PACE UNIVERSITY Lubin School of Business, MBA Program Pace Plaza, NY, NY - Fall 2006
FIN 644 – Money, Banking and Capital Markets Text: Stephen G Cecchetti (Brandeis University), Money, Banking and Financial Markets (McGraw-Hill, 2006) ISBN: 0072452692
Date and Topic Sept. 7 Introduction. The five components of financial markets. The five themes of the course (“TRIMS-Time-Risk-Information-Money-Stability”). Money and payments system. Chapters 1-2. CASE: Where Are the $100 Bills? (p. 28) .
Sept. 14 Payment system, overview of financial instruments and markets. Present value and interest rates. Chapters 3-4. CASE: Terrorism Insurance (p. 38). Sept. 21 Risk. Bonds and determinants of interest rates. Chapters 5-6. CASE: Government-Run Lotteries (p. 101). Sept. 28 Risk and term structure of interest rates. Chapter 7. CASE: Michael Milken and Junk Bonds (p. 157). Oct. 5 Stocks andMarket Efficiency. Chapter 8. CASE: Are Stock Market Prices Too High or Low? (p. 191). Oct. 12 Derivatives and Foreign Exchange. Chapters 9-10. CASE: Long Term Capital Management (p. 222). Oct. 19 Economics of Financial Intermediaries. Banks. Chapters 11-12. CASE: The Rogue Trader, Nick Leeson (p. 308). How does it compare with the Amaranth Losses? Oct. 26 Mid-Term on Chapters 1-12.
Nov. 9 Central banking in the USA (Federal Reserve) and Europe. Chapters 15-16. CASE: The Evolution of Federal Reserve Independence (p. 412). Nov. 16 The Central Bank Balance Sheet. Monetary Policy and Interest Rates. Chapters 17-18. CASE: The Fed Response on 9/11/01 (p. 439). Nov. 30 Exchange-Rate Policy. Money Growth. Chapters 19-20. CASE: The Gold Standard – Should You Buy Gold Today? (pp. 504,507). Dec. 7 Modern Monetary Policy. Understanding Business Cycles. Monetary Policy in the Short Run. Chapters 21-23. CASE: Stagflation in the 1970s (p. 634). Dec. 14 Final Exam, on Chapters 1-23.