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Final Exam: Monday, May 17 10:30am-12:30pm in TYD 1132 Lecture: Tuesday and Thursday 2:00pm- 3:15pm in TYD 1132 Office Hours during final week: TA: Mon 5/10, Wed 5/12 and Fri 5/14 from 12 – 1:30pm and by appointment Professor: Thu 5/13 by appointment Course Description: The goal of this course is twofold: (1) to provide an introduction into the workings of financial markets and (2) to analyze the role of financial markets for the broader macroeconomy. The course will discuss the basic role of financial markets, the types of financial assets and how they are traded. We will introduce a number of technical tools for valuing risk, pricing financial assets and creating portfolios. Finally, we will employ these insights to discuss issues of broader relevance for the macro economy, with special emphasis on the current financial crisis. Required Textbook and Readings:
Prerequisites: The formal requirement for the course is having successfully taken ECON326, and the calculus methods you applied in that course will be frequently utilized. ECON435 also uses a number of statistical tools, so ECON321 is highly recommended as another pre-requisite. I will distribute a math handout and a problem set in our first class to help you review some of the mathematical concepts and tools that will be used in class. I strongly recommend that you work through these on your own to refresh your math skills, and that you come to office hours if you have any questions. Composition of Grade: 10 % Class participation and investment game There will be no opportunities for extra credit. If at any point during the semester you face circumstances which prevent you from attending lecture, handing in problem sets on time and/or participating in quizzes or exams, please contact me as soon as possible to discuss ways to manage the situation. There is little that can be done after an unsatisfactory grade has been assigned. Class Preparation and Participation: Students are expected to be prepared for each lecture by studying the textbook chapters as indicated below. Furthermore, you are expected to follow our regular financial news discussion and analysis in class and online to connect the theoretical concepts that we are studying to what is going on in financial markets day-to-day. Preparing all of these materials will help you to actively and effectively participate in classroom discussions. This means regular class attendance is an expectation. You will be responsible for all the preparatory materials in your problem sets, quizzes and exams. Financial News Analysis Presentation and Blog: One of the main goals of our class is to actively follow actual events in financial markets. At the beginning of each class, we will review and discuss the financial news and developments since the previous class. To this goal, I will sign up a team of two students for each class to prepare a short presentation (approx. 10 – 12 min). During the week before your presentation, make sure to buy and read a financial newspaper every day and keep track of all important financial developments. In your financial news presentation, (i) spend some time to discuss and analyze how markets performed since our last class and (ii) pick two to three specific news items that are closely related to topics we have covered in a recent lecture and present some in-depth research on these items. For this, read all related news articles from several different financial news sources (such Financial Times, Wall Street Journal, Bloomberg.com, MarketWatch.com, Yahoo! Finance, Google finance etc.) and compile a brief summary, analysis and comment. You should present this to class and post an online summary with links (around 300 – 400 words) to our financial news analysis blog. I urge all class participants to sign up to this blog and read it regularly to be well prepared for problem sets, quizzes and the final exam. Check here for the electronic signup sheet. Virtual Investment Game: In order to gain some practical experience with financial markets, I require that every student participates in a simulated stock market game. Please sign up for a free online account at http://www.virtualstockexchange.com/ using your UMD Directory ID as part of your username so that I can verify that you signed up. (For example, if your directory ID is “testudo,” you can sign up as “testudo” or – if this is unavailable – as “testudo_2010” or “testudo_435” etc.) Once you have created an account, choose the option “Invited to join a game?” and enter the Game ID “ECON435_2010”. You will be prompted to enter the password for the game, which is “goterps”, and this completes the setup. Problem Sets: There will be six mandatory problem sets throughout the semester, each of which will be given equal weight. (In addition, I will distribute a math problem set that helps you to refresh your math skills that you acquired in ECON326.) The problem sets will help you to work through the materials covered in class and will be useful in your preparation for the mid-term and final exam. Therefore I assign an important weight of the final grade to your performance on problem sets. If you will have to miss a class, please turn in your problem set by leaving it in my mailbox in the main office of the economics department (Tydings 3110, open until 4:30pm) or by slipping it under my office door (Tydings 4118F) before the beginning of class. For fairness, if you turn in your problem set late, I will drop 33% of the points if you hand it in after class the same day and 50% of the points if you hand it in the day after its due date. Later submissions will not receive any credit. Quizzes and Final Exam: There will be three quizzes throughout the semester and one final exam. The material covered by the quizzes will be cumulative, but with special focus on the most recent materials. If you fail to take a quiz or exam, you will receive a zero score, unless your absence is due to one of the legitimate causes listed in the Undergraduate Catalog and you provide documentation for this as soon as possible. You are responsible for all material in the relevant chapters of the textbook (see below), for the topics we discussed in our financial news analysis and blog and for what was covered in my lectures. If you miss any lectures, please make sure that you copy the notes of one of your colleagues. Course Evaluations: At the end of the semester, please let me know what you liked and what you disliked about this class by taking advantage of the University's on-line course evaluation system. I really appreciate your feedback – incorporating your suggestions will help me in updating the course for future generations of students. Students with Disabilities: Students with disabilities are required to get in touch with me within the first three weeks of classes and furnish the required documentary evidence. I will be happy to accommodate your needs. Academic Integrity: The University of Maryland, College Park has a nationally recognized Code of Academic Integrity, administered by the Student Honor Council. This Code sets standards for academic integrity at Maryland for all undergraduate and graduate students. As a student you are responsible for upholding these standards for this course. It is very important for you to be aware of the consequences of cheating, fabrication, facilitation, and plagiarism. For more information on the Code of Academic Integrity or the Student Honor Council, please visit http://www.shc.umd.edu Course Outline:
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