Finance 614: Subject and Structure

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Finance 614 Subject and Structure

• Galina A Schwartz
• Department of Finance
• Business School
• University of Michigan

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We are going to study

• International Financial Markets
• Current Institutions
• Offshore and Onshore Markets
• Financial Innovation
• Financial Instruments
• Derivative securities
• Futures, Options, Swaps
• International Asset Portfolio
• Bond and Equity Portfolios

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Game Theoretic Approach

• Same as FIN 612
• Players (Governments, Regulators, Central Banks,
  Financial Institutions, Corporations,
  Individuals)
• Incentives and Implementation
• Important issues Same as FIN 612
• technology, legal and regulatory framework,
  market micro structure, macroeconomic parameters
  INFORMATION

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What will be different from Finance 612

• Finance 614 is more ADVANCED, and it is more
  DEMANDING
• Economic analysis will be more COMPLEX
• Number of topics to be covered will be SMALLER

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Specifically, the publications we will use are

• The Economist Magazine
• Red Herring Magazine
• These publications have more details and more
  controversies

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Main skill to master

• Same as in 612
• Financial Information Analysis
• It is a difficult, challenging and slow to learn
  skill
• It is a rigorous approach
• It is frustrating at first
• Then, it is rewarding

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Fin 614 focuses on

• I. Financial institutions and instruments (
  history)
• Why do they exist
• What role do they play
• II. Expectations of further developments
• Hi-Tech and Financial System
• (past, present, future)
• III. International Financial Legalities and their
  future

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Finance 614 International Financial System and
Hi-Tech

• Information its costs, its precision, its
  retrieval and analysis
• Globalization the new markets and their
  structures
• Innovation financial transactions, clearing
  house system,
• Security PC, internet, smart cards, etc -- on
  your demand

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Example

• Long Term Capital Management
• Insider and Outsider Perspective
• Which is more informative?
• Please, read both AEA
• papers distributed in class
• today