Course Title: Economics of Money and Finance
Course Code：12423
Number of Credits: 3
Teaching Hours: 48
Prerequisites: Fundamental Accounting Principles
Overview
This course focuses on the basic functions served by the financial system, while de-emphasizing its current structure and rules. Learn financial tools, rules and structure of the economic principle. It is an approach designed to give students the lifelong ability to understand and evaluate whatever financial innovations they may confront one day.
The Core Principles Approach
l Time has value
l Risk requires compensation
l Information is the basis for decisions
l Markets set prices and allocate resources
l Stability improves welfare
Syllabus
Part I Money and the Financial System
Chapter 1 An Introduction to Money and the Financial System
The Five Parts of the Financial System
The Five Core Principles of Money and Banking
Chapter2 Money and the Payment System
Money and How We Use It
The Payment System
The Future of Money
Measuring Money
Chapter3 Financial Instruments, Financial Markets, and Financial Institutions
Financial Instruments
Financial Markets
Financial Institutions
Part II Interest Rates, Financial Instruments, and Financial Markets
Chapter4 Future Value, Present Value, and Interest Rates
Valuing Monetary Payments Now and in the Future
Applying Present Value
Real and Nominal Interest Rates
Chapter5 Understanding Risk
Defining Risk
Measuring Risk
Risk Aversion, the Risk Premium, and the Risk-Return Trade-off
Sources of Risk: Idiosyncratic and Systematic Risk
Reducing Risk through Diversification
Chapter6 Bonds, Bond Prices, and the Determination of Interest Rates
Bond Prices
Bond Yields
The Bond Market and the Determination of Interest Rates
Why Bonds are Risky
Chapter7 the Risk and Term Structure of Interest Rates
Ratings and the Risk Structure of Interest Rates
Michael Milken and the History of Junk Bonds
Differences in Tax Status and Municipal Bonds
The Term Structure of Interest Rates
The Information Content of Interest Rates
Chapter8 Stocks, Stock Markets, and Marker Efficiency
The Essential Characteristics of Common Stock
Measuring the Level of the Stock Market
Valuing Stocks
Investing in Stocks for the Long Run
The Stock Market’s Role in the Economy
Chapter 9 Derivatives: Futures, Options and Swaps
The Basics: Defining Derivatives
Forwards and Futures
Hedging and Speculating with Futures
Options
Swaps
Chapter 10 Foreign Exchange
Foreign Exchange Basics
Exchange Rates in the Long Run
Exchange Rates in the Short Run
Government Policy and Foreign Exchange Intervention
PartⅢ Financial Institutions
Chapter 11 the Economics of Financial Intermediation
The Role of Financial Intermediaries
Information Asymmetries and Information cost
Financial Intermediaries and Information Costs
Chapter 12 Depository Institutions: Banks and Bank Management
The Balance Sheet of Commercial Banks
Bank Risks: Where It Comes from and What to Do about It
Chapter 13 Financial Industry Structure
Banking Industry Structure
No depository Institutions
Chapter 14 Regulating the Financial System
The Sources and Consequences of Runs, Panics ,and Crises
The Government Safety Net
Regulation and Supervision of the Financial System
PartⅣ Central Banks, Monetary Policy and Financial Stability
Chapter 15 Central Banks in the World Today
The Basics: How Central Bank Originated and Their Role Today
Stability: The Primary Objective of All Central Banks
Meeting the Challenge: Creating a Successful Central Bank
Chapter 16 The Structure of Central Banks: The Federal Reserve and the European Central Bank (deleted )
Chapter 17 The Central Bank Balance Sheet and the Money Supply Process
The Central Bank’s Balance Sheet
Changing the Size and Composition of the Balance Sheet
The Deposit Expansion Multiplier
The Monetary Base and the Money Supply
Chapter 18 Monetary Policy: Using Interest Rates to Stabilize the Domestic Economy
The Federal Reserve’s Monetary Policy Toolbox
Operational Policy at the European Central Bank
Linking Tools to Objectives: Making Choices
Chapter 19 Exchange-Rate Policy and the Central Bank
Linking Exchange-rate Policy with Domestic Monetary Policy
Mechanics of Exchange-Rate Management
The Costs, Benefits and Risks of Fixed Exchange Rates
Fixed Exchange-rate Regimes
PartⅤ Modern Monetary Economics
Chapter 20 Money Growth, Money Demand and Modern Monetary Policy
Why We Care about Monetary Aggregates
The Quantity Theory and the Velocity of Money
The Demand for Money
Targeting Money Growth in a Low-Inflation Environment
Chapter 21 Modern Monetary Policy and Aggregate Demand
Output and Inflation in the Long Run
Money Growth, Inflation and Aggregate Demand
The Monetary Policy Reaction Curve
The Aggregate Demand Curve
Chapter 22 Understanding Business Cycles
The Aggregate Supply Curve
Equilibrium and the Determination of Output and Inflation
The impact of Shifts in Aggregate Demand on Output and Inflation
Stabilization Policy
Chapter 23 Monetary Policy, Output and Inflation in the Short Run
The Monetary Policy Transmission Mechanism
The Challenges Modern Monetary Policymakers Face
Deflation and the Zero Nominal-Interest-Rate Bound
Booms and Bust in Equity and Property Prices
Delivery method
Group work. Case study, classroom learning， presentation,
Assessment
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Form of assessment
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Weighting
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Assignment and Attendance
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60%
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Final Exam
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40%
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Students must achieve a minimum mark 50% in the normal recorders before attending the exam. The exam is an end-of –semester test and it will be held about 3 hours.
Teacher’s information
Wang Hainan
Chen Chunxia
Niu Ziyu
Textbook
Money , Banking , And Financial Market , edited by Stephen G.Cecchetti ,published by Peking University Press