FIN6320 – Money & Capital Markets Mark Frost

Summer Semester, 2005 Office: (972) 371-1465

M: 6-10 p.m. SOM 1.110 Home: (972) 394-2810
URL: http://utd.mark-frost.com/fin6310/ Cell: (214) 693-6031
Office Hours: ½ hour before and after class Fax: (972) 384-1771
(In addition, I am always available by appointment) Email: econman@mark-frost.com

Objective
Develop a solid foundation in financial economics, investment finance, and monetary institutions. Em-
phasis will be placed on institutions and real world applications.

Required
1. Financial Markets & Institutions, 5th edition (Mishkin & Eakins)
2. Business Calculator (i.e. BAII+)

Prerequisites
It is recommended a student have some understanding of introductory microeconomics and be comfort-
able with elementary algebra and basic statistics. Even so, no formal exposure to the subject of finance
is assumed.

Grading Structure.
1. One exam weighted at 50%.
2. Two Projects weighted at 25% each
a. All Projects are due within 15 minutes from the start of class. 10pts/day penalty after.

Instructor and Teaching Philosophy

I have extensive experience in the Banking and Financial Services sectors that I hope to share with you. I
pride myself in being a very dedicated teacher and truly care that my courses are successful for commit-
ted students. Economics is not an easy subject and the only way to make it so would be to teach some-
thing besides economics. Therefore, I think it only fair to tell you something of what I expect from my
successful students. I don’t believe in grade inflation and believe university-level work should be challeng-
ing. Hence, you should know that I will and do assign “F’s” to those who deserve them. I estimate the
“average” student will require a time investment of at least five additional hours per week to earn an “A” in
this course. If you are used to “sliding” through courses with a minimal of effort and think you can suc-
cessfully do the same with this one, then you may wish to reconsider taking this one.

Preparation.
It is assumed you are literate adults and can therefore read. Hence, you will not be “taught the book.” It
is suggested you utilize the textbook as a study guide and reference. Ideally, you should read the rele-
vant chapters before I discuss them in the lectures, as published in the schedule below.

Lectures.
It is assumed you are rational adults. Hence, there is no mandatory attendance policy. With the excep-
tion of exam dates, attendance is completely optional and no one will ever be directly penalized for failing
to attend class. Therefore, if you should decide the marginal cost of your time invested in class atten-
dance exceeds its marginal benefit, I respect your right to not attend and order your own preferences.
However, again, I do not “teach the book” and have noticed a strong correlation between poor grades and
poor attendance in my classes. If all you do is read the book, you will have a high statistical probability of
failing the course.

Cheating and Plagiarism!

The minimum penalty for cheating and/or plagiarism is a “F” for the course. The University may impose
additional penalties.

Communication
I want this class to be very successful for you. If you experience problems, concerns, worries, etc., don’t
wait till the “crises point” to contact me. I do not mind being called at home during reasonable hours.
Furthermore, if you get a chance, stop by during my office hours or other convenient time just to “chat” for
a while. It is good for you to interact personally with your teachers.
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 EXPECTED SCHEDULE (v2)
(The following readings should be completed prior to their respective lecture) (*=study, not just read)
# Date Lecture Topic Reading
Introductions, Course Orientation, Q&A
• Introductions and review of syllabus Lecture
1 5-16
• Review of Economics, Mathematics, & Statistics
• Philosophy & Ideology
Introduction to Financial Prediction
• Forecasting
2 5-23 • Economic Modeling Lecture
• Collaborative expert committees
Project 1 assigned

3 5-30 Holiday – No Class

Money, Central Banks, and Markets I

• The Fed and the Money Supply
4 6-06 1-8
• Money Demand
• The Price of Money (TVM)
Money, Central Banks, and Markets II
• Bond Market
5 6-13 9-11*
• Stock Market
• International Markets

6 6-20 No Class -- Project Time

Money, Equity, and Risk Markets

• Financial Markets
7 6-27 12-14
• Return and Risk basics
• Pricing Models

8 7-04 Holiday – No Class

International Economics and Finance

• Exchange Rates and Risk
9 7-11 • Big Mac Index 13,14

Project 1 Due! – Assignment of Project 2.

Risk Management: Introduction to Financial Derivatives
• Rational Expectations
10 7-18 24, 25
• Volatility
• Strips, Swaps, Options and Futures
Investment, Economics, & Ethics
• Efficient Markets?
• Moral Hazard & Adverse Selection
11 7-25 15,16
• The Value of Information
• Martha Stewart: victim or villain?
• Miscellaneous and Review for Final exam

Comprehensive Final Exam (open note/book)

12 8-01
Project 2 Due!

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