University of Technology Sydney

25741 Capital Markets

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 2022 is available in the Archives.

UTS: Business: Finance
Credit points: 6 cp

Subject level:

Postgraduate

Result type: Grade and marks

There are course requisites for this subject. See access conditions.

Description

This subject examines the structure and behaviour of Australia's financial system and its main components. Its principal topics are the instruments and processes through which financing is arranged, the pricing of instruments and the associated risks and their management with derivatives. The subject forms part of the finance specialisation in the MBA and Master of Business degree programs where it provides a preparation for more specialised subjects in investment management, international finance and the various subjects that deal with financial institutions and risk management.

Subject learning objectives (SLOs)

Upon successful completion of this subject students should be able to:
1. explain the major functions performed by a developed financial system, their inter-relationships and official supervision of the Australian financial system by the Reserve Bank of Australia and the Australian Prudential Regulation Authority
2. discuss the operations of the main financial instruments and financial markets that comprise the Australian financial system and calculate prices and investment yields for debt securities
3. evaluate the main risks involved in global financial markets and how they are managed with derivative products in Australia, and evaluate the use of derivatives for hedging purposes
4. explain the potential for financial markets to impose financial discipline on the management of financial institutions and borrowers.

Contribution to the development of graduate attributes

This subject provides finance students with an understanding of the operations of a financial system and its major components. It provides a knowledge and competency basis for subsequent specialised subjects, such as Investment Management and International Finance.

This subject contributes to the development of the following graduate attributes:

  • Communication and interpersonal skills
  • Attitudes and values

This subject also contributes specifically to develop the following Program Learning Objectives for the Master of Finance and Master of Financial Analysis:

  • Convey information clearly and fluently in high-quality written form appropriate for the audience (3.1)
  • Demonstrate persuasive oral presentation skills suitable for academic or professional audiences (3.2)
  • Interact effectively with others in order to lead towards a desired outcome (3.3)

Teaching and learning strategies

The subject will be taught using a combination of in-class and on-line learning activities. In-class activities include lectures and interactive exercises that provide opportunities to discuss and apply theory to practice. For example, problem-solving exercises done in a team with other students. On-line and off-line learning opportunities provide students with access to a number of current videos and case studies on topics covered in the subject that they can view before coming to class. The learning management system will be used to share information and encourage interaction between staff and students. Students will also use appropriate computer software such as word processors and presentation tools to complete assigned tasks.

In preparation for class students are expected to do the following to prepare them for participation in class discussion and activities:

  1. Review of lectures - Before coming to class students are required to read and review the lecture PowerPoint slides for the topic(s) being covered. This will allow them to participate in the class discussion organised by the lecturer each week.
  2. Review case studies and digital resources - Before coming to class students are required to read and review case studies and watch online videos when they are provided for a topic. Lecturers will ask students to discuss in groups the main points in these case studies and online videos.

After each topic is finished students are expected to:

  1. Review of lectures - After each lecture students should go over the material covered and read material from the textbook that covers the topic in the lecture. Students should post questions on the Discussions forum to discuss the material being covered. These questions will be answered by other students.
  2. Self-learning revision questions - A few days after a topic is covered in lectures students are required to complete the revision questions for the topic. While answers will be provided on the learning management system students might want to post questions on the Discussions forum to discuss the questions and answers.
  3. Self-learning online (non-assessable) multiple-choice - Multiple choice quizzes are available for students to complete on the topics.

Particular emphasis is placed on creating opportunities throughout the session for students to gain feedback on their learning. In addition to informal feedback gained from peers and tutors while participating in interactive exercises, students will receive formative feedback in the following ways:

  1. through class quizzes where all students receive feedback in class on whether each question was well answered or poorly answered by the majority of students in the subject in addition to where the correct answer was covered in the lecture notes;
  2. students are asked to meet with their lecturer to review their presentation slides before they do their class presentation;
  3. written feedback from the lecturer provided on the grade sheet of the written assignment.

An aim of this subject is to help you develop academic and professional language and communication skills to succeed at university and in the workplace. During the course of this subject, you will complete a milestone assessment task that will, in addition to assessing your subject-specific learning objectives, assess your English language proficiency.

Content (topics)

  1. The major functions performed by the financial system
  2. The processes of financing the risks and their management
  3. Financial products and services and their financial characteristics
  4. The roles played by financial institutions and their supervision
  5. The operations of the main markets for securities and foreign exchange
  6. The behaviour of financial variables
  7. The pricing of financial market securities
  8. The nature, purposes and risk-management uses of derivatives

Assessment

Assessment task 1: Video Presentation (Group)

Objective(s):

This addresses subject learning objective(s):

1, 2, 3 and 4

Weight: 25%
Length:

Video: 10 to 15 minutes.

Criteria:
  • Ability to present financial topics effectively for academic or professional audiences
  • Ability to work and discuss with others with the aim to achieve a desired outcome
  • Ability to discuss the major functions of the financial system, as well as to assess the operations, risk and risk management of financial institutions, financial instruments and financial markets.

Assessment task 2: Quizzes (Individual)

Objective(s):

This addresses subject learning objective(s):

1, 2, 3 and 4

Weight: 50%
Length:

Nine 15-minute online quizzes

Criteria:
  • Ability to evaluate and identify the major functions of the financial system and its regulatory background.
  • Ability to identify and assess the operations, risks and risk management of financial institutions, financial instruments and financial markets.
  • Precision and skill in calculating prices and yields of financial instruments.
  • Ability to show and calculate how financial derivatives are used to hedge risk or earn additional reward.

Assessment task 3: Case Study (Individual)

Objective(s):

This addresses subject learning objective(s):

1, 2, 3 and 4

Weight: 25%
Length:

1-to-2 page report

Criteria:
  • Ability to convey information on finance topics clearly and fluently in high-quality written form.
  • Precision and skill in discussing the major functions of the financial system, as well as in assessing the operations, risks and risk management of financial institutions, financial instruments and financial markets.

Minimum requirements

Students must achieve at least 50% of the subject’s total marks.

Recommended texts

The subject closely follows the textbook:

  • Viney, C and Phillips, P. (2019) Financial Institutions, Instruments and Markets, 9th edition, McGraw-Hill, Australia.
  • Hunt, B. and Terry, C. (2018) Financial Institutions + Markets, 8th edition, Cengage Learning (NZ) Limited.

Students are provided with lecture notes that include material from several texts and publications. There are two Australian textbooks that cover the topics studied in the subject. These textbooks are listed below under ‘References’. In the ‘Class Schedule’ reference chapters are written for the textbook by Viney and Philips (2019).