BADM 454-01, Global Capital Markets, fall 2008

Abstract

By the end of the course, my goal for this class is that you will:  Understand the theoretical connections between interest rates, foreign exchange rates, and inflation Understand various theories on how exchange rates are determined in the marketplace Understand various theories of interest rate determination in the marketplace Understand nature, risk and pricing of option, futures, and forward contracts in general Understand asset liability management in commercial banking, including VAR analysis  Be familiar with a variety of fixed income securities including: money market instruments, conventional and indexed bonds, securitized bonds such as CDO’s, CLO’s, CMO’s. Be familiar with specific derivatives contracts that relate to fixed income securities including: credit swaps, interest rate swaps, credit default swaps. Part One of the course is an overview of international finance and the key economic parity theories that relate the concepts of foreign exchange rates, inflation, and interest rates. This is background information necessary to understand how foreign exchange rates are determined in the global capital markets, and how they in turn impact inflation and interest rates. Part Two of the course builds on this foundation and adds interest rate determination, yield curves, and duration, and various risks of the credit markets. Bond pricing should be better understood by the end of part two. Part Three of the course extends what we’ve learned to derivatives markets Part Four of the course will have some speakers talk about sectors within the credit markets.