Course description

This course is designed to provide a unified framework for understanding financial markets, institutions and instruments. It focuses on several topics, including the structure and regulation of various markets in financial instruments, operation of banks and non-bank financial institutions, central bank operations and their effect on financial institutions, risks faced by the managers of financial institutions and the methods, markets and instruments for managing these risks. On completion of the course, the students will be familiar with notions and concepts specific to the markets in financial instruments, both securities and derivatives, and will be able to identify and use the financial instruments specific to various transactions carried out on financial markets.

Course Aim

This course aims to provide an understanding of the fundamentals of financial markets: structure, participants, operations and instruments, and associated theoretical and empirical issues.

Learning outcomes

• Explain the role and the functions of financial markets, institutions and instruments in a market economy.
• Describe the methods of issuing stocks in primary markets and their advantages and disadvantages.
• Describe the process of trading stocks in secondary markets.
• Differentiate among various types of financial assets and financial products, explain the specifics of their markets, and apply basic valuation methods in practice.
• Describe the theoretical determinants of the level and term structure of interest rates
• Analyze the types and roles of monetary and non-bank financial institutions
• Explain the reasons for changing values of financial products, their impact and consequences.
• Work in teams, present work results both in writing and orally, and substantiate decisions taken.
• Critically evaluate the recent financial news articles and relevant research in financial markets.

Course description

This course broadens and applies knowledge and skills gained during mathematical analysis and finite mathematics courses. Students learn to solve first and second order differential and difference equations and apply them in economic problem solving. The main attention of this course is focus on static and dynamic optimization techniques and their application in day-to-day problems and decision making of economics and management.

Aims of the course

This course aims to broaden the knowledge and skills in advanced mathematical analysis, which is usually applied in solution of various economic problems.

Learning outcomes

• To be acquainted with concepts and principles of advanced mathematical analysis.
• Be able to formulate, model, and solve static optimization problems.
• Be able to formulate, model, and solve dynamic optimization problems.
• Be able to analyze solved problems and make conclusions.
• Be able to convey information sequentially, logically, accurately and clearly, both in written and oral form.

The Master’s Thesis is a culminating experience in graduate level education for the degree candidates. It is an individual endeavour of analytical nature, which contains elements of originality and is performed in conformity with general requirements of academic papers and scholarly projects. For the students, the Master’s thesis should be a learning activity that is stimulating and engenders a sense of pride and accomplishment.

The intent of the thesis is to provide an opportunity for the Master’s degree candidates to refine, in some cases acquire, a range of skills at an appropriate level to conduct a competent research project. A successful thesis is an evidence that the candidate has acquired the minimum level of research skills required and can therefore be accredited a Master’s degree. Skills required of thesis writers are those associated with research design, data collection, information management, analysis of data, synthesis of data with existing knowledge, and critical evaluation of the writer’s own ideas and those presented in the literature reviewed. The thesis should be written in English within a given period of time and comply with commonly accepted principles of academic ethics.

Learning outcomes:

• Identify a gap in the financial economics literature which is relevant to the continuously changing contemporary world.
• Cultivate a habit to critically test the up-to-date theories with empirical data.
• Critically evaluate various research methods and select appropriate ones for the given topic (with limitations and assumptions clearly outlined).
• Thoroughly analyse the available data with the theory-methodology-data triangle intact and well synthesised.

Develop communication skills both in the written form as well as in presentation to maintain attentions of the intended readers/audience and to sustain critical and constructive discussions in the field of financial economics.

Course description

This introductory course surveys various mathematical concepts utilised in financial economics. Together with Financial Econometrics, it constitutes the foundation of the ‘research’ pillar in MSc Financial Economics at ISM. As such, some of the topics will be ‘repeated’, but more in depth, in other courses. As clients’ profiles and objectives have become increasingly global and complex over the past few decades, financial institutions have come up with more sophisticated and more structured products, alternatives, and approaches, some of which are reviewed in this course from a pricing and mathematical perspective. Given the current political environments (e.g. Brexit, transpacific trade war), we pay significant attention to the assumptions behind formulae and models, while we practice not only calculations but also explanations to prepare ourselves for the contemporary regulatory environment, most notably characterised by the MiFID II.

Learning outcomes

Upon successful completion of this course, students will be able to:

• Illustrate and utilise the axioms of rationality in pricing.
• Define and explain interest rates as they are applied to different types of debt instruments.
• Define and explain the structuring considerations for various derivative products.
• Identify issues and projects surrounding the rapidly changing world such as hybrid securities, financial engineering, and blockchain.

Course description

This course provides an overview of economic (dis)integration in Europe. Given the rampant Euroscepticism(s) and the ongoing so-called ‘Brexit’ process, we shift our focus from the previous year’s emphasis on the Monetary Union to the game-theoretical interaction between the firms and the policymakers. To begin with, we keep our distance from ‘methodological nationalism’ (i.e. taking nation-state as a unit of analysis) and assume differentiated incentive-giving mechanisms for, say, average householders, parliamentarians, and ‘Eurocrats’. Such a multilevel analysis of EU Economics shall deepen our understanding of rapidly changing business environments in Europe.

Learning outcomes

• Demonstrate their wide range of knowledge on European Economics in a coherent manner.
• Analyse how EU and national institutions (dis)incentivise certain economic activities.
• Illustrate the elements of politicisation in EU Economics and assess the current level of integration.
• Critically review the history of economic and financial integration and assess the level of institutional development within the EU.

Course description

This course follows Capitals of Capital: The Rise and Fall of International Financial Centres 1780-2009 (Cambridge University Press) by Youssef Cassis, and investigates how the regional and global network of cities occupies a crucial position in understanding the development of financial markets. Our historical narrative is such that we primarily focus on the banking sector in Europe, while we constantly draw a comparison with the current situation. As a theoretical framework, Financial History allows us to flexibly examine the roles played by states, institutions, firms, and individuals, and to analyse the game-theoretical interaction among them. The knowledge (including methodology) obtained in this course shall be complementary to any modules offered within politics, economics, and finance.
Prof. Cassis of European University institute has kindly agreed to name this course after his eye-opening masterpiece.

Learning outcomes

• Utilise historical narratives to explain various mechanisms within the financial markets.
• Define and understand the network theories of international financial centres.
• Demonstrate game-theoretical interaction among various financial actors.
• Illustrate the complexity of contemporary financial markets with different incentives generated by each institutional setting.

Course description:

This course guides students to prepare for their thesis writing process by surveying various topics in the field of Financial Economics. The three main foci are: literature review, research methodology, and hypotheses. First, by systematically highlighting the differences between the annotated bibliography and the literature review, we emphasise the link between the existing literature and the research questions at hand. Second, by skimming through the preliminary data, we check the data availability and the feasibility of the chosen research method. Third, by articulating the hypotheses, we evaluate the proposed research design. The course lasts throughout the semester and concludes with the thesis proposal defence.

Course objectives:

Upon successful completion of this course, students will be able to:

• Identify a gap in the financial economics literature and cultivate interests in topics relevant to students’ career paths.
• Critically evaluate various research methods, especially given the data availability.
• Formulate a series of hypotheses relevant to the given research questions and develop a habit to continuously assess the progress of own research.
• Strengthen communication skills both in the written form as well as in presentation in order to stimulate discussions in the field of financial economics.