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December 2005
Detailed Description:
This course introduces students
to the financial system in the United States. It discusses the fundamentals and
role of money and capital markets, including the variety of financial
institutions operating in these markets, the financial instruments being
traded, and the rules and regulations governing both the institutions the
markets. The factors determining the level and structure of interest rates and
the relationship of interest rates and bond prices are examined. Particular
attention is devoted to commercial bank management, structure, and regulation,
including the management of risk and the development of public policy towards
banking. The globalization of financial markets is examined, as are the
fundamentals of international finance and exchange rates. Lastly, the course also
discusses the organization, functioning and operation of the Federal Reserve
System and how the Fed interacts with the private financial sector and the
macroeconomy through regulatory and monetary policies. The theory developed in
the class is brought to bear on important current financial problems, such as
banking crises, inflation, deflation, and bank regulation.
Materials Used:
The basic textbook and study guide, plus supplementary handouts on current developments.
What the Student "Takes-Away" from the Course:
1. An understanding of the
U.S. financial system.
2. The basics of the U.S. money and capital markets.
3. The fundamentals of interest rates and bond pricing.
4. What banks are and how do they work.
5. The operation of and differences between different types of financial
institutions, e.g., commercial banks, savings and loan associations, pension
funds, insurance companies, mutual funds, and so on.
6. Basic elements of managing financial institutions.
7. How and why and by whom financial institutions and markets are regulated by
the government, recent changes in regulation (deregulation), and the structure
of the regulatory agencies.
8. The fundamentals of international finance and exchange rates and how
domestic and foreign financial markets are interrelated.
9. The purpose, organization, and function of the Federal Reserve
10. How the Fed formulates and conducts monetary policy.
11. How the Federal Reserve impacts the economy through monetary policy.
12. Current financial and monetary issues.
Pedagogy, etc:
Lectures and class discussion; homework assignments from study guide; visit
to Federal Reserve Bank of Chicago.
Quizzes: Nearly every class (5 minute at class-end)
Examinations:
Two mid-terms and a final examination.
Grade:
Final Examination ................ 35%
Two mid-terms ....................40%
Quizzes ............................... 20%
Class performance and
Homework assignments.......... 5%
Total...................................100%
Finance 337: Reading Assignments
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