SOUTHERN CONNECTICUT STATE UNIVERSITY
DEPARTMENT OF ECONOMICS AND FINANCE
FALL 2002
COURSE NUMBER:
 FIN455
COURSE TITLE:
 Securities Markets
COURSE DESCRIPTION:
 A practical analysis of securities markets including economic forecasting, interest rate analysis, portfolio strategy and investment management
PREREQUISITES:
 FIN 340, FIN 341; or permission of the instructor
PROFESSOR:

Dr. Robert M. Eldridge.
Tel: (203) 876-5046 (H); (203) 392-5628 (O)
Fax: (203) 392-5254
Email: eldridger1@southernct.edu
OFFICE HOURS:
 Tues: 1700-1915; Wed: 1600-1800; Thurs: 1000-1200; or by appointment.
CLASS HOURS:
 Wed 1815-2045, BU317
MATERIALS:
 A) Capital Markets,Institutiuons and Instruments, Fabozzi and Modigliani, Prentice-Hall, Upper Saddle River, N.J., 2003
B) Subscription to the Wall St Journal
COURSE OBJECTIVES:
The objective of this course is to pursue in both breadth and depth the introduction to the various security markets that the student first met in FIN 340 and FIN341. The course will examine both domestic and foreign markets including equities, fixed income (both long and short term) and derivatives. The course will employ the use of the World Wide Web (WWW) in examining market activities.
METHOD OF INSTRUCTION:
METHOD OF INSTRUCTION: The course will consist of lectures, readings from the Wall St Journal, usage of the World-Wide-Web and a term paper.
METHOD OF ASSESSMENT:
 1. Exams: (2@ 25 %) = 50%
2. Term Paper = 30%
3. "Two minute drills" = 15%
4. Participation and attendance = 5%
SPECIAL CLASS:
Following regular class on 11 Sept, I will hold a one hour tutorial on the Library's Datastream system. This will be in the library from 2100-2200.
SPECIAL NOTES:
  1. "Two minute drills". At the end of each class there will be a one question quiz lasting two minutes. I will count only the top 10 grades. This will constitute 15% of the course grade.
  2. At the end of the course the student will be requested to complete a "Course Survey" form, separate and distinct from any University Evaluation form. This survey helps me in preparing the course for the next time that it is offered. For each form returned, 1/n points will be added to the final grade, whre "n" represents the number of students enrolled in the course based on the registrar's final class list.
  3. The student is permitted and encouraged to tape record lectures for personal study use only.
  4. If any student has a particular disability-related need in order to participate in this course, such as special seating, note-taking assistance, use of tape recorders or modified exam conditions you will need to visit the Disability Resource Office, EN15, to arrange for approved accommodations. If you have other information you wish to share with me such as emergency medical information, or arrangements in case the building has to be evacuated, please
    tell me as soon as possible.
  5. Weather Check number: 203-392-5520
TERM PAPER:
 Part A:
You are to select one cash market and one derivatives market from the menu of global markets available to you on the World-Wide-Web. At least one of the markets chosen must be a non-US market. Discuss: the nature of the market; the products traded on it; are there US products traded on the non-US market; how a US-based portfolio manager might use this market; the advantages and the disadvantages of the market. What regulatory issues might affect American users of the market.

Part B:
You are to select one short term foreign interest rate and its US equivalent (example: LIBOR vs Fed Funds), one stock index (cash market) and the Dec futures contract on the stock index (for example, FTSE100 vs the DJIA). Using Datastream in the library for both the source of data and plotting, plot the daily prices of the cash index against the futures and the foreign interest rate against its US equivalent. Also plot the differences between the interest rates and the differences between the cash and futures prices. For the interest rates, the time period will be 1 Sept 2002 through and including 29 Nov 2002. For the futures contract the time period will be from 20 Sept 2002 to 6 Dec 2002 inclusive. From your analysis of the data and the various plots, what information can you deduce/use.

These two parts will constitute your "final exam"; you will make a presentation on your results at the last class, 11 Dec.

The grade on the paper will be a function of both the finance and the writing. While I don't expect Pulitzer-prize English, I do expect the following:
  1. No spelling errors
  2. Standard grammar:
    1. Every sentence must have a subject and a verb.
    2. Subject and verb will agree in number.
    3. No split infinitives.
    4. No dangling participles
    5. No dangling prepositions.
  3. Proper punctuation
  4. Pronouns will clearly reflect to a preceding proper noun.
  5. Remember, a name like General Motors is a compound singular noun and thus is never referred to as "they", but always "it".
EXPECTATIONS:
  1. What you may expect from me:
    1. A strong grounding in Securities Markets.
    2. A willingness to work with you on specific problems you have with the course or scheduling.
    3. A sense of excitement about the field of finance.
  2. What I expect of you:
    1. Come to class prepared by having read the assigned materials and done any outside work assigned.
    2. If you know that you will miss a class, a call to me would be appreciated.
    3. If something does not make sense in the course, you will ask me either in class, in office hours or call me at home.
    4. A sense of what is going on in the world of business and finance through a daily reading of the Wall St Journal, sections one and three at a minimum.
  3. Profile for success or failure. If you go into an exam behind in the reading and not up with the class discussions or any assigned homework, you probably will not be successful. If, on the other hand, you have done the reading and homework and been faithful in attendance, you should have no problem with any exam you get from me.
ASSIGNMENT SCHEDULE
Date
Topic
Chapters
Sept 04 Introduction/Overview of Markets/Institutions 1,2
Sept 11 Market structures: Primary/Secondary
Library tutorial 2100-2200		 6, 7
Sept 18 Depository Institutions/Nondepository Inst 3, 4
Sept 25 Investment Banking
Risk and Return I 		5
8
Oct 02 Risk and Return II
Interest Rates 		9
17
Oct 09 Term Structure of Interest Rates
Exam I -Second hour of class
19
Oct 16 Common Stock Market 13,14
Oct 23 Valuation of Debt Contracts
Money Markets
18
20
Oct 30 Treasury/Agency Markets
Corp Debt Markets I
21
22
Nov 06 Corp Debt Markets II 23
Nov 13 Exam-First hour of class
Asset Backed Securities Market
27
Nov 20 Introduction to Futures Markets
Introduction to Option Markets 		10
11
Nov 27 Introduction to Swaps, Caps, Floor Markets
Stock Index Derivative Markets 		12
16
Dec 04 Exchange Traded Interest Rate Futures and Options
Stock Options 		28
15
Dec 11 OTC Interest Rate and Credit Derivatives Market
Presentation of research papers 		29