Finance 614: Subject and Structure

Galina A Schwartz

Department of Finance

Business School

University of Michigan

We are going to study International Financial Markets: Current Institutions: Offshore and Onshore Markets Financial Innovation Financial Instruments[Derivative securities]Futures, Options, Swaps International Asset Portfolio:Bond and Equity Portfolios

Game Theoretic Approach:[Same as FIN 612]: Players (Governments, Regulators, Central

Banks, Financial Institutions, Corporations, Individuals)

Incentives and Implementation Important issues [Same as FIN 612]: technology, legal and regulatory framework,

market micro structure, macroeconomic parameters +INFORMATION

What will be different from Finance 612

Finance 614 is more ADVANCED, and it is more DEMANDING

Economic analysis will be more COMPLEX Number of topics to be covered will be

SMALLER

Specifically, the publications we will use are:

The Economist Magazine Red Herring Magazine These publications have more details

[and more controversies]

Main skill to master

[Same as in 612] Financial Information Analysis It is: a difficult, challenging and

slow to learn skill It is: a rigorous approach It is: frustrating at first Then, it is rewarding

Fin 614 focuses on: I. Financial institutions and instruments

(+ history)Why do they exist What role do they play II. Expectations of further

developmentsHi-Tech and Financial System (past, present, future) III. International Financial Legalities

and their future

Finance 614: International Financial System and Hi-Tech:

Information: its costs, its precision, its retrieval and analysis

Globalization: the `new’ markets and their structures

Innovation: financial transactions, clearing house system,

Security: PC, internet, smart cards, etc -- on your demand

Example : Long Term Capital Management

Insider and Outsider Perspective:

Which is more informative?

Please, read both AEA

papers distributed in class

today