Januari 2026 – Juni 2026
Studiepunten: 3
Docent Marc De Ceuster
Study material:
Valdez, Stephen and Philip Molyneux, An Introduction to Global Financial Markets
(8ed), Macmillan Education (Palgrave), 2016, pp. 518. (Price: 61 euro)
Learning outcomes:
Analyst: You can give an overview of the role and the institutional structure of the
financial markets and institutions.
Analyst: You know the basic terminology of the financial world so you can easily
understand financial economic reports.
Analyst: You can explain basic concepts of the financial world.
Course contents:
the role of direct and indirect finance in the economy
the different types of banks
the way how money markets, capital markets and derivative markets work and the
products that are traded in these markets
the role of regulation and supervision
Some key trends in global financial markets (including ESG)
Assessment method:
Examination: written examination without oral presentation, electronic, closed book,
multiple-choice, open-queston, exercises.
For the exam you should be able to explain concepts in an concise and correct way
and explain their relationships with financial markets and institutions, compare
financial concepts, give an overview of the role and the institutional structure of f
inancial markets and institutions, reflect on financial problems, apply financial
concepts in small exercises (Excel can be used but we do NOT provide cheat sheets
with formulas.)
Written assignment (no second assessment period): a 1 page opinion article as a
reaction to an article published in a financial newspaper or magazine (Financial
Times, Wall Street Journal (Europe), The Economist, ... ). The opinion article will
carry a weight of 2 points on 20.
Grading:
explain concepts in an concise and correct way and explain their relationships with
financial markets and institutions
compare financial concepts.
give an overview of the role and the institutional structure of financial markets and
institutions.
reflect on financial problems.
apply financial concepts in small exercises (Excel can be used but we do NOT provide
cheat sheets with formulas.)
,Table of Contents
1. The Financial System..........................................................................................................................1
The actors...........................................................................................................................................1
The financial system...........................................................................................................................3
Role of the government......................................................................................................................5
Review questions................................................................................................................................5
2. Money and Bond Analytics: fixed income markets.............................................................................6
Financing sources...............................................................................................................................6
Interest rates......................................................................................................................................6
Time value of money..........................................................................................................................7
Multiple cash flows.............................................................................................................................8
Bond pricing........................................................................................................................................8
Yields..................................................................................................................................................9
3. Money and Bond Markets................................................................................................................11
Ratings..............................................................................................................................................11
The instruments................................................................................................................................11
Money Market Instruments (Wholesale)..........................................................................................13
Capital market instruments..............................................................................................................14
Primary Market.................................................................................................................................17
Secondary Market............................................................................................................................17
4. Equity Markets..................................................................................................................................18
Equity holder and their rights...........................................................................................................18
Primary market.................................................................................................................................20
Secondary Market............................................................................................................................20
Asset Classes.....................................................................................................................................21
Valuing a share.................................................................................................................................22
Indexes.............................................................................................................................................22
5. Risk and Return.................................................................................................................................24
What is risk?.....................................................................................................................................24
Distribution of the returns of an asset..............................................................................................24
Portfolio theory................................................................................................................................24
6. Derivatives........................................................................................................................................27
Setting the scene..............................................................................................................................27
Spot contracts...................................................................................................................................27
Forward contracts............................................................................................................................29
Futures.............................................................................................................................................30
Swaps...............................................................................................................................................30
7. Derivatives - options.........................................................................................................................31
Options.............................................................................................................................................31
Derivates use revisited (optional material).......................................................................................32
8. Exercises...........................................................................................................................................34
9. Financial Intermediation...................................................................................................................40
Players..............................................................................................................................................40
Depository institutions.....................................................................................................................41
Non depository institutions..............................................................................................................43
Mutual funds....................................................................................................................................44
Alternative investments...................................................................................................................45
Private equity...................................................................................................................................46
10. Commercial and Investment Banking.............................................................................................48
Commercial banking.........................................................................................................................48
, Investment banking..........................................................................................................................50
11. The Financial Crisis of 2008.............................................................................................................52
Timeline............................................................................................................................................53
12. Regulation and Supervision............................................................................................................57
Banking is risky business...................................................................................................................57
Regulators.........................................................................................................................................57
Supervision.......................................................................................................................................60
, 1. The Financial System
The actors
Borrowers and lenders (haves and havenots)
Lenders (haves): posses capital and can lend it out. => want to earn a return on
their savings
Examples: households (savings), banks
Borrowers (havenots): need money to finance consumption or investment and will
have to raise capital.
Examples: households (mortgage loan), firms (investments), governments (dept>GDP)
(issuing bonds)
Net wealth = assets - liabilities
Example: When a single household owns a house of 100 but at the same time has a
remaining mortgage debt of 80, its net wealth is 20.
Growth Drivers in Net Wealth
- Value changes in assets and liabilities
- Net-income from labour, capital or transfers (i.e. pensions, social security based
income)
- Inheritances, gifts
Wealth Creation: “Assets put money in your pocket, whether you work or not, and
liabilities take money from your pocket.” Robert Kiyosaki => Wealth increases when
assets grow faster than liabilities.
Wealth is not distibuted equally, how can this be visualised? Gini Coefficient, Lorenz
curve, …
An asset is a possession that has value in an exchange transaction.
- Tangible assets or real assets derive value from their physical character and
the utility they generate.
Examples: house, car, laptop, …
- Intangible assets derive value from a legal claim to some future benefit.
Examples: brand name, patent, copyright, software license, goodwill, …
- Financial assets are intangible assets that represent a claim to future cash.
Examples: stocks, bonds, savings account, investment fund, …
Asset Classes
- Traditional: Common stock, Bonds, Cash
- Alternative: Real estate, Commodities (gold, silver, …), Private equity, Hedge
funds, Venture capital, Currencies (forex)
Liabilities = financial obligations or debts => Mortgage loans, consumer loans, tax
debt
Financial Actors
Households
- Supply savings to the financial
system
- Borrow money for housing,
consumption, education
Assets: real estate, shares, bonds, bank
deposits, …
Liabilities: mortgages, consumer loans,
tax dept, …
=> also use leverage
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