25556 The Financial System
Warning: The information on this page is indicative. The subject outline for a
particular session, location and mode of offering is the authoritative source
of all information about the subject for that offering. Required texts, recommended texts and references in particular are likely to change. Students will be provided with a subject outline once they enrol in the subject.
Subject handbook information prior to 2025 is available in the Archives.
Credit points: 6 cp
Subject level:
Undergraduate
Result type: Grade and marksRequisite(s): 25300 Fundamentals of Business Finance OR 25400 Financial Literacy
These requisites may not apply to students in certain courses.
There are course requisites for this subject. See access conditions.
Description
The aim of this subject is to develop an understanding of the operations of a modern financial system, covering its payment, financing and market-risk management activities. Its main topic areas are financial institutions, financial markets (such as stocks, bonds and foreign exchange) and derivatives (such as futures and options).
Subject learning objectives (SLOs)
| 1. | discuss how the Australian financial system performs its core financial functions; the settlement of transactions, the flow of funds and risk transfer |
|---|---|
| 2. | explain the roles and principal operations of deposit-taking financial institutions, fund management institutions and the major financial markets including the markets for derivative contracts |
| 3. | describe the structure of the main financial instruments (including the plain vanilla derivative contracts) and demonstrate their use in the flow of funds and risk-transfer functions. |
Contribution to the development of graduate attributes
The subject contributes to the aim of preparing students to commence a fulfilling and effective career in business, especially in finance-related professions. Its specific contributions are to enable students to develop their knowledge and understanding of the theory and practice of firm’s investment, financing and dividend decisions.
This subject contributes to the development of the following graduate attributes:
- Communication and collaboration
This subject contributes specifically to the development of Program Learning Objectives:
- Demonstrate ability to work independently and with others as a member of a team to achieve an agreed goal (2.2)
Teaching and learning strategies
Lectures are used to guide and assist student learning, supplemented by the use of appropriate learning 2014 practices, such as on-line and off-line learning opportunities and tutorials are used to enable students to demonstrate their understanding through their responses to set questions and case studies.
Content (topics)
- Functions of a financial system;
- Deposit-taking and fund management financial institutions;
- Financial markets; short-term money, bond, foreign exchange and equity markets;
- Pricing of financial instruments and calculation of investment yields;
- Determinants of spot and forward prices and interest and exchange rates;
- Plain vanilla derivative contracts (FRAs, futures, swaps and options); their markets and their use.
Assessment
Assessment task 1: Quizzes (Individual)*
| Objective(s): | This addresses subject learning objective(s): 1, 2 and 3 |
|---|---|
| Weight: | 30% |
| Length: | Duration: 30 minutes each for the two quizzes. |
| Criteria: | *Note: Late submission of the assessment task will not be marked and awarded a mark of zero. Failure to take the online quiz There will be no alternate quiz for The Financial System. Students who fail to participate in the quiz due to illness and/or misadventure will have the final exam re-weighted conditional on the students submitting, receiving approval and complying with the requirements of special consideration in accordance with the UTS rules. If the composite mark for the final exam is more than 50 percent and the student is in the final subject of their degree, the UTS rules on borderline result (range of 45-49, inclusive) shall apply whereby students will be allowed to undertake a supplementary final examination. Where a student completes and passes a supplementary examination, the maximum mark awarded for the subject will be 50 Pass. |
Assessment task 2: Assignments (Group)
| Objective(s): | This addresses subject learning objective(s): 1, 2 and 3 |
|---|---|
| Weight: | 20% |
| Length: | More information on the assignment will be provided during the semester. |
Assessment task 3: Final Exam (Individual)
| Objective(s): | This addresses subject learning objective(s): 1, 2 and 3 |
|---|---|
| Weight: | 50% |
| Length: | Duration: 2 hours |
Minimum requirements
Students must achieve at least 50% of the subject’s total marks.
Required texts
Ben Hunt and Chris Terry, 2018, Financial Institutions + Markets, 8th edn, Cengage Learning South Melbourne.
References
Faculty of Business, 2018, Guide to Writing Assignments