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COURSE SYLLABUS

Suffolk University Sawyer School of Management

FIN319: Money & Capital Markets

Instructor: Michael Eisenstein, CFA, CTP

Semester: Fall 2016

| FIN 319 – Money & Capital Markets | Suffolk University | Fall 2016 | 1

Table of Contents I. Welcome ............................................................................................................................ 2

II. Course Catalog Description ......................................................................................... 2

III. Required Text & Materials ......................................................................................... 3

Textbook ............................................................................................................................... 3

Recommended Business Book Reading List: ........................................................................ 3

Potential Harvard Business & UVA Darden Business Publishing Case Studies (HB) ..... 3

Other Material ..................................................................................................................... 4

Recommended Specialized News & Analysis Outlets: ........................................................ 4

IV. Prerequisites .................................................................................................................. 5

V. Course Objectives .......................................................................................................... 5

VI. Course Format ............................................................................................................... 5

VII. Bloomberg BMC ......................................................................................................... 6

VIII. General Course Policies, Attendance and Class Conduct .................................. 6

Attendance ........................................................................................................................... 6

Exams, Homework & Presentations .................................................................................... 6

Class Conduct ...................................................................................................................... 6

Academic Honesty ............................................................................................................... 6

IX. Required Tools .............................................................................................................. 7

X. Grading & Exams ............................................................................................................ 7

XI. Executive Presentations: .............................................................................................. 8

Presentation Grading .......................................................................................................... 8

XII. Availability ................................................................................................................... 8

XIII. Counseling Center Statement ................................................................................. 9

XIV. Other Matters ............................................................................................................. 9

Suffolk University’s Policies Realted to Courses & Student Suppor Services ................... 9

A wide range of helpful resources can be located on the web by following this URL address: http://www.suffolk.edu/explore/54511.php ................................... 9

Course Withdrawal Deadlines ............................................................................................. 9

Disability Services ............................................................................................................... 9

Credit Hour Requirements & NEASC Credit Hour Policy ................................................ 9

Early Alert Project ............................................................................................................... 9

XV. Tentative Session Outline ....................................................................................... 10

XVI. Appendix ................................................................................................................... 13


Sawyer School of Management

FIN 319AE- Money & Capital Markets Fall Semester 2016

Instructor: Michael J. Eisenstein, CTP, CFA Managing Director, Treasury NewStar Financial, Inc. (NASDAQ Ticker: NEWS) Room: Somerset, Room 315 Course: Money & Capital Markets Course #: FIN 319AE Date: 08/30/2016 - 12/20/2016 Time: Tuesday 4.30pm to 7:10pm Final Exam: 12/20/2016, 05:00PM - 07:30PM, Somerset, Room 315 Hours: By Appointment Only, Refer to Availability Section Profile: http://www.linkedin.com/in/michaeljeisenstein Email: [email protected] Mobile: +617.416.1832

I. Welcome Welcome to FIN 319- Money and Capital Markets. I look forward to spending the semester together working through complex financial theories and engaging in intellectually challenging dialogue and debate. This is an advanced finance course covering sophisticated, contemporary material and I expect all class members to plan accordingly. Please read through this Syllabus in detail as it contains an overview of our assignments, objectives and timeline.

II. Course Catalog Description From the Course Catalog: This course covers characteristics, structure and function of money and capital markets with a focus on the recent events relating to financial markets and their impact on the

Draft: August 15, 2016


corporate financing behavior and the interrelationship among the various financial markets. Also, each type of financial institution and its internationalization are discussed. Prerequisite: EC 101 and EC 102 III. Required Text & Materials

Textbook There is one text required for this course in addition to select business case studies. You are welcome to purchase the text electronically online, or used, which is typically a cost effective solution to buying a new hardcopy.

“Finance: Capital Markets, Financial Management & Investment Management”, by Frank Fabozzi (F) available at the Suffolk University Bookstore & online.

Recommended Business Book Reading List: Behavioral Investing- Michael Pompian The Big Short- Michael Lewis Liars Poker- Michael Lewis Flash Boys- Michael Lewis Rise and Fall of Merrill Lynch Boomerang- Michael Lewis Currency Wars- Jim Rickards Predator’s Ball – Connie Bruck When Genius Failed- Roger Lowenstein Zero to One- Peter Thiel Fooled by Randomness – Nassim Taleb Strategy in Business, Poker and War – McDonald Private Equity: The New Tycoons – Kelly Potential Harvard Business & UVA Darden Business Publishing Case Studies (HB) Commercial Loan Syndication: “Chase’s Strategy for Syndicating the Hong Kong Disneyland Loan”, April 14, 2003 Private Equity & Private Company Valuation: “Rosario Acero”, 1998 “Hope Enterprises”, 1998 “Calaveras Vineyards”, 1995 “Berkshire Partners Acquisition of Carters”, January 23, 2008 Derivatives & Hedging:


“JPM and the London Whale”, January 2013 “Delta Beverage Group”, June 2004 “Walt Disney Company’s Yen Financing”, September 5, 1991 “The B.F. Goodrich-Rabobank Interest Rate Swap”, August 22, 1996 “J&R Railroad”, June 23, 1994 “Pacific Northwest Cable”, March 28, 1991 “Swiss FX Trader Scenario”, Marco Luethy & Michael Eisenstein 2010 Convertible Bonds: “Boston Chicken Convertible Bond Offering”, August 15, 1996 “Kingston Murray Enterprises Convertible Offering”, November 4, 1995 “Convertible Securities”, June 28, 2002 ABS & RMBS: “RMBS at SU Investment Management, 2010 “A Landmark Transaction”, 2010 Please wait on purchasing select studies. We will identify cases that complement the material we cover in class. The case studies can be downloaded from the following website and cost approximately $7.00: http://harvardbusinessonline.hbsp.harvard.edu/ http://store.darden.virginia.edu/business-case-studies Other Material You are encouraged to read a combination of the following news sources as current events and ‘Topics of The Day’ will be discussed in detail during the course. Recommended Specialized News & Analysis Outlets: Seeking Alpha- www.seekingalpha.com Mises Institute- www.mises.org Dr. Ed Yardeni- www.blog.yardeni.com Global Economic Analysis- www.globaleconomicanalysis.blogspot.com Value Walk- www.valuewalk.com ZeroHedge- www.zerohedge.com Alphaville- www.ftalphaville.ft.com CreditFlux – www. creditflux.com Market Folly- www.marketfolly.com Mainstream News Outlets: Wall Street Journal- www.wsj.com CNBC- www.cnbc.com Financial Times- www.ft.com Fox Business News- www.foxbusinessnews.com Bloomberg- www.bloomberg.com


IV. Prerequisites EC 101 and EC102 & a fundamental understanding of statistics, economics and financial mathematics. V. Course Objectives FIN319 covers the characteristics, structure and function of money and capital markets. Specifically, after the course, students should be able to:

Articulate the fundamentals and explain the function of global money and capital markets and instruments

Understand the basics of valuing and pricing global money and capital market instruments

Identify how the changing financial landscape and contemporary global macro trends affect the value and price of money and capital market instruments

Throughout the semester, and to the extent permitted by Suffolk’s OTM, I will incorporate into the material real-time market information via Bloomberg and demonstrate analytics using Excel (and possibly Visual Basic for Applications) to enhance an understanding of the principles of money and capital markets. An optional recitation, the details of which will be announced early in the semester, shall be held for students seeking to improve their knowledge of prerequisite material or Bloomberg. VI. Course Format Classes will consist of lectures but are ideally as interactive as possible. We will begin select classes with a brief discussion of current events or mini-case studies (Topics of The Day) relevant to the week’s topics and you are encouraged to suggest articles. Participation, which is not synonymous with attendance or spectating, is a major component of the final grade. Class members should feel free at all times to raise questions, engage in debate, contribute opinions and provide their professional view of the material discussed in class. Everyone’s point of view is highly valued and credit will never be lost by expressions of disagreement with fellow students or me. The classroom is a dynamic learning environment and I advocate not only a top-down, vertical transfer of information but also a horizontal dimension to the learning exchange.


VII. Bloomberg BMC Learning how to navitgate the Bloomberg terminal and its essentials is a core element of FIN 319. BMC completion is worth [10]% of the Final Letter Grade. The student due date is December 6, 2016 and I will get a report on December 7. Access is automatically turned off (not at my discretion) on December 6th. This link explains how you can upload your resumes onto the Bloomberg Talent Search database after completing BMC. https://vimeo.com/166808398/1e88f8fa88 Our Money and Capital Markets class code is: MEFIN319A25 Complete instructions can be found in the Appendix of this Syllabus and on Blackboard. Get started immediately. Do not delay. The BMC Course is self-paced and will take approximately 10 hours on the Bloomberg Terminal. VIII. General Course Policies, Attendance and Class Conduct Attendance Attendance is vital and as a policy, to keep accurate records, I circulate a sign-in sheet at the start of each lecture. Please let me know in advance if you cannot attend a class (due to business travel or illness) or need to arrive late or depart early. If you miss more than 2 classes, or are habitually tardy, your grade will be adversely affected at my sole and absolute discretion. Exams, Homework & Presentations Failure to take any of the exams will automatically result in a letter grade of “F” for the course. There are no make-up exams or extra credit projects should an exam be missed. Similarly, problem sets and presentations must be turned in on time; late submissions will not be accepted. Class Conduct Two points. First, the classroom is a professional environment. Second, mobile device check as a courtesy to everyone in the classroom. Academic Honesty Cheating on examinations, plagiarism and/or improper acknowledgment of sources in essays or research papers, and the use of a single essay or paper in more than one course, without the permission of the instructor, constitute unacceptable academic conduct.

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Student work may be checked by plagiarism detection software. Academic dishonesty will be reported to the Office of Student Affairs. Reports will be addressed through the Student Discipline System. An undergraduate student who has been found to have violated this policy is subject to an automatic grade of “F” in the course and to suspension, enforced withdrawal, or dismissal from the University or appropriate lesser penalties if warranted by the circumstances.

In other words, all students must read and be familiar with Suffolk University’s academic integrity policy and Student Handbook. Violations, which include but are not limited to any form of cheating, plagiarism, aid of academic dishonesty, fabrication, lying, bribery or threatening behavior will not be tolerated and automatically result in a course letter grade of “F”.

IX. Required Tools Students are expected to be proficient using a financial calculator (HP or TI), Microsoft Excel, PowerPoint and Word and be capable of navigating the Bloomberg Terminal. X. Grading & Exams Your final grade will be a combination of class participation, obtaining a Bloomberg BMC Certificate, presentations, a mid-term and a final exam. The grade and component distributions are outlined as follows. An extra 5 points on the final grade is available to students who take the 2 hour, 8 section, Bloomberg Aptitude Test (BAT).

Letter Grade Numeric Grade Definition

A 95 – 100 Exceptional performance

A- 90 – 94 Excellent performance

B+ 85 – 89 Great performance

B 80 – 84 Good performance

B- 77.5 – 79 Acceptable performance

C+ 75 – 77.4 Acceptable performance

C 70 – 74 Less than acceptable performance

C- 67.5 - 69 Less than acceptable performance

D 65 – 67.4 Unsatisfactory performance

F <65 Course failure


# Component Total Weight

1. Attendance, Participation and Topics of the Day 10%

2. Bloomberg BMC Certification 10%

3. Executive Presentations (2 @ 15% each) 30%

4. Examinations (Mid-Term & Final @ 25% each) 50%

Total 100%

XI. Executive Presentations: Class members will divide into teams of [2-3] to research and prepare two executive presentations on contemporary course related topics. Multiple topics will be discussed and selected early in the semester. The presentations are tentatively scheduled to be delivered in [Class #6, and Class #13]. Please begin working on the projects immediately and do not wait until the last minute to get started. The projects will give you an opportunity to learn more about specific aspects of investment instruments and global markets, and to refine your presentation skills. Presentation Grading

Component Weight

Presentation Format and Appearance 20%

Organization and Structure 25%

Content 30%

Engaging the Audience 25%

Total 100%

XII. Availability

I am generally available by email and phone and try to respond to inquiries the same business day. Please note that I often respond to individual emails and post announcements / send emails on Blackboard late in the evening or very early in the morning as my work schedule permits.

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XIII. Counseling Center Statement

A range of issues can cause barriers to learning, such as strained relationships, increased anxiety, health issues, alcohol/drug problems, feeling down, difficulty concentrating, lack of motivation or feeling ill. These concerns or other stressful events may lead to diminished academic performance or may reduce a student's ability to participate in daily activities. University Counseling, Health & Wellness resources are available to help students address these and other concerns. Students can learn more about Suffolk’s broad range of confidential counseling and medical services at http://www.suffolk.edu/campuslife/2746.php XIV. Other Matters Suffolk University’s Policies Realted to Courses & Student Suppor Services A wide range of helpful resources can be located on the web by following this URL address: http://www.suffolk.edu/explore/54511.php Course Withdrawal Deadlines [TBD] - Last day to withdraw from a course without receiving a grade of “W”. [TBD] – Last day to withdraw from a course without receiving a grade of “F”. Disability Services If you anticipate issues related to the format or requirements of this course, please meet with me. I would like us to discuss ways to ensure your full participation in the course. If you determine that formal, disability-related accommodations are necessary, it is very important that you be registered with the Office of Disability Services (located in 73 Tremont St., 7th floor, 617-994-6820) and notify me of your eligibility for reasonable accommodations. We can then plan how best to coordinate your accommodations. Credit Hour Requirements & NEASC Credit Hour Policy Resource: http://www.suffolk.edu/explore/54511.php Early Alert Project This class participates in Suffolk’s Early Alert Project. Around week 3, I will notify the Center for Learning and Academic Success if a student has struggled with writing or language skills, excessive absences, incomplete work, or difficulty with the course content. This warning is not an official grade, yet it indicates concerns about the students progress that need to be addressed immediately. If a student receives an Early Alert, this student should meet with the faculty member during office hours to discuss strategies for how the student can be successful in the class.


XV. Tentative Session Outline Course Calendar:

TUESDAY

8/30 HOLIDAYS and "Suffolk Days"

no class 9/6 Labor Day: no classes Monday, Sept 5

9/13 Suffolk Monday: All Monday classes meet Tuesday Sept 6th (Labor Day makeup)

9/20 Fall Break: no classes Monday Oct 10

9/27 Veterans Day: no classes Friday Nov. 11

10/4 Suffolk Friday: all Friday classes meet Tuesday Nov 22nd (Veteran's Day makeup)

10/11 Thanksgiving recess: * no classes Wed. Nov 23 through Friday Nov 25

10/18

10/25 Semester dates:

11/1 First day of semester: Tuesday, August 30

11/8 Last day of semester: Tuesday, December 13

11/15 "Snow" day: Saturday, December 10 ( for Day courses)

no class 11/22 Reading day: Wednesday, December 14

11/29 *Finals: December 15 - 20 (see Registrar's Schedule)

12/6

12/13 Finals inclement weather, if necessary: Tuesday, December 21final*

GRADES DUE Monday Dec 26, 2016 by 2pm


Please read/review the handouts and case studies ahead of the class. Bear in mind that this is a tentative schedule and subject to change at any point.

Legend

► Denotes a lecture topic

● Denotes a reading assignments or discussion topic

■ Denotes a deliverable / exam / presentation

Week Topics, Readings and Deliverables Reading

Wee

k 1

► Course Overview and Introduction ► Global Money and Capital Market Asset Classes, Financial Instruments and the Economic Climate

● Fundamentals of Select Money Market and Capital Market Instruments

Ch 1, Ch 2 & Ch 4

Wee

k 2

► Global Money and Capital Market Asset Classes, Financial Instruments and the Economic Climate (Continued) ► Anatomy of Global Commercial & Investment Banking

● Select Case Study To Be Determined (Possibly, Syndicating the Chase HK Disney Loan)

● Topic of the Day Discussion

Ch 4

Wee

k 3

► Introduction to the Bloomberg Terminal: Analytics, Global Markets, Research and Valuation ► Global Financial Markets Exercise

● Summary of Key Bloomberg Commands

Handouts & familiarity with the Bloomberg

Terminal

Wee

k 4

► Foreign Exchange Markets and Exchange Rates ► Triangular Currency Arbitrage and Cross Rates ► Parity Relationships ► Balance of Payment Accounting


Lecture

Wee

k

5

► Fixed Income Mathematics ► Duration and Convexity ► Yield Curves and the Term Structure of Interest Rates

Ch 5, Ch 7 & Ch 19


● Spot & Forward Rates and Constructing the Forward Rate Curve

● Recession Predicting Capability ● Global Yield Curves and Trends

● Economic Indicators that Predict Recessions (GS) ● Economic Indicators that Move Bond Markets (JPM)


Wee

k 6

■ Executive Presentation #1 ● Any additional class time will be used to conclude discussions on previously opened topics

N/A

Wee

k 7

► The Federal Reserve and Central Banks ► The History of Money, Banking and Credit ► A 40 Year Experiment- The Gold Standard & Fiat

Currency ► Austrian Business Cycle Theory ► Money and Inflation ► Choice in Currency and the Denationalization of Money ● Topic of the Day Discussion

Rothbard, “Case Against the Fed”

(www./mises.org/books/fed.pdf) Ch 5

Wee

k 8

■ In Class Mid-Term Examination

N/A

Wee

k 9

► Equity Markets ► Algorithmic Trading ► Free Cash Flow and Multiples Valuation ► Private Company Valuation ► Mergers and Acquisitions (Time Permitting)

● Select Case Study To Be Determined ● Topic of the Day Discussion

Ch 7, Ch 8, Ch 9, Ch 11 & Ch 18

Wee

k 1

0

► Private Equity and Venture Capital Markets ► Real Estate Capital Markets

● Select Case Study To Be Determined ● Topic of the Day Discussion

Ch 7, Ch 8, Ch 9, Ch 11 & Ch 18


Wee

k 1

1

► Futures & Forwards ► Interest Rate and Currency Swap Pricing and Valuation ► Option Contracts ● Cross Hedging ● Hedging w/ Stock Index Futures

● Binomial, Black-Scholes Model & Greek Letters ● Topic of the Day Discussion

Ch 6, Ch 12 & Ch 21

Wee

k 1

2

► Option Contracts (Continued) ► Asset Backed Securities (ABS, MBS & CDOs) ► Credit Derivatives and Trading Strategies (CDS, SCDOs) ► Weather Derivatives


Ch 6, Ch 12 & Ch 21

Wee

k 1

3

■ Executive Presentation #2 ● Any additional class time will be used to conclude discussions on previously opened topics Bloomberg BMC Certification Due ● Exam is programmatically turned off following the cut off date

N/A

Wee

k 1

4

► The Minsky Framework ► Behavioral Finance Theory

● Cognitive Dissonance ● Cognitive and Emotional Biases ● Behavioral Investor Types ● Topic of the Day Discussion

Lecture

Wee

k 1

5

■ In Class Final Examination

N/A

XVI. Appendix

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