FIN3109 Managing Financial Institutions
|Semester 1, 2013 On-campus Toowoomba|
|Faculty or Section :||Faculty of Business and Law|
|School or Department :||School of Accounting, Economics and Finance|
|Version produced :||25 April 2014|
Examiner: David Troedson
Moderator: Lujer Santacruz
Students are required to have access to a personal computer, e-mail capabilities and Internet access to UConnect. Current details of computer requirements can be found at http://www.usq.edu.au/current-students/support/computing/hardware.
Financial management of core bank activities is a highy complex task requiring a broad range of financial skills. Banks must obtain funding from various sources in order to extend loans. They must generate sufficient return to cover their funding costs while maintaining adequate levels of liquidity. They must balance the returns they make against a range of financial risks including capital risk, interest rate risk, liquidity risk, foreign exchange risk, operational risk and credit risk. Banks undertake a range of on-balance-sheet and off-balance sheet activities and operate in local, national and international markets. In addition to interest costs and revenues, banks incur a range of non-interest costs and generate various non-interest revenues including fees and charges, commissions and capital gains. This course aims to provide students a broad knowledge of these various activities and to equip students with skills relevant to the management of such activities.
This course provides a broad appraisal of authorized deposit taking institutions (ADIs), and the associated decision making processes of the financial services sector in Australia. A range of topics is addressed including: the Australian financial environment; understanding financial statements; evaluating returns, risks and performance; the yield curve and gap management; the management of liabilities, liquidity, the securities portfolio and capital; and hedging and pricing with various interest rate derivatives. Formerly FIN2109.
On successful completion of this course, students should be able to:
- discuss strategic management in the financial services industry, and discuss the regulatory environment in which ADIs operate with particular reference to APRA and the Basel Accords
- demonstrate an understanding of the term structure of interest rates, interest rate sensitivity of assets and liabilities and gap management
- demonstrate an understanding of the management of liabilities
- explain liquidity risk and demonstrate an understanding of liquidity management
- discuss the types of securities that ADIs invest in and explain how the security portfolio is managed
- demonstrate an understanding of how ADIs manage capital
- understand the difference between forwards and futures, and display a working knowledge of each
- demonstrate an understanding of what an option is, especially interest rate options, and explain how and why they are used by ADIs
- understand the basics of interest rate swaps and how they are used by banks
- demonstrate the literacy skills required of a financial services professional by reading and demonstrating an understanding of an ADI's financial statement
- solve problems faced by financial services professionals in the management of financial institutions by applying key risk and return measures and an understanding of the trade-off between risk and return to the examination and evaluation of ADI financial statements
- demonstrate relevant numeracy skills by undertaking the range of calculations that face managers of financial institutions (including management of the repricing gap and duration gap).
|1.||Introduction to pricing fixed income securities, elasticity and duration||4.00|
|2.||Understanding financial statements of ADIs||8.00|
|3.||Evaluating returns, risks and overall performance||9.00|
|4.||Prudential supervision, Basel Accords and capital management||9.00|
|7.||Managing the securities portfolio||9.00|
|8.||Managing interest rate risk I||8.00|
|9.||Managing interest rate risk II||8.00|
|10.||Financial futures and forwards||9.00|
|12.||Interest rate swaps||9.00|
Text and materials required to be purchased or accessed
ALL textbooks and materials available to be purchased can be sourced from USQ's Online Bookshop (unless otherwise stated). (https://bookshop.usq.edu.au/bookweb/subject.cgi?year=2013&sem=01&subject1=FIN3109)
Please contact us for alternative purchase options from USQ Bookshop. (https://bookshop.usq.edu.au/contact/)
Hogan, W, Avram, KJ, Brown, C, Degabriele, R, Ralston, D, Skully, M, Hempel, G, Simonson, D & Sathye, M 2004, Management of financial institutions, 2nd edn, John Wiley & Sons, Milton, Queensland.
Koch, T & MacDonald, S 2010, Bank management, 7th edn, South Western Cengage Learning, Australia.
(Chapters of this text can be purchased individually from http://www.cengagebrain.com.au. Enter ‘Koch and MacDonald’ in the search box. Under ‘Purchase Options - digital’ choose ‘echapters’. Each chapter costs $7.50.)
Hull, JC 2010, Risk management and financial institutions, 2nd edn, Pearson, Sydney, New South Wales.
Hunt, B & Terry, C 2011, Financial institutions and markets, 6th edn, Cengage Learning, Melbourne, Victoria.
Saunders, A & Cornett, M 2010, Financial institutions management: a risk management approach, 7th edn, McGraw-Hill Irwin, New York.
Student workload requirements
|Description||Marks out of||Wtg (%)||Due Date||Notes|
|ASSIGNMENT||20||20||16 Apr 2013||(see note 1)|
|QUIZZES||20||20||07 Jun 2013||(see note 2)|
|EXAM A (MULTI-CHOICE)||30||30||End S1||(see note 3)|
|EXAM PART B (WRITTEN)||30||30||End S1|
- The assignment will involve brief questions that require research into banking regulation and short answer/calculation questions based on course content.
- Four online quizzes will be conducted during the semester. These will occur during weeks 4, 9, 12 and 15. Further details will be provided on the course Study Desk.
- The examination is scheduled to be held in the end-of-semester examination period. Students will be advised of the official examination date for Exam (A & B) after the timetable has been finalised. The total working time for Exam (A & B) is 2 hours.
Important assessment information
It is the students' responsibility to attend and participate appropriately in all activities (such as lectures, tutorials, laboratories and practical work) scheduled for them, and to study all material provided to them or required to be accessed by them to maximise their chance of meeting the objectives of the course and to be informed of course-related activities and administration.
Requirements for students to complete each assessment item satisfactorily:
To satisfactorily complete an individual assessment item a student must achieve at least 50% of the marks. (Depending upon the requirements in Statement 4 below, students may not have to satisfactorily complete each assessment item to receive a passing grade in this course.)
Penalties for late submission of required work:
If students submit assignments after the due date without prior approval of the examiner, then a penalty of 5% of the total marks gained by the student for the assignment may apply for each working day late up to ten working days at which time a mark of zero may be recorded.
Requirements for student to be awarded a passing grade in the course:
To be assured of receiving a passing grade a student must achieve at least 50% of the total weighted marks available for the course.
Method used to combine assessment results to attain final grade:
The final grades for students will be assigned on the basis of the aggregate of the weighted marks obtained for each of the summative assessment items in the course.
This is a restricted examination. Candidates are allowed access to specific materials during the examination. The only materials that candidates may use in the restricted examination for this course are: writing materials (non-electronic and free from material which could give the student an unfair advantage in the examination); calculators which cannot hold textual information (students must indicate on their examination paper the make and model of any calculator(s) they use during the examination). Students are not permitted to take mobile telephones, pagers or other electronic means of communication into the examination room.
Examination period when Deferred/Supplementary examinations will be held:
Any Deferred or Supplementary examinations for this course will be held during the next examination period.
University Student Policies:
Students should read the USQ policies: Definitions, Assessment and Student Academic Misconduct to avoid actions which might contravene University policies and practices. These policies can be found at http://policy.usq.edu.au.
Assignments: (i) The due date for an assignment is the date by which a student must submit the assignment to the USQ. (ii) Students must retain a copy of each item submitted for assessment. This must be produced within 24 hours if required by the examiner. (iii) In accordance with university policy, the examiner may grant an extension of the due date of an assignment in extenuating circumstances. (iv) Assignments are to be submitted in the appropriate assignment folders.
Referencing in assignments: Harvard (AGPS) is the referencing system required in this course. Students should use Harvard (AGPS) style in their assignments to format details of the information sources they have cited in their work. The Harvard (AGPS) style to be used is defined by the USQ Library's referencing guide at http://www.usq.edu.au/library/referencing.
Course weightings: Course weightings of topics should not be interpreted as applying to the number of marks allocated to questions testing those topics in an examination paper. The examination may test material already tested in assignments.
Dishonest actions: (i) Any student who is alleged to have performed a dishonest action relating to any assessment in the course will have a course of action taken against him/her as outlined in the academic regulations. (ii) Pieces of assessment should be the work of individual students. Joint pieces of assessment are not permitted unless written approval has been obtained from the examiner. (iii) Dishonest action in relation to assessment includes: copying or attempting to copy the work of others; use of or attempting to use information prohibited from use in that form of assessment; submitting the work of another as your own; consciously committing acts of plagiarism, that is, taking and using another's thoughts or writings as one's own with intent to deceive, which occurs when paragraphs, sentences, a single sentence or significant parts of a sentence which are copied directly, are not enclosed in quotation marks and appropriately footnoted or referenced in the text; direct quotations are not used, but text is paraphrased or summarised, and the source of the material is not acknowledged by footnoting or other reference in the text.
Deferred work: Students who, for medical, family/personal, or employment-related reasons, are unable to complete an assignment or to sit for an examination at the scheduled time may apply to defer an assessment in a course. Such a request must be accompanied by appropriate supporting documentation. One of the following temporary grades may be awarded: IDS (Incomplete - Deferred Examination); IDM (Incomplete Deferred Make-up); IDB (Incomplete - Both Deferred Examination and Deferred Make-up).
Computer, e-mail and Internet access: Students are required to have access to a personal computer, e-mail capabilities and Internet access to UConnect. Current details of computer requirements can be found at http://www.usq.edu.au/current-students/support/computing/hardware.