78159 - Financial Products and Markets

Learning outcomes

At the end of the course the student has a sound knowledge of the financial products traded in the market, the differences among them, and the reasons why they were introduced in the market. The products range from standard bonds and stocks, to derivatives and structured finance products. The student has knowledge of the main agents trading in the market, as fund raisers or investors, as well as financial intermediaries.

Course contents

The course illustrates the role that financial intermediaries and financial markets play in the economy. Special emphasis is placed on the valuation of fixed-income securities and financial derivatives. In detail:

• Valuation of risk-free fixed income assets (government bonds). The yield curve. Interest rate risk.
• Valuation of fixed income assets issued by risky entities (corporate bonds). Credit risk. Liquidity risk.
• Valuation of financial derivatives (forward/futures, swaps, options).
• Hedging risks with financial derivatives. Derivatives and speculation.
• Innovative financial products.

Exchange students interested in taking this course must have an academic background in economics or finance and prerequisite knowledge of microeconomics and econometrics.

Readings/Bibliography

Required readings:

Z. Bodie, A. Kane and A. Marcus, Investments, 11th edition, McGraw Hill (selected chapters only, as indicated in the slideset).

Any other material that will be posted on Virtuale.

Teaching methods

Lectures, exercises.

Assessment methods

Course assessment:

One-hour written, closed-book exam, which consists of a combination of open-ended questions and exercises. A mock exam will be provided on Virtuale. The grade is 100% based on the written exam.

The maximum possible score on the overall exam is 30 cum laude, in case all answers are correct, complete and formally rigorous. The grade distribution is as follows:
<18 failed
18-23 sufficient
24-27 good
28-30 very good
30 cum laude excellent

The final grade of Finance I.C. is the simple average of the grade of Financial Products and Markets and the grade of Asset Pricing.

The use of AI is prohibited in the formal assessments of student learning (written exam). Any use constitutes a violation of academic integrity.

Teaching tools

Course page on the platform "Virtuale", where students can find:

• lecture slides
• mock exams
• other reading material.

Office hours

See the website of Mascia Bedendo