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INTRODUCTION TO FINANCE

Syllabus

EN IT

Learning Objectives

LEARNING OUTCOMES:
The aim of the course is to analyze the structure and the functioning of a financial system, paying attention to its main components (Financial products and services, Financial
Intermediaries, and Financial Markets). At the end of the course the students will know the key elements of the main financial products and services, will be aware about the
functioning of the Financial Markets and Financial Institutions, and will be even able to assess an investment project (NPV, IRR), understanding the consequences of different
financial management decisions.

KNOWLEDGE AND UNDERSTANDING:
Students will learn the functioning of the financial systems, the main financial products, the differences between differente financial intermediaries, and the functioning of financial markets. Students will know the role of financial markets and intermediaries in facilitating the matching between deficit and supply of financial resources. At the end of the course, students will understand the trade-off that exists between risk and return, in an investment perspective.

APPLYING KNOWLEDGE AND UNDERSTANDING:
Students will be able to calculate and interpret the value of the rate of return required by banks in granting loans, the reimbursement plan of mortgages, the internal rate of return
and net present value of an investment, the bond duration, the stock's price, the expected risk and eturn of a security and of a portfolio of securities, the contribution plans of pension funds, the option payoffs.

MAKING JUDGEMENTS:
Students will be able to judge the pro and cons of the application of different financial products or the quality of different financial services. Students will be able to discuss about
financial events and financial news understanding the possible consequences of new events on the financial system.

COMMUNICATION SKILLS:
Students will learn the glossary of financial markets and will be able to have a conversation about basic financial topics using technical terms.

LEARNING SKILLS:
Students will learn how to collect data to evaluate and assess financial products and how to extend those methodologies to new scenarios.

GIANNI NICOLINI

Prerequisites

None

Program

(Week #1)
- Economics and Finance: basic concepts
- The Financial System
- The concept of Money
(Week #2)
- The Role of Central Banks in the Monetary System
(Week #3 and #4)
- Banks and the Banking business
- Banking: the Credit Portfolio Management
- A Banks' classification
(Week #5)
- The Payment System: the Payment Tools (Included a section on Cryptocurrencies)
- Investing and Capital raising
- Financial products: Banks accounts
- Financial products: Mortgages
(Week #6)
- Financial products: Bonds
- The Investment Decisions (NPV, IRR, etc.)
- Bond valuation
(Week #7)
- Financial products: Stocks
- Stock Valuation
(Week #8 and #9)
- Portfolio Theory and the Capital Asset Pricing Model (CAPM)
(Week #10)
- Financial products: Mutual Funds and Pension Funds
- Investment Banking
- Risk Management
(Week #11)
- Financial products: Derivatives
- Financial Markets
(Week #12)
- Regulation and Supervision of the Financial System
- The Financial crisis

Books

Nicolini G., Haupt M., Guille M. (eds) (2024). Financial Markets and Institutions. Bocconi University Press. Milan (Italy) ISBN 978-12-80623-09-6 978-8831322-81-2

Other materials (slides, readings, etc.) could be provided during the course and posted on the webpage of the course.

Bibliography

Ronald W. Melicher, Edgar A. Norton. "Introduction to Finance - Markets, Investments, and Financial Management" (15th edition). Wiley

Mishkin F.S., Eakins S.G. (2018). Financial Markets and Institutions, Global Edition. Pearson

Teaching methods

The course is organized with 2 (academic) hours classes. Blackboard and Slides represent the main teaching tools used by the teacher. The course is hosted by two modules of the same semester.

Exam Rules

The assessment is based on a single written test, and the output is a grade on a scale 0-30 (minimum grade to pass the exam 18/30, maximum grade 30/30. There is the chance to include a grade "cum laude" if the grade is 30/30).

The exam is based on a written test. It consists in solving problems and in answering theoretical questions, with multiple choice and open answers questions. The answers will be evaluated on the basis of the correctness of the result obtained; the theoretical questions will be evaluated according to the knowledge of the contents of the theories.
During the oral exam the knowledge and ability to fully explain the essential features of the topic will be assessed, with respect also to the reasoning and critical skills.
The evaluation will be expressed out of thirty. To pass the exam even with the minimum grade, 18, the student must obtain correct numerical results, demonstrate knowledge of the topics in their essential features and knowing how to frame them in the methodological context. To pass the exam, the student must know the basic aspects of risk and return, financial intrmediaries and financial markers, financial products and instruments. To obtain an average grade (23-26) the student must demonstrate not only a good knowledge of the topics, but also a good ability to analyze and to be able to draw conclusions. A high grade (27-28) will be assigned to students who also demonstrate a good autonomy of judgment, know how to argue affirmations and choices, and explain the arguments in a clear and consequential way, using appropriate terminology. Grades from 29 to 30 will be awarded to those students who, in addition to satisfying the conditions referred to the previous point show completeness of presentation and correctness of the language and terminology. Laude is provided to students who demonstrate excellent ability in reasoning, making cross-disciplinary and interdisciplinary connections.

Criteria for formulating the judgment expressed out of thirty:
- Fail (<18/30): significant deficiencies and/or inaccuracies in knowledge and understanding of the topics; limited analysis and synthesis skills, frequent generalizations.
- 18-20: just minimun knowledge and understanding of the topics with possible imperfections; Sufficient analytical, synthesis and independent judgment skills.
- 21-23: Knowledge and understanding of routine topics; Correct analysis and synthesis skills with coherent logical argumentation.
- 24-26: Fair knowledge and understanding of the topics; good analytical and synthesis skills with rigorously expressed arguments.
- 27-29: Complete knowledge and understanding of the topics; remarkable analytical and synthesis skills. Good independent judgement.
- 30-30L: Excellent level of knowledge and understanding of the topics. Remarkable analytical and synthesis skills and independent judgement. Arguments expressed in an original way.

GIANLUCA MATTAROCCI