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AFF1300 Money and capital markets

Unit Guide Semester 1, 2012

The information contained in this unit guide is correct at time of publication. The University has the right to change any of the elements contained in this document at any time. Last updated: 17 Feb 2012

Table of Contents
AFF1300 Money and capital markets - Semester 1, 2012......................................................................1 Mode of Delivery..............................................................................................................................1 Workload ..........................................................................................................................................1 Unit Relationships............................................................................................................................1 Prohibitions..........................................................................................................................1 Chief Examiner............................................................................................................................................1 Campus Lecturer.........................................................................................................................................1 Caulfield...........................................................................................................................................1 Tutors..........................................................................................................................................................1 Caulfield...........................................................................................................................................1 Academic Overview ...................................................................................................................................2 Learning Objectives.........................................................................................................................2 Graduate Attributes ..........................................................................................................................2 Assessment Summary.....................................................................................................................2 Hurdle Requirements...........................................................................................................2 Second marking...................................................................................................................2 Return of final marks............................................................................................................3 Exam viewing.......................................................................................................................3 Assessment criteria ..............................................................................................................3 Teaching Approach.....................................................................................................................................3 Feedback.....................................................................................................................................................4 Our feedback to You........................................................................................................................4 Your feedback to Us........................................................................................................................4 Previous Student Evaluations of this unit....................................................................................................4 Required Resources....................................................................................................................................4 Recommended Resources..........................................................................................................................5 Unit Schedule .............................................................................................................................................6 Assessment Requirements......................................................................................................................7 Assessment Tasks ...........................................................................................................................7 Assessment task 1...............................................................................................................7 Assessment task 2...............................................................................................................8 Assessment task 3...............................................................................................................9 Examinations...............................................................................................................................................9 Examination 1..................................................................................................................................9 Assignment submission...............................................................................................................................9 Online submission...........................................................................................................................9 Other Information....................................................................................................................................10 Policies..........................................................................................................................................10 Student services............................................................................................................................10 Blackboard (MUSO) .......................................................................................................................10

AFF1300 Money and capital markets - Semester 1, 2012


On completion of this unit students should demonstrate an understanding of a financial system, its operation and component parts; yield curve analysis, the term structure of interest rates, and exchange rate interaction; sources and types of business finance, short, medium and long term, domestic and overseas, and associate pricing formulae; the structure and operation of Australian financial institutions and markets; the major types of risk and the derivative products available to manage financial risk; the structure, functions and role of prudential supervision in the financial markets.

Mode of Delivery
Caulfield (Day)

Workload
This is a six credit point unit with three class contact hours a week through a twelve-week semester. For each six credit point unit the University expects a student to spend twelve hours a week in class contact and self-directed study.

Unit Relationships
Prohibitions
AFC2000, AFC1100 (pre 2009), AFC2100 (pre 2009), AFG1300, AFW1300

Chief Examiner
Piyadasa Edirisuriya

Campus Lecturer
Caulfield
Dr Piyadasa Edirisuriya Campus: Caulfield Phone: +61 3 990 32226 Email: Piyadasa.Edirisuriya@monash.edu

Tutors
Caulfield
To be advised.

Academic Overview
Learning Objectives
The learning goals associated with this unit are to: 1. describe the structure and operation of financial institutions and markets in Australia; 2. evaluate short and medium to longer term financial instruments 3. explain government monetary policy and the term structure of interest rates 4. describe the derivative products available to manage financial risk 5. apply critical thinking, problem solving and presentation skills to individual and / or group activities dealing with money and capital markets and demonstrate in an individual summative assessment task the acquisition of a comprehensive understanding of the topics covered by AFF1300.

Graduate Attributes
Monash prepares its graduates to be: 1. responsible and effective global citizens who: a. engage in an internationalised world b. exhibit cross-cultural competence c. demonstrate ethical values 2. critical and creative scholars who: a. produce innovative solutions to problems b. apply research skills to a range of challenges c. communicate perceptively and effectively

Assessment Summary
Hurdle Requirements
There is a hurdle requirement in this unit. The learning outcomes in this unit require students to demonstrate in the individual summative assessment task a comprehensive understanding of the topics covered in the unit. This is demonstrated by the requirement that the student must attain a mark of at least 50% in the final summative assessment task. A student's final mark is normally the sum of the marks obtained in all of the individual assessment items in the unit. Where a student fails the unit solely because of failure to satisfy the hurdle requirement, a mark of 48 will be returned for the unit.

Second marking
Where an assessment task is given a fail grade by an examiner, that piece of work will be marked again by a second examiner who will independently evaluate the work, and consult with the first marker. No student will be awarded a fail grade for an assessment task or unit without a second examiner confirming the result. Note: Exceptions to this are individual pieces of assessment contributing 10% or less of the final mark, 2

Academic Overview unless the total of such pieces exceeds 30% of the final mark.

Return of final marks


Faculty policy states that 'the final mark that a student receives for a unit will be determined by the Board of Examiners on the recommendation of the Chief Examiner taking into account all aspects of assessment'. The final mark for this unit will be released by the Board of Examiners on the date nominated in the Faculty Calendar. Student results will be accessible through the my.monash portal.

Exam viewing
Feedback on student performance in examinations and other end-of-semester assessment is required, in accordance with the University procedures on Unit Assessment. For more information, please see the following URL: http://www.buseco.monash.edu.au/aaf/student/exam-view/index.html.

Assessment criteria
Assessment Criteria Grading Descriptors available at: http://www.buseco.monash.edu.au/esg/agu/policies/assessment.html. Assessment Task Value Major Assignment Presentation Participation Examination 1 25% 3% 2% 70% Due Date Friday, 27 April 2012 Week 3 - 12 Week 1 - Week 12 To be advised

Teaching Approach
This unit will be taught as a two-hour class session and one hour tutorial each week for 12 weeks. Teaching and learning include lectures, tutorials and class presentations. Lecture outlines and answers/solutions to tutorial questions/problems are downloadable from the Monash University Blackboard site at: https://my.monash.edu.au/muso/blackboard/login/. All students are expected to participate in at least 70% of tutorials. All students are expected to participate in their enrolled tutorial class only. It is the responsibility of all the AFF1300 students to ensure that their participation is properly recorded at tutorials. Therefore, the lecturer/s and the tutor/s of this unit will not be accountable for any particular students failure to prove the participation requirement. Students are expected to download lecture materials from the unit Web site and study them carefully before coming to each lecture. For tutorials, students are required to attempt all questions for each week before attending tutorial classes. It is important to discuss and study these tutorial questions with your tutor to complete this unit successfully. Suggested solutions for compulsory tutorial questions will only be provided after each tutorial class over the unit Web site. Students are required to make a formal presentation of one tutorial question to the class. This task has been designed to improve presentation skills of students. Class presentations and 3

Academic Overview participation are an important part of this unit and both activities will be taken into account in the final evaluation process. Students are expected to spend additional private study time and access the recommend readings, which are listed in this guide and on Blackboard. In addition to the recommended readings and sets of weekly lecture materials and tutorial questions are provided on Blackboard. These resources enable students to develop a mastery of the topics covered by the unit. To ensure a high probability of completing successfully this unit, students need to approach it in a systematic way. At a minimum this should involve: reading the prescribed material prior to each weekly session; preparing solutions to each set of questions prior to the session; attending sessions and participating in discussions of model answers; reviewing material from other references from time to time; and attempting relevant past examination and test questions.

Feedback
Our feedback to You
Types of feedback you can expect to receive in this unit are: Informal feedback on progress in labs/tutes Graded assignments with comments Test results and feedback Solutions to tutes, labs and assignments

Your feedback to Us
Monash is committed to excellence in education and regularly seeks feedback from students, employers and staff. One of the key formal ways students have to provide feedback is through SETU, Student Evaluation of Teacher and Unit. The University's student evaluation policy requires that every unit is evaluated each year. Students are strongly encouraged to complete the surveys. The feedback is anonymous and provides the Faculty with evidence of aspects that students are satisfied and areas for improvement. For more information on Monash's educational strategy, and on student evaluations, see: http://www.monash.edu.au/about/monash-directions/directions.html http://www.policy.monash.edu/policy-bank/academic/education/quality/student-evaluation-policy.html

Previous Student Evaluations of this unit


If you wish to view how previous students rated this unit, please go to https://emuapps.monash.edu.au/unitevaluations/index.jsp

Required Resources
Prescribed text(s) available from the University Bookshop AFF1300 Money and Capital Markets. Hunt & Terry, Compiled by Piyadasa Edirisuriya. Cengage Learning 4

Academic Overview Blackboard (MUSO) Material used in class together with other information of importance to students will be published online. In order to access information about this unit in Blackboard you must be enrolled in the unit and have a valid Authcate Username and Password. Blackboard is accessed through the my.monash portal at URL: https://my.monash.edu.au/muso/blackboard/login/. Q Manual The Q Manual is a student guide for producing quality written work on time. Printed copies are available at the bookshop or online at URL: http://www.buseco.monash.edu.au/publications/qmanual/qmanual.pdf. Calculators Electronic devices (including calculators) are not permitted in tests and examinations in this unit unless identified with an approved for use label. These labels are available from: Caulfield Campus Accounting and Finance Reception Desk (Building H, Level 3).

Recommended Resources
Prescribed text(s) and reading(s) Edirisuriya, P. (2010). Money and capital markets. McGraw-Hill Viney, C., (2009). McGraths Financial Institutions, Instruments & Markets (6th ed.) The McGraw-Hill Companies. Kidwell, D. S, Brimble, M., Beal D. & Willis, D. (2007). Financial markets institutions and money. John Wiley & Sons Australia, Ltd. Lewis, M.K., & Wallace, R. H. (1997). The Australian financial system. South Melbourne: Longman. Mishkin F. S., & Eakins S. G. (2006). Financial markets and institutions (6th ed.). Boston: Addison Wesley. Reserve Bank of Australia (RBA), Bulletins and Annual Reports, 1990 onwards. Valentine, T., Ford G., Edwards V., Sundmacher, M., & Copp, R. (2006). Financial markets and institutions in Australia (2nd ed.). Frenchs Forest: Pearson Education. The RBA Web site at: http://www.rba.gov.au provides electronic versions of some RBA publications.

Unit Schedule
Week 0 1 2 3 4 5 6 7 8 9 10 11 12 Activities ORIENTATION WEEK 20 FEBRUARY - 24 FEBRUARY Overview of the financial system (Required readings: Textbook - Topic 1) Assessment No formal assessment or activities are undertaken in week 0 See Blackboard

The payments system (Required readings: Textbook - See Blackboard Topic 2) Banking Institutions and Prudential Supervision (Required readings: Textbook - Topic 3) Funds management and Insurance (Required readings: Textbook - Topic 4) Introduction to interest rate risk management (Required readings: Textbook - Topic 5) Introduction to markets (Required readings: Textbook - Topic 6) The Share market (Required readings: Textbook Topic 7) The money market (Required readings: Textbook Topic 8) The bond market (Required readings: Textbook Topic 9) Foreign exchange and global capital markets (Required readings: Textbook - Topic 10) Financial futures (Required readings: Textbook Topic11) Swaps and Options (Required readings: Textbook Topic 12) SWOT VAC Examination period See Blackboard See Blackboard See Blackboard See Blackboard See Blackboard See Blackboard See Blackboard See Blackboard See Blackboard See Blackboard No formal assessment is undertaken SWOT VAC LINK to Assessment Policy: http://policy.monash.edu.au/policy-bank/ academic/education/assessment/ assessment-in-coursework-policy.html

Assessment Requirements
Assessment Tasks

Assessment task 1
Title: Major Assignment Due date: Friday, 27 April 2012 Details of task: ASSIGNMENT ISSUE What is the role of financial intermediaries in an economy? Discuss with examples from Australian financial markets. The objective of this report is to apply your theoretical knowledge to analyse a current financial market related issue. By doing that student can gain broader understanding of global and domestic financial system related issues. The assignment report is to be word-processed and presented in business report format. It should include in the following order: a letter (or a memo) of transmittal (addressed to the tutor stating that the assignment report is being submitted and also briefly describing in one or two sentences the significance of the issue/s addressed in the report), executive summary, table of contents, footnotes (or Harvard system of reference citation in text), appendices and bibliography. Please note: there is no need to give purpose, scope, method, limitations and assumptions in your report. Students should start their research for the report by reading the prescribed textbook for this subject: Edirisuriya (2012). Thereafter, students can obtain additional research material from many sources such as The Australian Financial Review, The Australian and The Age. Students can also search periodicals such as Business Review Weekly, The Economist, Shares, Personal Investor and any other business/finance journals or newspapers for additional articles. Some useful financial Web sites are also indicated in this unit outline. Data could be obtained from the Monash university library databases. After a thorough literature search on the above lines with adequate research material in hand, students need to use the marking guide attached to this unit outline in writing their assignment report. Attach any important information such as current newspaper articles, journal articles or reports relating to the topic in the appendices, which should be numbered as I, II and III so on but will carry the usual page numbers. However, make sure to attach only very relevant information and do not attach all reference newspaper/journal articles. The marking guide structure (available from Blackboard) should be used as a guide to writing your report. Students must retain a copy of the assignment for their reference. Word limit: 2500 Weighting/Value: 25% Estimated return date: Marked assignments will be returned in teaching Week 10 by your tutor in your class. Do not ask your friend to collect your assignment as this is not permitted due to privacy regulations. It is your responsibility to collect the marked copy of your assignment from your tutor. As the unit coordinator may request you to produce your marked assignment 7

Assessment Requirements for review or verification purposes, it is suggested that you keep your marked assignment until final exam results are released. If you are unable to attend Week 11 classes, make sure to contact your tutor and arrange a method of collecting your assignment. Criteria for marking: See separate marking guide. Learning objectives assessed: Learning objectives 1-5. Submission details: A hardcopy of the assignment should be submitted to your tutor or as otherwise instructed by your tutor. Electronic submission of the assignment is NOT permitted. Submitting two assignments to two tutors is not allowed and penalty marks will be applied. Please make sure to fill your tutors name and the time of the tutorial on your assignment cover sheet. Without your tutors name, it may be difficult for the tutor to trace your assignment, if it is misplaced or lost. Writing wrong tutors name, wrong tutorial time or not providing tutors name or placing your assignment in a wrong box may result in losing your assignment marks. It is your responsibility to obtain your tutors name and contact details during the first meeting (tutorial class). Penalties for late lodgement: A maximum penalty of 2 marks of the total mark allocated to the assessment tasks will be deducted for each day they are late. Assessment coversheet: Work submitted for assessment MUST be accompanied by a completed and signed assignment coversheet, available at URL: http://www.buseco.monash.edu.au/student/forms/assessment-coversheet.doc. In the case of group assignments, each member of the group must complete and sign a separate assignment coversheet. Additional information: Applications for extension of time: Applications for an extension of time allocated to an assessment task must be made by completing the application form found at URL. http://www.buseco.monash.edu.au/student/exams/speccon.html. The form must be submitted to the Chief Examiner for approval.

Assessment task 2
Title: Presentation Due date: Week 3 - 12 Details of task: Students are required to make a class presentation using one tutorial question (descriptive answer to just one tutorial question not a calculation type tutorial question). Release dates: Marks will be made available to students in Week 12. Weighting/Value: 3% Presentation requirements: Students are required to make a class presentation using one tutorial question. Estimated return date: Marks will be made available to students in Week 12. Criteria for marking: Marks will be allocated based on the quality of the presentation. Learning objectives assessed: Learning objectives 1-5. 8

Assessment Requirements

Assessment task 3
Title: Participation Due date: Week 1 - Week 12 Details of task: Participation is not just attendance and students are required to participate in class discussions. No participation in class discussions means your tutor may give you zero participation marks. Two marks for 100% participation. Less than 25% participation means zero marks. Students are required to participate in class discussions by way of answering questions, asking questions and contributing to other students questions. Weighting/Value: 2% Estimated return date: Marks will be made available to students in Week 12.

Examinations
Examination 1 Weighting: 70% Length: 3 hours Type (open/closed book): Closed book Electronic devices allowed in the exam: approved calculators

Assignment submission
Online submission
If Electronic Submission has been approved for your unit, please submit your work via the VLE site for this unit, which you can access via links in the my.monash portal.

Other Information
Policies
Monash has educational policies, procedures and guidelines, which are designed to ensure that staff and students are aware of the University's academic standards, and to provide advice on how they might uphold them. You can find Monash's Education Policies at: http://policy.monash.edu.au/policy-bank/academic/education/index.html Key educational policies include:

Plagiarism (http://www.policy.monash.edu/policy-bank/academic/education/conduct/plagiarism-policy.html) Assessment (http://www.policy.monash.edu/policy-bank/academic/education/assessment/assessment-in-coursework-po Special Consideration (http://www.policy.monash.edu/policy-bank/academic/education/assessment/special-consideration-policy.h Grading Scale (http://www.policy.monash.edu/policy-bank/academic/education/assessment/grading-scale-policy.html) Discipline: Student Policy (http://www.policy.monash.edu/policy-bank/academic/education/conduct/student-discipline-policy.html) Academic Calendar and Semesters (http://www.monash.edu.au/students/key-dates/); Orientation and Transition (http://www.infotech.monash.edu.au/resources/student/orientation/); and Academic and Administrative Complaints and Grievances Policy (http://www.policy.monash.edu/policy-bank/academic/education/management/complaints-grievance-policy.

Student services
The University provides many different kinds of support services for you. Contact your tutor if you need advice and see the range of services available at www.monash.edu.au/students The Monash University Library provides a range of services and resources that enable you to save time and be more effective in your learning and research. Go to http://www.lib.monash.edu.au or the library tab in my.monash portal for more information. Students who have a disability or medical condition are welcome to contact the Disability Liaison Unit to discuss academic support services. Disability Liaison Officers (DLOs) visit all Victorian campuses on a regular basis Website: http://adm.monash.edu/sss/equity-diversity/disability-liaison/index.html; Telephone: 03 9905 5704 to book an appointment with a DLO; Email: dlu@monash.edu Drop In: Equity and Diversity Centre, Level 1 Gallery Building (Building 55), Monash University, Clayton Campus.

Blackboard (MUSO)
All unit and lecture materials, plus other information of importance to students, are available through the MUSO (Monash University Studies Online) site. You can access MUSO via the My.Monash Portal: http://my.monash.edu.au

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Other Information You can contact MUSO Support by: Jobdesk: http://jobdesk.monash.edu.au/login/index.cfm?jobdesk_id=14 Email: muso.support@calt.monash.edu.au Phone: (+61 3) 9903-1268 Further information can be obtained from the following site http://www.monash.edu.au/muso/support/index.html

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