Republic of the Philippines

Laguna State Polytechnic University

Province of Laguna

College of Business Management and Accountancy

Learning Modules

CAPITAL MARKETS (FM104)

Course Description: This course offers an overview of what capital market is and how
investors use the various capital markets for investment opportunities and to diversify risk.
Some of the risk and potential rewards of each and these areas of the economy are
introduced. Activities include a team-based project that involves analyzing the economy,
industries, and securities and constructing an investment portfolio that can meet the needs
and preferences of hypothetical investors. It also includes a unifying and analytic framework
that uses few basic economic principles to organize students thinking about the structure of
financial markets, the foreign exchange markets and financial institution management. At the
end, each student could tell why each chapter is heading to a special topics that are
important and how they relate to other topics in the course.

MODULE 1
INTRODUCTION

In a market economy, the allocation of economic resources is driven by the outcome of the
many private decisions. Prices are the signals that direct economic resources to their best
use. The types of markets in ab economy can be divided into (1) market for products
(manufactured goods and services), or the product market, and (2) the market for the factors
of production (labor and capital), or the factor market. In this subject, we will focus on the
part of the factor market, the market for financial assets, or simply the Financial Market. This
market determines the cost of capital. We will also look at the basic characteristics and
functions of financial assets and financial markets.

Learning Objectives:

After reading the chapter, the students will understand:

1. What a financial asset is.
2. The distinction between a debt instrument and an equity instrument.
3. The general principles for determining the price of a financial asset.
4. Ten Properties of financial assets
5. The principal economic functions of financial assets.
6. What a financial market is and the principal economic function it performs.
7. The different ways to classify financial markets.
8. What is meant by a derivative instrument.
9. The reasons for the globalization of financial markets.
10. The classification of global financial markets.
11. What is meant by an asset class.

Pedagogical Activities:

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Prepared by: JANUARY T. JALBUENA, LL.B., MBA
CBMA Faculty
(Note: The teacher has the discretion to apply any of the suggested teaching
strategies/methodologies/activities listed below.)

1. Multi-Media Presentation- A slide show on the basic characteristics and functions

of financial assets and financial markets.

2. Brainstorming and Inter-active Discussions – between a debt instrument

and an equity instrument; general principles for determining the price of an a
financial asset; ten properties of financial assets; its economic functions

3. A Panel discussion or an informal debate on the rationale of the course and on

the reasons for the globalization of financial markets.

Evaluation

Essay:
1. What is the difference between a financial asset and a tangible asset?
2. Explain why liquidity may depend not only on the type of financial asset but also
on the quantity one wishes to sell?
3. Give three (3) examples of derivative instruments and explain why they are called
derivative instruments.
4. Give three (3) reasons for the greater integration of financial markets throughout
the world.

Activity Plan
1. Make a figure/charts of each classifications of financial markets by:
a. Type of claim
b. Maturity of claim
c. Financials claim newly issued
d. Organizational Structure
2. Classification of Global Financial Markets.
a. Internal Market
b. External Market
And explain each type of classifications.
3. Written Report: “The Financial Market: Its Importance and How it Affects the
Performance of the Economy” (individual output). This is a typewritten report and
does not exceed one page.

Assessment of the Essay and Activity Plan (Rubrics output for every evaluation)

1. Each essay will be assessed based on:

a. Originality of words and Authenticity (2 points)

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Prepared by: JANUARY T. JALBUENA, LL.B., MBA
CBMA Faculty
 b. Justification of the answer with basis on the subject matter. (3 points)

c. Topic Relatedness (2 points)

d. Application of the example.(3 points)

2. Charts and Figures based on:

a. Creativity, Workmanship (25 points)

b. Originality Authenticity (25 points)

3. Written Report based on:

a. Originality, Concept and Topic Relatedness: (40 points)

Totality of Rubrics Output: 100 points

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Prepared by: JANUARY T. JALBUENA, LL.B., MBA
CBMA Faculty