CHAPTER 15 THE FUNCTIONING OF FINANCIAL MARKETS After completing this chapter, you should be able to do the following: • Distinguish

between primary and secondary markets; • Explain

the role of investment banks in helping issuers raise capital; • Describe primary market transactions, including public offerings, private placements, and right issues; • Explain the roles of trading
venues, including exchanges and alternative trading venues; • Identify characteristics of quote-driven, order-driven, and brokered markets; • Compare long, short, and leveraged positions in
terms of risk and potential return; • Describe order instructions and types of orders; • Describe clearing and settlement of trades; • Identify types of transaction costs; • Describe market
efficiency in terms of operations, information, and allocation.

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FINANCIAL MARKETS

COURSE DESCRIPTION AND PURPOSE

Financial  markets,  or  markets  for  financial  assets,  play  an  important  role  in the  efficient  functioning  of  a market
economy.  Financial  Institutions  are  any  establishments   that  make  these  markets  function efficiently. The course
studies  the  fundamental  principles  that  govern  financial  markets  and  institutions.  We  attempt  to understand the
workings of the Banking Industry, the Federal Reserve and the behavior of financial intermediaries.

Topics  include  valuation  of  financial  assets  and  the  characteristics  of  financial  instruments  in money  and capital
markets.  We analyze  the relationships  among financial  institutions,  monetary policy and the stability of the economy
as a whole. Financial Markets and Institutions will provide a foundation for your further study of Finance, as well as an
essential component of your managerial education about the world in which business operates.

This course explores the function, pricing, and institutional structures of financial markets. Our intent is to understand
the  differences  between  these  instruments  and  the  institutions  that  operate  in  today's  financial  markets. Rapid
changes  in the  composition  of  financial  instruments  and  institutions  mean  that  the content of this course must be
evolving as well. Understanding  the economic foundations of these intermediaries,  in addition to the institutional
instruments,  and developing your analytical and research skills, will prepare you not only for today's job market, but will
also help to increase your educational flexibility in adapting to future changes.

COURSE OBJECTIVES

Students will be able to:

 Apply concepts relevant to financial markets and financial institutions, such as the flow of funds, levels of
interest rates and interest rate differentials, to current events or topical issues.
 Determine and analyze the appropriate measures of risk and return for various financial instruments.
Understand the mechanics and regulation of financial securities exchanges and determine how the value of
stocks, bonds, and securities are calculated.
 Identify and evaluate the role symmetric versus asymmetric information plays in the structure and operation of
the financial system information.
 Evaluate empirical evidence of market performance, and contrast it with theories of market performance.
 Research and analyze specific problems or issues related to financial markets and institutions.
 Explore the international integration of international financial markets and analyze the implications for financial
managers.

MAJOR & CURRICULUM OBJECTIVES TARGETED

Students will be able to:

 Identify the functions of financial markets and institutions and examine their impact on the level of interest rates
and interest differentials.
 Use information technology as a tool to do essential business tasks including performing electronic research,
and creating documents, presentations and spreadsheets.
  Research and organize written and oral communication.

TEACHING METHODOLOGY

Course delivery will focus on ensuring that students are able to:

 Present written and verbal communication  in a clear and concise manner.
 Interact with other students and the instructor to demonstrate functional skills, foundational knowledge and
application of the theory.
 Learn how to perform web based research.

ASSURANCE OF LEARNING

The College of Business cares about the quality of your education. For more information please visit the Assurance of
Learning site to learn more on the College's commitment to this initiative.

IMPORTANT INFORMATION

POLICIES

Please review the policies page as it contains essential information regarding guidelines relevant to all courses at FIU
and additional information on the standards for acceptable netiquette important for online courses.

TECHNICAL REQUIREMENTS & SKILLS

One of the greatest barriers to taking an online course is a lack of basic computer literacy. By computer literacy we
mean being able to manage and organize computer files efficiently, and learning to use your computer's operating
system and software quickly and easily. Keep in mind that this is not a computer literacy course; but students enrolled
in online courses are expected to have moderate proficiency using a computer. Please go to the "What's Required"
page to find out more information on this subject.

For detailed information about the technical requirements, please click here.

ACCESSIBILITY AND ACCOMMODATION

For detailed information about the specific limitations with the technologies used in this course, please click here.

For more information about Blackboard's Accessibility Commitment, click here.

For additional assistance please contact our Disability Resource Center.

COURSE PREREQUISITES

It is recommended that Finance 3403, or equivalent (contact instructor for equivalents) be taken before Finance 4303. It
is highly suggested that FIN 4303 be taken before Commercial Banking, International Finance, International Banking,
Risk Management and Securities Analysis since it provides an excellent introduction to these disciplines.