Capital Markets provides a comprehensive introduction to the workings of modern financial systems, the efficiency of money markets and the role of investment bankers, illustrating how they impact our financial system. By drawing on numerous theoretical and practical examples from real-world case studies, this module aims at introducing the basic concepts of the banking, finance, investment, business studies, economics and financial service sector to the third year undergraduate students.

(LO1) Traditional capital markets might be described simply as the meeting place where providers and users of capital interact through the medium of money or its proxies. Today’s capital markets in Europe and America continue with the above basic function and have become increasingly more sophisticated to serve the needs of an array of specialized investment sources including private equity funds, hedge funds, sovereign wealth funds. Meeting these specialized needs has entailed the rapid development of new financial products and resulted in highly-rewarding new roles for finance industry professionals. To aid in the analysis and sale of these new products, computers handle vast databases of market data while accompanying analytics support decision-making in a financial world approaching information overload.

(LO2) The course objective is to present the current capital markets with a blend of the theoretical with the practical. Our examination will extend beyond the traditional financial products, equity and debt instruments, to recent innovations. Until the summer of 2007, capital markets had experienced spectacular growth via a proliferation of new products. In keeping with classic economic theory, the investment rewards of products such as securitization were inevitably accompanied by risks as recent events brought to light. New products like asset-backed securities and Electronic Traded Funds will be reviewed and identified by investor profile and investment rationale.

(LO3) The context in which our course develops will be the dramatic events unfolding from mid-2007 to the present. The conceptual bases and investment metrics employed by market participants will be examined in depth. Theories of risk v. return and those for interest rates will be reviewed. Data sources, key market indexes and investment performance measures will be identified. The common analytical techniques will be discussed along with the role of equity analysts and also that of major credit rating agencies.

(S1) Adaptability

(S2) Problem solving skills

(S3) Commercial awareness

(S4) Communication skills

(S5) Lifelong learning skills

(S6) Ethical awareness

Teaching Method: Online Asynchronous Learning Materials
Unscheduled Directed Student Hours: 12
Attendance Recorded: No

Teaching Method: Large Group Teaching
Scheduled Directed Student Hours: 12
Attendance Recorded: Yes

Teaching Method: Seminar
Scheduled Directed Student Hours: 6
Attendance Recorded: Yes

Teaching Method: Group Study
Description: Bi-weekly 1 hour session to foster student community and engagement by working with others on their ‘active learning’ activities
Scheduled Student Hours: 6
Attendance Recorded: No

Self-Directed Learning Hours: 114

Skills/Other Attributes Mapping

Skills / attributes: Ethical awareness
How this is developed: Taught/Lectures Workshop/Clinic
Mode of assessment (if applicable): Examination

Skills / attributes: Lifelong learning skills
How this is developed: Taught/Lectures Workshop/Clinic
Mode of assessment (if applicable): Examin ation

Skills / attributes: Communication skills
How this is developed: Taught/Lectures Workshop/Clinic
Mode of assessment (if applicable):

Skills / attributes: Commercial awareness
How this is developed: Taught/Lectures Workshop/Clinic
Mode of assessment (if applicable): Examination

Skills / attributes: Problem solving skills
How this is developed: Taught/Lectures Workshop/Clinic
Mode of assessment (if applicable): Examination

Skills / attributes: Adaptability
How this is developed: Taught/Lectures Workshop/Clinic
Mode of assessment (if applicable)

1. Introduction to Financial System (Chapter 1)
Introduction to financial markets and financial instruments.

2. Banking System I (Chapter 2)
Retail and Corporate Banking and the objectives and tasks of two different structures.

3. Banking System II (Chapter 3)
Investment Baking, Islamic Banking and Mutual Funds.

4. Banking System III (Chapter 4 & Chapter 7)
Working and Regulations of Insurance and Pension Funds. Objectives. Goals and Monetary Policies of Central Bank / Federal Reserve.

5. Banking System IV (Chapter 14 & Chapter 15)
Working of Hedge Funds / Private Equity. Financial Regulations – types, requirement, and current gaps in the system.

6. Reading Week

7. Financial Markets I (Chapter 6, Chapter 8 & Chapter 9)
Introduction to Bond (different types of bonds, securitisation and demand and supply curve) and Equity Markets (different type of equity viz. Common / preferential shares, idea of an e xchange, index, their working and trading system). Ways and means of raising the capital from the equity / bond market.

8. Financial Markets II (Chapter 5 & Chapter 10)
Introduction to Money Market (interest rates, overnight lending, commercial papers, Eurocurrency, treasury bills & credit rating) and Futures Market (Basic definition of different types of derivative contracts, OTC Market and settlement process of the same).

9. Financial Markets III (Chapter 6 & Chapter 8)
Introduction to Commodities Market (viz. trading, exchanges, ETF, shipping etc.) and an introduction to the Financial Crisis (what went wrong and how can we avert it in future).

10. Revision