COURSE SYLLABUS CRN 10234; FIN 6246 MONEY AND CAPITAL MARKETS SPRING 2012

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1 COURSE SYLLABUS CRN 10234; FIN 6246 MONEY AND CAPITAL MARKETS SPRING 2012 DESCRIPTION: A survey of money and capital markets and the role they play in financial intermediation, capital formation, economic growth, monetary policy and business cycles. College: Business Division: Business Subject Area: Finance Course Number: FIN 6246 CRN: Credit Hours: 3 Time and Location: Wednesday evenings 6:30pm-9:15pm LH 2202 Semester Runs From January 9, 2012 to April 23, 2012 Prerequisites: FIN 5405 Instructor: Phone: Dr. David M. Jones djones@fgcu.edu Office Home Office Location: Lutgert Hall 3337 COURSE DESCRIPTION: An advanced and comprehensive examination of macroeconomic policies, with particular emphasis on monetary policy and its role in maintaining sustainable economic growth and stable prices. Special attention will be devoted to the important role of money and capital markets in transmitting monetary policy and in business fixed capital formation. There will be an examination of monetary policy objectives instruments, techniques and basic approaches. Also analyzed will be factors influencing interest rates, the yield curve and real versus nominal interest rates. There will be an examination of asset price bubbles and financial crises and how central banks should respond in order to maintain orderly financial markets and minimize the impact of these events on spending and output. Students should emerge with a clear understanding of the important role of financial intermediation and efficient money and capital markets in support of increased capital formation and sustainable economic growth. Also there should be recognition of the important role that innovation such as the IT revolution and increasing business capital accumulation in boosting productivity growth and achieving an improving standard of living for most citizens.

2 GRADING, ATTENDANCE AND OTHER POLICIES: Requirements and Weighting: Class participation = 25 points Mid-Term = 25 points Final Exam = 50 points TOTAL Available = 100 points Grading Scale: = A = B = C 69 or less = F Do not anticipate any scaling of the grades. You are expected to attend all classes. If the mid-term is missed, the weight will be added to the final exam. Failure to appear at the final without prior instructor notification will result in a grade of zero. Learning Objective Understanding the extremely important role of efficiently operating money and capital markets in supporting sustainable growth in aggregate demand and output. Analysis of roles of innovation and business-fixed investments as influences on business productivity and growth. Assessment Strategy Participation in class discussion, mid-term exam, final exam. Examining the critical role of money and capital markets and bank and nonbank financial intermediaries in the important process of the transmission of monetary policy and in maintaining stable and sustainable economic growth. Participation in class discussion, participation in team presentations, final exam. Analyzing the role of useful money and capital market signals such as the shape of the yield curve, stock prices and commodity prices in foreshadowing changes in economic growth and inflation. Analysis of asset price bubbles and the destabilizing impact on the financial system and the economy Participation in class discussion, participation in team presentations, mid-term exam, final exam. ADDITIONAL COURSE AND INSTRUCTOR INFORMATION This course will be organized around the following major topics: Macroeconomic Policies and Business Cycles; Financial Intermediation; Monetary Policy; Interest Rates and the Yield Curve; Inflation and Inflation Expectations; Market Liquidity; Financial Crises; Asset Price Bubbles; Financial Innovation; Globalization; Aggregate Demand and Supply Analysis.

3 REQUIRED COURSE MATERIALS: The class text is Fredrick S. Mishkin, The Economics of Money, Banking and Financial Markets; BUSINESS SCHOOL EDITION (Boston:Addison Wesley, July 2009) ISBN: RECOMMENDED MATERIALS: Cameron M. Reinhart and Kenneth S. Rogoff, This Time is Different: 8 Centuries of Financial Folly, Princeton University Press ISBN Andrew Ross Sorken, Too Big to Fail: How Wall Street and Washington fought to Save The Financial System and themselves. Viking Press ISBN: David M. Jones, We Won t Do It Again (See Angel) Academic Behavior Standards and Academic Dishonesty All students are expected to demonstrate honesty in their academic pursuits. The university policies regarding issues of honesty can be found in the FGCU Student Guidebook under the Student Code of Conduct and Policies and Procedures sections. All students are expected to study this document which outlines their responsibilities and consequences for violations of the policy. The FGCU Student Guidebook is available online at Disability Accommodations Services Florida Gulf Coast University, in accordance with the Americans with Disabilities Act and the university s guiding principles, will provide classroom and academic accommodations to students with documented disabilities. If you need to request an accommodation in this class due to a disability, or you suspect that your academic performance is affected by a disability, please contact the Office of Adaptive Services. The Office of Adaptive Services is located in Howard Hall 137. The phone number is or TTY Student Observance of Religious Holidays All students at Florida Gulf Coast University have a right to expect that the University will reasonably accommodate their religious observances, practices, and beliefs. Students, upon prior notification to their instructors, shall be excused from class or other scheduled academic activity to observe a religious holy day of their faith. Students shall be permitted a reasonable amount of time to make up the material or activities covered in their absence. Students shall not be penalized due to absence from class or other scheduled academic activity because of religious observances. Where practicable, major examinations, major assignments, and University ceremonies will not be scheduled on a major religious holy day. A student who is to be excused from class for a religious observance is not required to provide a second party certification of the reason for the absence.

4 FIN 6246 Money and Capital Markets Class Assignments and Readings Dr. David M. Jones Spring 2012 January 11 January 18 January 25 Introduction to Money and Capital Markets Text Chapters 1, 2 and 3 Introduction to Money and Capital Markets Handout Identifying Fed Policy Signals When Zero Interest Rate Policy (ZIRP) is in effect. Financial Intermediation Text Chapters 8, 10, 12 and 13 Key Economic and Financial Terms Handout Financial Crisis Dr. David M. Jones We Won t Do It Again (new book) Chapters 4, 5 Text Chapters 9 & 11 Reinhart and Rogoff This Time Is Different Chapters 1, Major Financial Crisis in the U.S. Dr. David M. Jones February 1 February 8 Monetary Policy Text Chapters 16, 17, & 18 Monetary Policy Handout Sorken Too Big To Fail Chapters 1-6 Monetary Policy (continued) Text Chapters 19 and 24 Dr. David M. Jones We Won t Do It Again (new book) Chapters 1 Effects of Central Bank Policy Outline Handout February 15 Interest Rates and the Yield Curve Text: Chapters 4, 5 & 6 Interest Rates and the Yield Curve Handout Inflation and Inflation Expectations Text Chapter 25 Fed Inflation Targeting Debate Handout Inflation and Inflation Expectations Handout February 22 Mid-Term Exam

5 February 29 Liquidity Liquidity: Definition Sources and Signals Handout Risk Management Handout March 6-10 Spring Break, 2012 March 14 March 21 March 28 April 4 April 11 April 18 Asset Price Bubbles Alan Greenspan, The Age of Turbulence. David M. Jones, We Won t Do It Again (new book) Chapter 4 Financial Innovation Text Chapter 12 & 14 Essay by Dr. David M. Jones and Kevin Pfleger Financial Derivatives Movie, Front Line PBS LTCM Globalization and the Outlook for the U.S. Dollar Text Chapters 20 and 21 David M. Jones, We Won t Do It Again (new book) Chapter 3 David M. Smick: The World is Curved, Chapters 1, 2, 3 Globalization and the Outlook for the U.S. Dollar Handout Aggregate Demand and Supply Analysis Text Chapter 23 Aggregate Demand and Supply Analysis Handout Review and Catch up. April 25 Final Exam