INTERMEDIARIES AND FINANCIAL MARKETS OF THE EUROPEAN UNION USP COURSE DUKE-IN-MADRID Objectives and Methodology The goal of the course will be to analyze the function of financial markets, making special reference to the European market. The class will be centred on the operation of these markets as an instrument to be used in business management. The methodology of the course will consist of a combination of conceptual presentations and practical exercises and the development of real cases. Pre-requisites Previous knowledge of Financial Management is assumed. Evaluation 70% Final Exam 30% Participation and other exercises and papers. Note: In order to receive a grade for this part of the course the student must attend a minimum of 75% of all classes. Course Program PART I. PRINCIPLES OF RATIONALITY IN FINANCIAL MARKETS Topic 1: Principles of Rationality. Special Reference to the Concept of Arbitrage 1. General Aspects of the Principles of Rationality 2. Concept of the Principle of Arbitrage 3. Absence of Arbitrage in a context without risk 4. Absence of Arbitrage in a context with risk 5. Applications of the Principle of Arbitrage in Decision Making Topic 2 The Principle of Option 1. Concept of the Principle of Option 2. Options at the Due Date
3. Models of Option Appraisal 4. Appraisal of European Options 5. Relation of Parity Between Call and Put options 6. Appraisal of American Options 7. Applications of the Principle of Options in Decision Making PART II. THE EUROPEAN MONETARY SYSTEM Topic 3 Evolution of the European Monetary System 2. Economic Integration 3. Evolution of European Integration: The European Union 4. Creation of the European Monetary System 5. Elements of the European Monetary System Topic 4 The Monetary System and the European Monetary Union 2. The Process of Reaching the European Monetary Union 3. The EURO as Single Currency 4. The Interest Rate of the EURO 5. The Reference Indices Connected with the EURO 6. Fixed-Term Contracts and Futures over Interest Rates 7. Interest Rate Swap 8. Options over Interest Rate PART III. INTERNATIONAL FINANCIAL MARKETS Topic 5 Introduction to International Financial Markets: The Foreign Currency Market 1. The International Finance System and the International Financial Markets 2. Domestic Financial Markets: The Spanish Market 3. Concept and Organization of the Foreign Currency Market 4. Quotation in the Foreign Currency Market 5. Segments of the Foreign Currency Market 6. Fixed-Term Contracts and Futures over Foreign Currency 7. Foreign Currency Swap 8. Options over Foreign Currency
Topic 6 The Euromarket: The Monetary Euromarket and the Capital Euromarket 1. The Euromarket 2. Concept of the Euromarket 3. Negotiated Products in the Monetary Euromarket: Euro-deposits, Euro-loans, Euro-Certificates of Deposit, and Euro-Financial Facilities 4. System of Compensation in the European Union: The TARGET 5. Concept of Capital Euromarket 6. Negotiated Products in the Capital Euromarket: Euro-Credits, Euro-Bonds, and Euro-Shares PART IV. THE AUTHORITIES AND FINANCIAL MARKETS Topic 7 Monetary Authorities and Financial Authorities in the European Union 2. Institutional Antecedents in the Process of European Integration 3. European System of Central Banks 4. European Central Bank 5. The Performance of the System of European Central Banks 6. Other European Institutions Related to Economic and Financial Activity 7. World-Wide Institutions Related to Economic and Financial Activity Topic 8 Financial Intermediaries in the European Union 2. Banks in the European Union 3. Savings Banks in the European Union 4. Credit Unions in the European Union 5. Other Credit Institutions in the European Union 6. Institutions of Collective Investment in the European Union 7. Insurance Companies in the European Union
BASIC BIBLIOGRAPHY MARTIN MARIN, J.L.; TRUJILLO PONCE, A; (2004): Manual de Mercados Financieros, Thomson, Madrid. HULL, J. (2002): Introducción a los mercados de futuros y opciones, Prentice Hall, Madrid. MARIN, J.M; RUBIO, G. (2001): Economía Financiera, Antoni Bosch Editor, DIEZ DE CASTRO, L; MASCAREÑAS, J. (1994): Ingeniería Financiera, McGrawhill. Madrid ADDITIONAL BIBLIOGRAPHY ADELL, R.; ROMERO, r. (1996): Opciones y futuros financieros, Pirámide, Madrid. ARAGONÉS, J.R. (1990): Economía financiera internacional, Pirámide, Madrid. BALARIN, E; ROSANAS, J.M; GRANDES, M.J: (1986): Sistemas de planificación y control, DDB, Bilbao. BERGES, A.; ONTIVEROS, E. (1984): Mercados de futuros e instrumentos financieros, Pirámide, Madrid. CALVO, A; RODRIGUEZ SAIZ, L; PAREJO GAMIR, J.A.; CUERVO, A.; (2005): Manual de sistema financiero español, Ariel Economía. CORBI, B. (1991): Financiación internacional, Editorial Ac, Madrid. COSTA RAN, L.; FONT VILALTA, M: (1992): Nuevos instrumentos financieros en la estrategia empresarial, ESIC, Madrid. CUERVO, A. (1994): Análisis y Planificación financiera de la empresa, Civitas, Madrid. DE LA TORRE, A. (1996): Operaciones de permuta financiera swaps. Ariel, FERNANDEZ, P. (1996): Opciones, futuros e instrumentos derivados, Deusto, Bilbao. FREIXAS, X. (1990): Futuros financieros, Alianza, Madrid. HULL, J. (2002): Introducción a los mercados de futuros y opciones, Prentice Hall, Madrid. LAMOTHE, P.; SOLER, J.A. (1996): Swaps y otros derivados OTC en tipos de interés, McGraw-Hill, Madrid. MARIN, J.; RUBIO, G. (2001): Economía financiera, Antoni Bosch Editor, MARTIN MARIN, J.L; TRUJILLO PONCE, A.; (2004): Manual de mercados financieros, Thompson, Madrid.
MASCAREÑAS, J. ; ARAGONÉS, J; GONZALEZ, S. (1996): Mercado de divisas y análisis del mercado financiero, Pirámide, Madrid. MASCAREÑAS, J. ; ARAGONÉS, J; SOLORZANO, M.; ALVAREZ, A. (1997): Futuros y opciones financieros, Pirámide, Madrid. ONTIVEROS, E.; BERGES, A.: MANZANO, D; VALERO, F.J. (1991): Mercados financieros internacionales, Espasa Calpe. PALOMO, RJ. ; MATEU, J.L; (2004): Productos financieros y operaciones de inversión, Instituto Superior de Técnicas y Prácticas Bancarias, Madrid. PEDROSA, M. (2003): Los mercados financieros internacionales y su globalización, AC, Madrid. RUIZ, R. J. ; GIL, A. M. (2000): La planificación financiera de la empresa, Instituto Superior de Técnicas y Prácticas Bancarias, Madrid.