ECGE1116 - Introduction to financial markets (EN)
Table of Contents
Mode of delivery
- Second term,
- 30 hours of theory
- 15 hours of exercises.
Language of instruction
The class and the reference book are in English.
Students will obtain knowledge about the financial markets and will learn how to define and identify fundamental financial concepts, among which e.g. financial products. After having learned the basic terminology of the financial world, they will be able to understand financial economic newspaper articles (and reports) and explain them in their own words. They will also learn how to apply the theoretical concepts during exercise sessions during which financial problems will be solved (e.g. with respect to time value of money, the term structure of interest rates, pricing of financial instruments and the risk-return trade off) and graphical representations will have to be made.
In a first part, money and the financial system will be introduced. In order to enable the pricing of financial instruments, the time value of money will be addressed. Present and future value calculations of a single cash flow, of cash flow streams, annuities and perpetuities will be taught. Both money market (treasury bills, commercial paper, repo) and capital market products (bonds, stocks) will be discussed. We will go into the pricing and the risk of bonds and stocks. Finally the importance of financial intermediaries is addressed, focusing on the structure of the financial industry, the depository institutions and the regulator.
Contents in detail:
Part 1: Introduction: Why study money, banking and financial markets? An overview of the financial system with a focus on the European and Belgian Markets What is money?
Part 2: Financial Markets The meaning of interest rates, annuities, perpetuities and loan tables The behavior of interest rates Risk structure of interest rates Stock markets and the efficient market hypothesis
Part 3: Financial Institutions An economic analysis of financial structure An introduction to banking and general principles of bank management Financial crises in advanced economies Financial crises in emerging economies
- Reference book: The Economics of Money, Banking and Financial Markets (12th Edition) (The Pearson Series in Economics) - Frederic S. Mishkin - Paperback ISBN: 9781292268859
a) Lectures During the lectures the theoretical concepts will be explained. Students will be encouraged to participate to class, answering to questions that will be raised (e.g. using Wooclap). Financial examples applying theoretical concepts will be demonstrated, together with a (virtual) trading example and financial applications in MS Excel.
b) Exercise sessions (TA sessions) Students will have the opportunity to solve problems under the guidance of an assistant, who will demonstrate the exercises. Students are encouraged to review the lecture before attending exercise classes.