6 and 7 - Bond Markets and Mortgage Markets
                   Problem Set #3 (Please prepare according to the “Guidelines for Problems Sets”)

Week 5 (9/26)      Chapter 9 - Stock Markets, including Appendix 3A (Equity Valuation)
                   Problem Set #4 (Supernormal Growth, Stock Index Arbitrage, and Currency
                   Risk)

Week 6 (10/3)      Chapter 4 - Federal Reserve, Monetary Policy and Interest Rates
                   Review for Midterm Examination

Week 7 (10/10)     Midterm Examination on Chapters 1 – 4 and 6-7 and 9, 90 points

Week 8 (10/17)     Go over Results from Midterm Examination
                   Chapter 8 - Foreign Exchange Markets
                   Problem Set #5

Week 9 (10/24)     Chapter 10 - Derivatives
                   Problem Set #6

Week 10 (10/31)    Chapters 11 - Commercial Banks and
                   Chapter 19 - Types of Risk Incurred by Financial Institutions

Week 11 (11/7)     Chapter 22 - Interest Rate and Insolvency Risk

Week 12 (11/14)    Chapter 23 - Managing Risk with Derivatives and Appendix 24A
                   Problem Set #7

Week 13 (11/21)    Chapter 20 - Managing Credit Risk (1 hour 15 minutes)

Week 14 (11/28)    Chapter 21 - Managing Liquidity Risk (1 hour, 30 minutes)
                   Problem Set #8 (CH 20 and 21)

Week 15 (12/5)     Review for Final Examination (Last class meets on December 7)

December 19        Final Examination on Chapters 8, 10-11, and Chapters 19-23 (90 points)
10:30 a.m.

*** Note: Schedule is subject to change and announcements about changes will be made in class.