CBE Course Outline _FINM7006_1_13

1 | T H E A U S T R A L I A N N A T I O N A L U N I V E R S I T Y Research School of Finance Actuarial Studies and Statistics The Australian National University ACT 0200 Tel: 02 6125 0487, 02 6125 1526 Fax: 02 6125 0087 Email: enquiries.fas@anu.edu.au Student Room 4.48 Office: Level 4, CBE Building 26c ANU Campus Map (map GH32) http://tinyurl.com/9n8xgd8 College of Business and Economics The Australian National University ACT 0200 Tel: International +61 2 6125 3807 Within Australia: 1300 732 120 (local call cost only) Fax: International: +61 2 6125 0744 Within Australia: 02 6125 0744 Student Level 2 Office: Building 26C Students with enquiries about program (degree) requirements should contact the College office; enquiries about course administration (subjects) are normally handled by the relevant Research School. FINM7006 Foundations of Finance Semester 1, 2013 Course Description Foundations of Finance is designed to familiarise students with the components of the financial system and introduce them to the three basic ideas underpinning finance: the time value of money; diversification; and, arbitrage. The aim of the course is to provide students with introductory exposure to financial transactions, institutions and markets including money markets, stock markets, foreign exchange, derivative markets and contracts. It provides students with a solid foundation for later studies in finance. Mode of Delivery On campus lectures and tutorials Prerequisites N/A Incompatible Courses N/A Course Convenor/Lecturer: Jennifer Gippel Phone: (02) 6125 7314 Email: jennifer.gippel@anu.edu.au Office hours for student consultation: Wednesday 10-12noon Research Interests Self managed superannuation, informed trading, life- cycle of the firm, qualitative research Student administrator/s Patricia Penm Phone: 6125 1526 Email: patricia.penm@anu.edu.au 2 | T H E A U S T R A L I A N N A T I O N A L U N I V E R S I T Y COURSE OVERVIEW Learning Outcomes Upon successful completion of the requirements for this course, students will have: • Attained a sound working knowledge of financial transactions, institutions and markets (including money markets, stock markets, foreign exchange, derivative markets and contracts) • A good understanding of the three basic ideas underpinning finance, namely: 1. The Time Value of Money; 2. Diversification; and, 3. Arbitrage. Proposed Assessment (Summary): Assessment for this course will be confirmed after consultation with students at the first lecture of the semester. If there are any changes to the assessment, those changes will be publicised on Wattle. Assessment Task Value Due Date 1) 5 x tutorial quizzes 20 % Refer to course schedule 2) Mid-semester . 30% (optional/redeemable) Week 6 3) Final exam 50% (or 80% if mid-semester does not count) Examination period More information about this course may be found on: • Study @ ANU, • the College of Business and Economics website, and • Wattle, the University's online learning environment. Log on to Wattle using your student number and your ISIS password. 3 | T H E A U S T R A L I A N N A T I O N A L U N I V E R S I T Y Feedback Staff Feedback Students will be given feedback in the following forms in this course: • Feedback to the whole class during scheduled lectures • Feedback to individuals during consultation time • Written feedback to the whole group in the form of quiz and mid-semester solutions Student Feedback ANU is committed to the demonstration of educational excellence and regularly seeks feedback from students. One of the key formal ways students have to provide feedback is through Student Experience of Learning Support (SELS) surveys. The feedback given in these surveys is anonymous and provides the Colleges, University Education Committee and Academic Board with opportunities to recognise excellent teaching, and opportunities for improvement. For more information on student surveys at ANU and reports on the feedback provided on ANU courses, go to: http://unistats.anu.edu.au/surveys/selt/students/ and http://unistats.anu.edu.au/surveys/selt/results/learning/ Policies ANU has educational policies, procedures and guidelines, which are designed to ensure that staff and students are aware of the University’s academic standards, and implement them. You can find the University’s education policies and an explanatory glossary at: http://policies.anu.edu.au/ Students are expected to have read the Code of Practice for Student Academic Integrity before the commencement of their course. Other key policies include: • Academic Progress • Assessment of Student Learning • Assessment Review and Appeals • Course Assessment: Consultation and Finalisation • Student Feedback on Teaching and Learning • Insert College policies on extensions, late submissions, etc as appropriate 4 | T H E A U S T R A L I A N N A T I O N A L U N I V E R S I T Y COURSE SCHEDULE Week/ Session Topic / Module Activity Required student preparation1 Assessment 1 (no Friday lecture) 18/02/13 Course Overview: An Introduction to Financial Markets and Systems Lecture Lecture Notes 1 CFA Code of Ethics and Standards of Professional Conduct: Pages 11-48 and 173-186. See link on page 7 of this course outline 2 25/02/13 The Time Value of Money – An Introduction to Financial Mathematics Lecture / Tutorial Lecture Notes 2; Prepare tutorial 1 3 04/03/13 The Time Value of Money – Valuing Shares Lecture / Tutorial Lecture Notes 3 Prepare tutorial 2 Quiz 1 (covers lecture 2) 4 11/03/13 The Time Value of Money – Valuing Debt Instruments Lecture / Tutorial Lecture Notes 4 Prepare tutorial 3 5 18/03/13 The Time Value of Money – Making Investment Decisions Lecture / Tutorial Lecture Notes 5 Prepare tutorial 4 Quiz 2 (covers lecture 4) 6 25/03/13 (no Friday lecture) Diversification – Defining Risk and Understanding its Relationship with Return Lecture /tutorial Lecture Notes 6 Prepare tutorial 5 Mid-Semester Examination held this week2 Mid semester break: March 29- April 14 inclusive 7 15/04/13 Mid-Semester Exam Review and Feedback. Lecture / Tutorial Review mid-semester in tutorial time Quiz 3 (content TBA) 8 22/04/13 Diversification – Portfolio Theory Lecture / Tutorial Lecture Notes 7 Prepare tutorial 6 9 29/04/13 Diversification – The Capital Asset Pricing Model (CAPM) and the Required Rate of Return for Risk Lecture / Tutorial Lecture Notes 8 Prepare tutorial 7 10 06/05/13 Arbitrage – Forwards and Futures Contracts Lecture / Tutorial Lecture Notes 9 Prepare tutorial 8 Quiz 4 (content TBA) 11 13/05/13 Arbitrage – Options Contracts Lecture / Tutorial Lecture Notes 10 Prepare tutorial 9 12 20/05/13 Arbitrage – Forwards, Futures and Options Contracts as Tools for Risk Management Lecture / Tutorial Lecture Notes 11 Prepare tutorial 10 Quiz 5 (content TBA) 13 27/05/13 Review and Exam Question Practice Lecture / Tutorial Lecture Notes 12 Prepare tutorial 11 1 Lecture notes and tutorial problem sets are the minimum preparation required. Please refer to the wattle for suggested reading and practice problems from the textbook 2 NB: Details for the mid-semester will be made available when obtained from exam section. As such, the date for the mid-semester may not be within this week. Further information will be provided as soon as received by the lecturer. 5 | T H E A U S T R A L I A N N A T I O N A L U N I V E R S I T Y ASSESSMENT REQUIREMENTS Assessment Tasks Participation Students are expected to attend weekly lectures and tutorials. Tutorial problems should be attempted before the tutorial, including tutorials in the weeks where there are quizzes. In quiz weeks all students should clarify any questions about the course material prior to the commencement of the quiz.. Students will be encouraged to participate in all tutorial discussions; however, there are no marks allocated for participation. Assessment Task 1: 5 tutorial quizzes: total weighting 20%. All quizzes count towards the final grade and all quizzes are of equal value (4%). Details of task: One of the five quizzes may be a take home overnight assignment. Otherwise the quizzes will be closed book and held at the end of the tutorial (see course schedule) for duration of 15-30 minutes. The course material to be covered in each quiz will be clarified prior to the quiz. Quizzes may be a combination of multiple choice, short answer concept questions and/or numerical problems where you must show all working. Bring your pencils and calculator to each quiz. The material in your text and on Wattle is subject to examination. The quizzes are designed to: (i) measure how well students have synthesized the concepts learned in class; (ii) keep students up to date; (iii) provide feedback for lecturer and student on their progress for the course. Any questions relevant for the quiz should be raised prior to the quiz. The marking criteria will be based on model solutions and answers prepared by the lecturer and will be made available to students after the last quiz in the week is held. Examination(s) Mid-Semester Examination will be held in week 6 (time, day and location TBA). This is exam is optional and redeemable: Total weighting 30% (or 0% if redeemed or not attempted). This is a closed book exam with no formula sheet. A mixture of theory and practical (numerical) questions will be asked. More details will be provided as the exam approaches. Students will need to review and revise the material covered in lectures 1 to 4 inclusive. Final Examination (Date TBA): Total weighting 50% (or 80% if the mid-semester does not count). This is a closed book exam with no formula sheet. A mixture of theory and practical (numerical) questions will be asked. More details will be provided as the exam approaches. Students will need to review and revise all material (lectures 1-13) pertaining to the course. 6 | T H E A U S T R A L I A N N A T I O N A L U N I V E R S I T Y Extensions and penalties Extensions: NA Penalties: If a student misses a tutorial in which a quiz is held then they will not be able to make up the quiz and will be awarded a zero for that quiz. If a student is sick, they should notify the lecturer immediately and with receipt of a medical certificate alternative arrangements will be made. Examination material or equipment Students are permitted a NON-PROGRAMMABLE scientific calculator and an English translation dictionary if required. Scaling Your final mark for the course will be based on the raw marks allocated for each of your assessment items. However, your final mark may not be the same number as produced by that formula, as marks may be scaled. Any scaling applied will preserve the rank order of raw marks (i.e. if your raw mark exceeds that of another student, then your scaled mark will exceed the scaled mark of that student), and may be either up or down. Tutorial and /or Seminar signup Enrolment in tutorials will be completed online using the CBE Electronic Teaching Assistant (ETA). To enrol, follow these instructions: 1. Go to http://eta.fec.anu.edu.au 2. You will see the Student Login page. To log into the system, enter your University ID (your student number) and password (your ISIS password) in the appropriate fields and hit the Login button. 3. Read any news items or announcements. 4. Select "Sign Up!" from the left-hand navigation bar. 5. Select your courses from the list. To select multiple courses, hold down the control key. On PCs, this is the Ctrl key; on Macs, it is the key. Hold this key down while selecting courses with the mouse. Once courses are selected, hit the SUBMIT button. 6. A confirmation of class enrolments will be displayed. In addition, an email confirmation of class enrolments will be sent to your student account. 7. For security purposes, please ensure that you click the LOGOUT link on the confirmation page, or close the browser window when you have finished your selections. 8. If you experience any difficulties, please contact the School Office (see page 1 for contact details). 7 | T H E A U S T R A L I A N N A T I O N A L U N I V E R S I T Y Workloads Students taking this course are expected to commit at least 10 hours a week to completing the work. This will include: [complete as appropriate] • Lectures: 2 hours • Tutorials: 1 hour • Private study: 7 hours Prescribed Texts and Reference Materials Prescribed text: Bettman, J. 2013. Foundations of Finance, Custom Publication, Pearson Education, Australia, ISBN: 9781486011926 Other Reading Students are required to read Pages 11-48 and 173-186 of the CFA Code of Ethics and Standards of Professional Conduct. This document can be found at; http://www.cfapubs.org/doi/pdf/10.2469/ccb.v2010.n2.1 Recommended Reading Students who wish to undertake additional reading may choose to read the text listed below. However, students should note that reading the text is NOT a course requirement. • Viney, C., 2009, McGrath’s Financial Institutions, Instruments and Markets, 6th Edition, Irwin / McGraw-Hill, Australia. • Ben,H.,and Chris, T., 2011, Financial Institutions and Markets, 6th Edition, Cengage. • Valentine, T., Ford, G. & Copp, R., 2006, Financial Markets and Institutions in Australia, 2nd Edition, Prentice Hall, Australia. Technology, Software, Equipment A NON-PROGRAMMABLE scientific calculator is needed for every enrolled student in studying this course. It is students’ responsibility of learning how to use their calculators. Office: Level 4, CBE Building 26c ANU Campus Map (map GH32) http://tinyurl.com/9n8xgd8