FINS1612 Summer 2022
Extra study material for the final exam
Lecture Topic
Interest Rate Determination
Copyright By PowCoder代写 加微信 powcoder
• How the central bank influences interest rates
• Liquidity, income, and inflationary effects
• Indicators that track economic activity
• Loanable funds approach
• Term structure of interest rates – yields vs maturity by the same issuer
• Risk structure of interest rates – yields vs maturity by different issuers
• Expectations, segmented market, liquidity premium theories
Foreign Exchange Markets
Nature of FX market
• FX market participants: dealers, brokers, central bankers, speculators, arbitrageurs
Spot transactions
• Spot quotations, two-way quotations
• Dealer spread, Transposing spot quotations
• Direct vs indirect quotes & Cross-rates
Forward transactions
• Forward market quotations; Forward points
Factors that influence exchange rates
• Supply and Demand curve
• Relative inflation rates, income growth, interest rates, exchange rate
expectations,
• Central bank and government intervention
Equity Markets I: Corporation and investor perspectives
Corporation and stock exchange
• The nature of the corporation and issuance of ordinary shares
• IPO and subsequent altern. to raise equity
• The stock market or exchange – various roles
• Primary & secondary market roles
• Debt, hybrid, and derivative securities
• Four main tasks of corporate finance
• First task is the investment decision / capital budgeting decision
• Capital budgeting requires selecting the best projects: NPV and IRR
Decision Rules
• Second task is the financing decision / capital structure decision
• How much debt vs equity: D/E Ratio
Share market from the investor’s perspective
• Investors’ investment alternatives: types of security classes
• Investors’ risk minimization through a diversified
portfolio: systematic vsunsystematic risk
• Investors’ investment approaches: Active vs. Passive investment
approaches; Sharetrading platforms
• Taxes – Australian Dividend Imputation Tax system
• Share price models
Forecasting share prices
• 1Fundamentals Analysis and Technical Analysis
Options contract
Introduction to Risk and Risk Management
• Understanding Risk – liquidity, inflation, market, etc.
Introduction to Options
• Nature of options
• Option payoff profiles
• Organization of options market
Option pricing and trading strategies
• Factors affecting option pricing
• Option trading strategies for risk management
• For lecture 1 to 4, please read the mid-quiz extra study material I made for you.
• There will be one short answer question based on the ethic topic, and it will be very straightforward. The best material would be the 2-page CFA code of ethics document uploaded on Moodle.