25556 The Financial System
UTS: Business: Finance and EconomicsCredit points: 6 cp
Subject level: Undergraduate
Result Type: Grade and marksRequisite(s): 25300 Fundamentals of Business Finance
These requisites may not apply to students in certain courses.
There are also course requisites for this subject. See access conditions.
Handbook description
The aim of this subject is to develop an understanding of the operations of a modern financial system, covering its payment, financing and market-risk management activities. Its main topic areas are financial institutions, financial markets (such as stocks, bonds and foreign exchange) and derivatives (such as futures and options). It forms the foundation for further studies in investment analysis and derivative securities.
Subject objectives/outcomes
On successful completion of this subject students should be able to:
- identify and understand the different financial institutions, financial instruments and financial markets in the Australian Financial System
- understand the pricing of securities in Australian financial markets
- interpret the impact of changes in the Australian Financial System on decision making by individuals and organisations.
Contribution to graduate profile
Financial markets influence the destiny of businesses and the allocation of resources generally, through their control over the cost and supply of funds. They also contribute to the efficient operation of businesses and the economy through their provision of payment services and risk-management instruments. The subject aims to encourage and assist students to acquire knowledge of the operations of the institutions and markets that comprise Australia's financial system, and develop an understanding of the instruments used in raising finance and in the management of the risks posed by the financial system. This knowledge and understanding is essential in achieving the objectives of both the finance and banking majors.
Teaching and learning strategies
The lectures and workshops will incorporate a range of teaching and learning strategies including direct access to lecture notes, applied problem solving, online teaching and readings. Key concepts covered in lectures are reinforced in tutorial discussion.
Content
- Functions of a financial system, payment methods and indirect/ direct financing
- Types of financial Institutions and their operations
- An overview of the financial markets, securities and regulations
- Major markets and financial instruments: short-term money, bond, foreign exchange and equity markets
- Determinants of spot and forward prices: interest and exchange rates
- Derivative markets, interest rate and currency derivatives.
Assessment
Assessment item 1: Assignments (Individual)
| Objective(s): | 1-3 |
| Weighting: | 20% |
| Task: | The assignments will assess students understanding of various aspects of the financial system. It will enable students to demonstrate they have met objectives 1-3. |
Assessment item 2: Mid-Semester Examination (Individual)
| Objective(s): | 1, 2 |
| Weighting: | 30% |
| Task: | This will test students understanding of trading in financial markets, the operations of the financial institutions and the pricing of securities trading in the different financial markets in Australia. Evaluation will be in terms of students meeting objectives 1 and 2 |
Assessment item 3: Final Examination (Individual)
| Objective(s): | 1-3 |
| Weighting: | 50% |
| Task: | This will test students understanding of financial institutions, financial markets, both physical and derivative, and financial instruments in Australia. Evaluation will be in terms of students meeting objectives 1-3. |
Required text(s)
Ben Hunt and Chris Terry, 2008, Financial Institutions and Markets, 5th edn, Thomson
Indicative references
Faculty of Business (1999) Guide to Writing Assignments (available from link on UTSOnline under 'Assignments')
