Financial Markets


An introduction to Financial Markets and Institutions.


The aim of this Module is to provide the student with an understanding of the role, functions and tools of the financial services industry in the context of both domestic economies and the world economy.

Learning Outcomes

By the end of this module the student should be able to:

1.  Understand current issues affecting financial markets and institutions and their customers;

2.  Understand the workings of financial markets and institutions and the flow of funds between global markets.

Indicative Content

1 Money and the Financial System

The Six Parts of the Financial System; What is Money and How Can We Measure It?; The Payment System.

2 The Risk and Term Structure of Interests Rates

The Bond Market and the Determination of Interests Rates; Ratings and the Risk Structure of Interests Rates; The Yield Curve; Theories of the Term Structure of Interests Rates.

3 Stock Markets and Derivatives

The Essential Characteristics of Common Stock; Measuring the Level of the Stock Market; Investing in Stocks for the Long Run; What are Derivatives?; Forwards and Futures; Options; Swaps.

4 Financial Institutions

The Role of Financial Intermediaries; Information Asymmetries and Information Costs; Bank Management; Bank Risk: Where it comes from and what to do about it?

5 Regulation and Financial Crises

Understanding the Central Bank's Balance Sheet; Monetary Base; the Money Multiplier and Money Supply; Monetary Policy; Unconventional Monetary Policy Tools.

6 Central Banking and Monetary Policy

The Need for Regulating the Financial System; The Government Safety Net; Regulation and Supervision of the Financial System; Financial Crises.

7 Current Topics on Financial Markets and Institutions

Exchange Rates Determination and Foreign Exchange Markets.

Statement on Teaching, Learning and Assessment

The final exam will be a combination of theoretical questions and problems in which students have to demonstrate their knowledge and ability to apply effectively the theories.

Teaching and Learning Work Loads

Total 200
Lecture 28
Tutorial/Seminar 10
Supervised Practical Activity 0
Unsupervised Practical Activity 0
Assessment 50
Independent 112

Guidance notes

Credit Value – The total value of SCQF credits for the module. 20 credits are the equivalent of 10 ECTS credits. A full-time student should normally register for 60 SCQF credits per semester.


We make every effort to ensure that the information on our website is accurate but it is possible that some changes may occur prior to the academic year of entry. The modules listed in this catalogue are offered subject to availability during academic year 2019/10 , and may be subject to change for future years.