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Anton Korinek
Tydings Hall 4118F
Department of Economics
University of Maryland


Teaching Assistant:

Laura Deimling
Tydings Hall 5106
Department of Economics
University of Maryland


Lecture: Tuesday and Thursday 2:00pm - 3:15pm in TYD 2110

Office Hours:   TA: Tue 10:15 - 11:45am and Fri 1:30 - 3pm
                            Professor: Thu 3:30-4:30pm in TYD 4118F

Final Exam: Wednesday, May 15th, 10:30am - 12:30pm in TYD 2110

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 slow economic recovery.

Recommended Textbook and Readings:

A useful textbook for the course is “Investments” by Zvi Bodie, Alex Kane and Alan J. Marcus, McGraw-Hill/Irwin, 9th edition (2010), ISBN 978-0073530703. This book is an excellent source of how modern financial markets work and explains the basic tools that financial economists use to analyze them.  A large majority of the materials covered are also included in the 8th edition (2008)7th edition (2006) or 6th edition (2004) of the book, which are more affordable. You can also rent an online version of the book.

A second reading is the “Financial Times” (FT), a leading daily business newspaper, to which I strongly recommend that you subscribe. FT offers 15-week student online or print subscriptions, and Kindle subscriptions are available as well. You could also read the print version in the library. The FT will be an invaluable tool in preparing your in-class financial news analysis presentation and blog posting.


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 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 it to refresh your math skills. If you have any questions or difficulty, please come to office hours. I will also test the materials on this handout on a math review problem set and on our quizzes and final exam.

Composition of Grade:

10 %  Class participation and investment game
16 %  Financial news analysis presentation & blog posting
24 %  Problem sets
30 %  Quizzes (10 % each)
20 %  Final exam

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, making presentations 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.  We will sign up a team of two students to review the most recent financial developments that have occurred since our previous class. I would like each of you to prepare a short presentation video (approx. 10 – 12 min), which you can upload e.g. at YouTube and which we will screen at the beginning of our class.

During the week before your presentation, make sure to buy and read a financial newspaper (Financial Times or Wall Street Journal) every day and keep track of all important financial developments by following related articles from at least two different online news sources (such as,, Yahoo! Finance, Google finance etc). You want to be exposed to a variety of opinions.

Your presentation will consist of two parts. First, spend some time to discuss in person how markets performed since our last class meeting and analyze what caused this performance. Secondly, screen a recorded video in which you analyze and discuss two to three specific topics that are closely related to our course. You should do in-depth research on these topics and present a brief summary, your analysis and your comments. You can record your video from the camera of most laptops using e.g. SMRecorder or the trial version of Camtasia. If you have never recorded a video make yourself familiar with how to do this as soon as possible. If you do not have access to a laptop with a camera, then our TA will be able to help you record the video in her office hours. (In that case, try to schedule your presentation for a Tuesday.)

In addition to the video presentation, post an online summary with links (around 300 – 400 words) to our financial news analysis blog at  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 virtual stock exchange game, for which you can register at:

The first session of the game runs from 1/30 to 3/13/2013. You will be given a virtual $10,000 investment account and be permitted to trade stocks and ETFs. You are expected to buy at least one security by 2/7 and to follow your virtual portfolio closely so that you can provide a brief update on how your investments have performed every class, if called upon. A second session of the game will run from 3/25 to 5/8/2013 and will include more sophisticated trading options. The goal of the investment game is to gain more practical insights into financial markets, but the performance of your investment portfolio will not impact your grade. (Exception: the mid-term winner and the final runner-up will obtain 3 bonus points; the final winner will obtain 5 bonus points).

We will determine who earned the highest returns in the two games on 3/14 and 5/9/2013. On 3/14 and 5/7 you are expected to hand in a short report (no more than 1 page) on your investment strategy and on how your investments have performed.  (Please include your username on the report.)  The winners will present their investment strategies to class.

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 to refresh the 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 submit your problem set before the beginning of class.  If you are late, I will drop 33% of the points if you submit it after class the same day and 50% of the points if you submit 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

Tentative Course Outline (details will change over the course of the semester):




Materials Due



Ch. 1



Role of the Financial System

Ch. 1



Money Markets

Ch. 2

Math practice problems


Bond Markets

Ch. 2



Equity Markets

Ch. 2



Security Trading

Ch. 3



Quiz 1

Ch. 3

Problem set 1


Security Trading




Mutual Funds

Ch. 4



Risk in Financial Markets

Ch. 5



Dealing with Risk

Ch. 6

Problem set 2



Ch. 7




Ch. 9



Quiz 2


Problem set 3


Efficient Market Hypothesis

Ch. 11

Mid-term report investment game

Spring Break



Efficient Market Hypothesis

Ch. 11



Bond Prices and Yields

Ch. 14



Term Structure

Ch. 15



Mortgage Markets


Problem set 4


Mortgage Markets





Ch. 20



Futures and Swaps

Ch. 22



Quiz 3


Problem set 5


Risk Management

Ch. 23



Retirement Savings




Retirement Savings




Financial Crisis and Growth


Problem set 6


Too Big to Fail


Final report investment game


Final Review




Final Exam: 10:30am 12:30pm