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The current and official versions of the course specifications are available on the web at //www.usq.edu.au/course/specification/current.
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FIN2302 Financial Economics

Semester 1, 2015 External Toowoomba
Units : 1
Faculty or Section : Faculty of Business, Education, Law and Arts
School or Department : School of Commerce

Contents on this page

Staffing

Examiner: David Troedson
Moderator: Frank Elston

Requisites

Pre-requisite: ECO1000 and FIN1101 and FIN1103 and STA2300

Other requisites

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 //www.usq.edu.au/current-students/support/computing/hardware

Rationale

The recent and ongoing subprime and government fiscal crises have altered the landscape of money, banking, and financial markets. Students and practitioners of finance need an up to date course that aids them in gaining a deeper understanding of the modern world of finance. Accordingly this course will emphasize the learning and application of basic analytical concepts. The course assumes some background knowledge in finance and statistics. See the course pre-requisites.

Synopsis

Financial Economics is a course in economic theory and relevant applications for finance students. It draws upon well-established microeconomic theory, which helps to provide an understanding of the interactions between agents and markets within the global financial system. The course also develops macroeconomic theory that directly relates to the monetary and banking system. A solid foundational understanding of financial economics is critical for students to develop core competency in finance.

Objectives

On successful completion of this course, students should be able to:

  1. evaluate the role played by banks in the flow of funds
  2. explain financial regulation and financial structure with economic analysis
  3. assess likely interest rate changes using a supply ? demand model for bonds and the liquidity preference framework
  4. compare the different theories of the term structure of interest rates
  5. compute value, duration and yields of bonds
  6. explain how transaction costs, economies of scale, adverse selection, moral hazard, and the principal agent problem have impacted the financial system
  7. discuss the major factors contributing to the recent financial crisis
  8. indicate the salient features of nonbank financial institutions
  9. explain the pricing of financial derivatives and how they might be used especially in regard to hedging
  10. explain how a central bank conducts monetary policy
  11. analyse how monetary policy affects output and inflation.

Topics

Description Weighting(%)
1. Money, banking, and financial markets 10.00
2. Interest rate determination and behaviour 10.00
3. Term structure of interest rates 10.00
4. Rational expectations, behavioural finance, and efficient markets hypothesis 10.00
5. Economic analysis of financial structure 8.00
6. Financial crises 12.00
7. Banking 10.00
8. Economic analysis of conflicts of interest and financial regulation 10.00
9. Financial engineering 10.00
10. Central banking and the conduct of monetary policy 10.00

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=2015&sem=01&subject1=FIN2302)

Please contact us for alternative purchase options from USQ Bookshop. (https://bookshop.usq.edu.au/contact/)

  • Mishkin, F 2013, The economics of money, banking, and financial markets, The Business School Edition, 3rd edn, Pearson New International Edition, Pearson Education, Essex.

Reference materials

Reference materials are materials that, if accessed by students, may improve their knowledge and understanding of the material in the course and enrich their learning experience.
  • Hunt, B & Terry, C 2011, Financial institutions and markets, 6th edn, Cengage Learning, South Melbourne, Victoria.
  • Malkiel, B 2012, A random walk down Wall Street, 11th edn, Norton, New York.
  • Mishkin, F & Eakins, S 2012, Financial markets and institutions, 7th edn, Prentice Hall, Boston, Massachusetts.
  • Norberg, J 2009, Financial fiasco: how America?s infatuation with home ownership and easy money created the economic crisis, Cato Institute, Washington DC.
  • Reinhart, C & Rogoff, K 2009, This time is different: eight centuries of financial folly, Princeton University Press, Princeton, New Jersey.
  • Shiller, R 2005, Irrational exuberance, 2nd edn, Princeton University Press, Princeton, New Jersey.
  • Viney, C & Phillips, P 2012, Financial institutions, instruments and markets, 7th edn, McGraw Hill, Sydney, New South Wales.

Student workload requirements

Activity Hours
Assessments 28.00
Directed Study 36.00
Private Study 96.00

Assessment details

Description Marks out of Wtg (%) Due Date Notes
QUIZ 1 10 10 26 Mar 2015
QUIZ 2 20 20 21 May 2015
2 HOUR EXAMINATION 70 70 End S1 (see note 1)

NOTES
  1. The examination date will be available via UConnect when the official examination timetable has been released.

Important assessment information

  1. Attendance requirements:
    External/Online: If you are an international student in Australia, you are advised to attend all classes at your campus. For all other students, there are no attendance requirements for this course. However, it is the students' responsibility 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.

    On-campus: 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.

  2. 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.)

  3. Penalties for late submission of required work:
    Students should refer to the Assessment Procedure http://policy.usq.edu.au/documents.php?id=14749PL (point 4.2.4)

  4. 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.

  5. 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.

  6. Examination information:
    This is a restricted examination. Candidates are allowed access to specific materials during the examination. The only materials that candidates may use in the examination for this course are:
    1. writing materials (non-electronic and free from material which could give the student an unfair advantage in the examination)
    2. 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.

  7. 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.

  8. 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.

Assessment notes

  1. 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 //www.usq.edu.au/library/referencing.