25741 Capital Markets

Subject level: Postgraduate

Handbook description

This subject examines the structure and behaviour of Australia's financial system and its main components. Principal topics are the instruments and processes through which financing is arranged, the pricing of instruments and the associated risks and their management with derivatives. The subject forms part of the finance specialisation in the MBA and Master of Business degree programs where it provides a preparation for more specialised subjects and the various subjects that deal with financial institutions and risk management.

Subject objectives/outcomes

On successful completion of this subject students should be able to:

1. understand the major functions performed by a developed financial system, their inter-relationships and their official supervision
2. describe the operations of the main instruments and markets that comprise a developed financial system
3. understand the behaviour and drivers of financial variables that forces change in financial systems
4. understand the main risks involved and how they are managed with derivative products
5. calculate the settlement prices for debt securities and investment yields on a simple and compound interest basis
6. evaluate the use of derivatives for hedging purposes
7. explain the potential for financial markets to impose financial discipline on the management of financial institutions and borrowers.

Contribution to graduate profile

This subject forms part of the core of the finance major in the MBA and MBus degree programs. It provides a knowledge and competency basis for subsequent specialised subjects, such as Investment Management and International Finance. Its primary purpose is to provide finance students with an understanding of the operations of a financial system and its major components.

Teaching and learning strategies

The subject will be taught using a combination of lectures and workshops. These classes will be supplemented with both printed and electronic learning materials and resources. The UTS web-based communication tool (UTS Online) will be used to share information and encourage interaction between staff and students. Students will also use appropriate computer software such as spreadsheets and word processors to complete assigned tasks.

Content

• The major functions performed by the financial system
• The processes of financing the risks and their management
• Financial products and services and their financial characteristics
• The roles played by financial institutions and their supervision
• The operations of the main markets for securities and foreign exchange
• The behaviour of financial variables
• The pricing of financial market securities
• The nature, purposes and risk-management uses of derivatives.

Assessment

Assessment item 1: In-class exams (Individual)

Assessment item 2: Essay (Individual)

Assessment item 3: Final Exam (Individual)

Indicative references

Viney, C. 2007, Financial Institutions, Instruments and Markets, 5th edition, McGraw-Hill, Australia.

Valentine, T., Ford, G. and Copp, R. 2006 Financial Markets and Institutions in Australia, 2nd edition, Prentice Hall.

Hunt, B. and Terry, C. 2008 Financial Institutions and Markets, Cengage Learning (NZ) Limited.

Articles in Reserve Bank of Australia Bulletins available on www.rba.gov.au

Articles in the Sydney Morning Herald and Australian Financial Review

Booklets from www.asx.com.au called 'Understanding Options Trading' and 'Understanding Options Strategies'

Faculty of Business (2006), Guide to Writing Assignments, Faculty of Business, University of Technology, Sydney. This can be downloaded from: www.business.uts.edu.au/resources/guide.html

Teaching resources

The web learning resources made available by the University can be accessed on: www.uts.edu.au/teachlearn/resources.html
www.bell.uts.edu.au
www.uts.edu.au/teachlearn/avoidingplagiarism

Some useful web addresses

www.apca.com.au Australian Payments Clearing Association

www.asic.gov.au Australian Securities and Investments Commission

www.rba.gov.au Reserve Bank of Australia

www.apra.gov.au Australian Prudential Regulation Authority

www.treasury.gov.au The Commonwealth Treasury

www.abs.gov.au Australian Bureau of Statistics

www.westpac.com.au Westpac

www.national.com.au National Australia Bank

www.anz.com.au ANZ

www.commbank.com.au Commonwealth Bank

www.bankers.asn.au Australian Bankers Association

www.bis.org Bank for International Settlements