Saint Louis University School

SCHOOL OF ACCOUNTANCY, MANAGEMENT, COMPUTING AND Seal

INFORMATION STUDIES
Department of Accountancy

REF SAMCIS-BSAC-AE 322 – 2020

COURSE GUIDE

I. Course Title: Financial Markets

II. Course Overview
A. Introduction
This course gives fundamental knowledge on the structure, function and role of the financial
system in light of the complex web of links and interconnections with the banking sector. The
course will cover financial intermediaries, financial instruments and the different markets where
credit institutions are active players. Students will learn how the money market provides debt
claims for short-term money management; how the equity and bond markets provide issuers with
long-term financing; how newly created financial assets are introduced through the primary
market; and how electronic and floor-based equity markets differ. The course also presents an
overview of the financial system and its various financial markets, instruments and institutions.
Students will learn commercial banks, investment banks, insurance companies, mutual funds, the
Bangko Sentral ng Pilipinas, and their role in the economy. This course will also expose the
students to various types of financial instruments (locally and internationally). It also helps
students to develop a series of applications of principles from finance and economics that explore
the connection between financial markets, financial institutions and the economy.

B. Course Learning Outcomes

After completing this course, the would be accountants should be able to:
1. Demonstrate research-based knowledge on the structure, function and role of the financial system
in light of the complex web of links and interconnections with the banking sector to help them in
their role as future accountants.
2. Demonstrate knowledge of would be accounts to infer the financial intermediaries, financial
instruments and the different markets where credit institutions are active players.
3. Demonstrate knowledge and skills to integrate short-term money management and long-term
financing critical in decision making of future accountants.
4. Demonstrate knowledge by would be accountants of how the different types of banks,
insurance companies, mutual funds, and the Bangko Sentral ng Pilipinas, role in the
economy.
5. Demonstrate skills to develop a series of applications of principles from finance and
economics that explore the connection between financial markets, financial institutions and
the economy for future accountants to gain an overall perspective.

C. Module and Unit Topics

 Saint Louis University School
SCHOOL OF ACCOUNTANCY, MANAGEMENT, COMPUTING AND Seal
INFORMATION STUDIES
Department of Accountancy

Units Topics/Lessons
1 Introduction and Overview to Financial System
2 Money: A Unique Financial Instrument
3 Financial Markets, Instruments and Market Makers
Assessment – Prelims
4 Financial Intermediaries and Risk
5 Central Banking and Monetary Policy
6 Financial Prices
Assessment – Midterms
7 Market Efficiency and Flow of Funds Among Sectors
8 How Exchange Rates Are Determined
9 Mathematics of The Financial Markets
Assessment - Finals

III. Course Study Guide

Dear Students,

Greetings!

Being enrolled in this course means that you have already grasped the basics of financial management. In
this course you will continue to learn the what, why and how of financial management concepts as
applied in the financing and investment arena.
The role of management accountants in today’s business world goes beyond the traditional accounting
function. As the primary internal financial advisor of the business, the management accountant must be
familiarized with the different avenues where the business can raise needed funds and where the business
can place its available funds to augment income from operations and achieve the goal of maximizing
owner’s wealth.

At the beginning of the course, you will be introduced to what the financial system and its components
are all about, how they impact the industries and economy in general, and the business in particular and
why they are vital to the economic health of a nation. Throughout the course, you will be familiarized
with the details regarding financial institutions and financial markets (two of the major components of the
financial system), how they operate (processes) and how they can be utilized to promote the financing and
investing activities of the different economic entities (individuals, businesses and government, among
others) for which a management accountant may render service.

The course facilitator is here to guide you, to establish routines and to manage the pacing of course. Your
time, previously acquired knowledge and skills, love for learning and collaboration are very much
needed.

To facilitate the learning process, kindly read and abide by these reminders:
1. Log in to Google Classroom and the Google Class created for this course.
2. Every day, visit the google class and take ample time to check on the stream page and classwork page,
the important announcements, discussions, additional inputs and course requirements.
 Saint Louis University School
SCHOOL OF ACCOUNTANCY, MANAGEMENT, COMPUTING AND Seal
INFORMATION STUDIES
Department of Accountancy

3. Synchronous discussions will be conducted in Google Meet or Google Hangouts. Presentations with
audio-visual version will be uploaded and you can download them anytime you have good internet
connections. Asynchronous discussion will be conducted in the Google Class.
4. Printed materials are uploaded in the Google Class for further guidance during the course and offline
sessions. These materials were prepared to help you in understanding the lessons and not for any other
purpose.
5. All discussions are academic activities mainly for this course which means that the relevant academic
conventions apply.
6. Note that our Google Classroom is a virtual learning environment, not a social networking site. On
your profile page, post a recent ID photo of yourself that will enable the facilitators and your
classmates to identify you.

Moreover, please observe the following:

1. Write clearly and in formal language. Do not use abbreviations.
2. Post only relevant information, in a clear and concise manner, to help attain the course objectives.
3. Be courteous at all times.
4. Manage your time properly so you can follow the course schedule of activities.

Should there be any developments or updates in the course scheduled activities, you shall be properly
informed.

Remember that you play a very vital role in the success of our learning process. Thank you for your
cooperation.

Sincerely,

The Course Facilitator

IV. Study Schedule

REGULAR Semester Schedule

Date Topics/Lessons Activities
Week 1 - 2 Unit 1: Introduction and Overview to Study DL Materials posted
Financial System
● Functions of financial system Formative Activity 1
● Requisites for an effective system Summative Activity 1
● Funds flow: savings – investment process
● Participants in the investment process
● Economic importance of investing
● Objectives / consideration in making
investment

Unit 2: Money: A Unique Financial

Instrument
● Defining money
 Saint Louis University School
SCHOOL OF ACCOUNTANCY, MANAGEMENT, COMPUTING AND Seal
INFORMATION STUDIES
Department of Accountancy

● The Economy and the aggregates

● The demand for and supply for money
● Money, Interest rates and Economy

Week 3 - 4 Unit 3: Financial Markets, Instruments Study DL Materials posted

and Market Makers
● Definition of Financial market and Formative Activity 2
Instruments Summative Activity 2
● Definition of Market Makers, Kinds, and
Roles
● Major financial Markets
● Major financial Market instruments
o Money market Instruments
o Capital Market Instruments
Week 5 Assessment – Prelims Comprehensive Summative Assessment
Week 6 - 8 Unit 4: Financial Intermediaries and Study DL Materials posted
Risk
● Common characteristics of Financial Formative Activity 3
Intermediaries Summative Activity 3
● Types of Risks faced by Financial
Intermediaries
● Commercial Banking
● Savings Associations and Credit Unions
● Regulation of financial system

Unit 5: Central Banking and Monetary

Policy
● Bangko Sentral ng Pilipinas (BSP) –
Organizational structure
● Monetary System
● Functions of the BSP in supervising and
regulation of the system
● Function of the Monetary System
● Major Policy tools - Open Market
Operations, Discount and Rediscount rate
and policy, reserve requirement

Week 9 Unit 6: Financial Prices Study DL Materials posted

● Interest Rates and bond prices, and
present values Formative Activity 4
● The determinants of Interest rates
● Inflation and Interest rates
Summative Activity 4
● Role of Credit Risk and Taxes in Interest
Rate Differentials

Week 10 Assessment - Midterms Comprehensive Summative Assessment

Week 13 - 15 Unit 9: Mathematics of the Financial Study DL Materials posted
Markets
● Spot and forward rates
 Saint Louis University School
SCHOOL OF ACCOUNTANCY, MANAGEMENT, COMPUTING AND Seal
INFORMATION STUDIES
Department of Accountancy

● The Term Structure (Yield Curve) and its Formative Activity 6

components Summative Activity 6
● Spot instruments
● Equities and stock indexes
And the Portfolio theory Study DL Materials posted
● Forward instruments
● Swaps Formative Activity 7
● Futures Summative Activity 7
● Options
Week 16 Final Assessment Comprehensive Summative Assessment

V. Evaluation
There are two types of activities throughout the duration of the course: Formative Activities and
Summative Activities.

Formative Activities
Formative activities primarily include Practice Exercises which are intended to help you assess
whether you have acquired the fundamental knowledge, skills and attitudes that are expected of
students to have acquired for each topic or not. They also offer quick concepts checks ideal for in-class
practice or quick reviews before exams.

Summative Activities
Summative Activities principally include Exercises and Problems that dig deeper into concepts,
testing your retention of critical topics and procedures. These undertakings may also include Real
Company Analysis where you may be asked to answer questions based on actual data provided by
existing companies. Ethical Questions that direct you to read a situation, consider ethical
implications, and make decisions based on your analysis may also be asked.

Comprehensive Summative Assessments are given at the end of each term (Prelim, Midterm, and
Final) to check whether you have adequately remembered and are able to correctly apply the different
concepts and procedures studied in the previous weeks. To ensure retention of all learnings, each
comprehensive summative assessment will cover topics from Prelim up to the present.

Formative and Summative Activities will be given through the Google Classroom. Tools available in
the G Suite (such as Google Docs, Sheet and Slides and Google Form) and MS Office (such as Word,
Excel, PowerPoint) may be employed for this purpose.

Whenever possible, your personal study of each chapter will be supplemented by online class
discussions through Google Classroom comments and/or Google Meet. Alternatively, discussions
may be made through a Facebook Group we will soon be forming for the class. These discussions
will help you perform well in your Formative and Summative Activities.

VI. Technological Tools

 Saint Louis University School
SCHOOL OF ACCOUNTANCY, MANAGEMENT, COMPUTING AND Seal
INFORMATION STUDIES
Department of Accountancy

To ensure a smooth learning process, it would be best that you have access to the following tools that
may be needed throughout the duration of the course:
1. Computer with MS Office Installed preferably a laptop.
2. Smart Phone
3. G Suite for Education (Google Classroom, Google Sheets, Docs & Slides, Google Form, and
Google Meet) – You are requested to use your SLU E-mail account to access this platform.

4. Reading Materials
Books
An Introduction to financial Markets and Institutions by Burton, Nesiba and Brown
Financial Markets and Institutions 12th Edition by Jeff Madura
Financial Markets and Institutions by Frederic Mishkin and Stanley Eakins 7th edition
Mathematics of the Financial Markets by Alain Ruttiens
Economics for Financial Markets by Brian Kettel

Journals
Acharya, V., Philippon, T., Richardson, M. & Roubini, N. (2009) The Financial Crisis of 2007-
2009: Causes and Remedies. Financial Markets, Institutions and Instruments, 18(2), 89-137.
Staikouras, S.K. (2003) The Interest Rate Risk Exposure of Financial Intermediaries: A Review
of the Theory and Empirical Evidence. Financial Markets, Institutions and Instruments. 12(4),
257-289.

VII. Grading System

Prelim Grade (PG), Midterm Grade (MG) and Tentative Final Grade (TFG)

Formative Assessments 10%

Summative Assessments 40%
Comprehensive Summative Assessment 50%
Total 100%

FINAL Grade = (PG+ MG + TFG) / 3

VIII. Contact Information of the Facilitator

For any queries you may have regarding the course, please feel free to contact:

Name of Facilitator: Dr. Elvira D. Dacayo Joseph R. Mendoza

Mobile number: 0917-357-5475 0915-221-1487
Email address: [email protected] [email protected]