The attendance of this course does not require the successful completion of any other course. Nevertheless, a basic knowledge in Business Economics is recommended for a fruitful attendance of the course.
After attending this course, the student has the basic knowledge to analyze financial systems. In particular, she/he knows the different types of financial markets, what financial instruments are used by firms, households and investors, and with what strategies. After attending this course, the student knows: how to price fixed income securities, equity securities, derivative securities (options, futures and forward); evaluate the main sources of risk; take financing and investment decisions; prepare and present financial reporting documents according to the current standards required by the financial industry.
The course contributes to the learning objectives of the course of study, concerning the area of economic-management disciplines, in particular with respect to the analysis of corporate finance and financial systems.
The course is organized into four teaching units.
I. Introduction to finance and financial markets.
General considerations on the financial function and on the role of finance in the economical system.
Financial markets.
Financial intermediaries.
Financial contracts and pricing.
Introduction to financial mathematics.
Currencies: Spot price and forward price.
The yield curve.
The risk: pure risks and financial risks.
Price volatility.
Expected return.
II. Fixed Income Securities
Definition and general characteristics.
Pricing of fixed income securities.
Yield to maturity and duration.
Corporate bonds: fixed and floating interest rates, particular cases, convertible bonds, bonds in foreign currencies.
Government bonds: general characteristics and main types.
Structured securities: collar, FRN, reverse floaters, reverse convertibles, equity linked, catastrophe bonds.
III. Equity Securities
Definition and classification of stock shares.
Pricing of equity securities.
Profitability indices.
The primary equity market: capital increases.
The secondary market.
The Italian Stock Exchange and the European markets: characteristics and methods of operation.
IV. Derivative securities
Definition and functions.
General types of derivative securities: forwards, futures, swaps, options.
The pricing of derivatives: forward price and forward value, Black and Scholes model.
Marking to market of futures and the role of the Clearing House.
European and American options.
Parity theorem.
Use of derivatives: hedging, hedging strategies with application to exchange rate and interest rate risks.
The course is organized in lectures and classes.
During the lectures, the fundamentals of the discipline will be presented, as well as the main events that characterize the financial markets, developing a dialogue between theory and practice.
The classes, instead, will provide exercises to be solved, aimed at developing practical skills.
The exam is written, composed of three problems, and extends over 90 minutes. Each problem involves the practical resolution of some questions, using the calculation techniques learned during the classes. Comments and interpretations of the results obtained will also be required.
All students who have passed the written test are allowed to access an optional oral exam. The oral exam consists in a new evaluation, on the whole content of the course, with particular reference to the theoretical contents. In case the oral exam is passed, the final evaluation will be attributed as the average of the written and the oral exam.
The exam rules are the same for both attending and non-attending students. Non-attending students are invited to contact the teacher for support in preparing the written exam.
If this course will be taught remotely, or according to a blend-teaching mode, changes can be implemented with respect to what is stated in the syllabus, to make the course and exams available.