SYLLABUS

 

The Financial System And The Economy

Econ 3210-07

BAS Room S128, 9:40 A.M. - 11:05 A.M., TUES. & THURS.

FALL, 2009

 

 

Instructor:                  Dr. William F. Ford, BAS N330 (Business-Aerospace Bldg.)  Room N332E.  Phone: 898-2889; E-mail: wfford @mtsu.edu

 

Office Hours:              Tues. & Thurs., 2:30 - 4:00 p.m.  Other times by appointment only.  To schedule appointments, please contact Ms. Hardebeck at ext. 2883 or via e-mail: hardebec@mtsu.edu.

 

Required Text             The required text is Money, The Financial System and the Economy,

and Calculator:          R. Glenn Hubbard (Addison-Wesley), Sixth Edition, 2008.  Check the following websites if you want to rent @ coursesmart.com or get a better buy on your textbook @ www.textbooks.com, www.bookbyte.com, www.classbook.com, www.half.com, www.amazon.com and www.Ecampus.com.  You should also bring a financial calculator to class every time we meet.

 

Objectives:                  (1)     To understand how banks and other financial institutions affect your life when you do business with them.

 

                                    (2)     To analyze the role of money and credit in the U.S. and international economies.

 

                                    (3)     To understand the financial sector of our economy, with particular emphasis on the structure and operations of commercial banks.

 

                                    (4)     To investigate the structure of the Federal Reserve System and its monetary policy role.

 

                                    (5)     To review the basic foundations of monetary theory.

 

(6)         To examine current issues and developments affecting the financial sectors of our economy and the economies of other countries.

 

Lecture Outlines:        Outlines of the lectures in this course are available on the internet @ http://www.mtsu.edu/~wfford

 

Attendance/Grading:  You are expected to attend all classes.  Anyone with more than one unexcused absence will have one letter grade subtracted from their final grade in the course. 

 

 

One-third of your final grade will be based on grades you earn on 6 or more short quizzes.  These will generally be unannounced quizzes, and they will be based strictly on the main issues discussed in the reading material assigned for that day and the prior day’s lecture and assigned readings.  The four highest grades you earn on the quizzes will determine this portion of your grade. If you take less than 4 quizzes due to absences, we’ll add up the grades you earned and divide by 4.  The remaining two-thirds of your grade will be based on your scores on the two one-hour exams shown on this syllabus.  Each counts for one-third of your grade.

 

                                   In addition, there will be one optional field research assignment which will allow you to add up to 5% to your final grade by turning in a paper on a subject that will be announced in class.  Earning an “A” will add 5 points to your final grade; “B” will add 4 points and a “C” will add 3 points.  No points will be awarded for grades below “C”.  All such papers must be turned in to Ms. Hardebeck (BAS N330) by 1:00 p.m. on Thursday, Nov. 19, 2009. 

 

                                    Your maximum grade for the course, then, will be determined as follows:

 

·         The average of your four best quiz grades         =          33 1/3%

·         Plus, your grade on the 1st- hour exam x1/3        =          33 1/3%

·         Plus, your grade on the 2nd- hour exam x 1/3       =          33 1/3%

·         Plus, your field research paper points                 =                  5%       

                                   

                                                                                       TOTAL:         =            105%         

 

                                    Plus/minus grading will not be used in this course.

                                                                        A = 90 – 105

                                                                        B = 80 – 89

                                                                        C = 70 – 79

                                                                        D = 60 – 69

                                                                        F = below 60

 

 

Work Assignments:    You should plan to spend 2-3 hours, on average, preparing for each class.  Primarily, this time should be spent reading the assigned chapter(s) in the text the day before each class. 

 

Ethics Policy:              Students in this course are expected to adhere to MTSU’s high standards of integrity as spelled out in the Student Handbook.  Anyone who cheats on quizzes or exams, or who submits work that is not their own, will be subject to the penalties set forth in the Handbook.

 

Lectures/Exams:

 

Sept.             1             Review of objectives, grading, etc.

                                    Chapter 1 - Introducing Money and the Financial System

                                    (Also, read the Appendix to this Chapter)

                                                     Chapter 1 Handouts -

                                                     1.  Hyperinflation

                                                     2.  Barter Formula

                                                     3.  Money & Happiness

 

             

                      3             Chapter 2 - Money and the Payments System

                                                    Chapter 2 Handouts -

                                                     1.  Credit Problems

                                                     2.  Starbucks

                                                     3.  Monetary and Credit Aggregates Chart

                                                     4.  Notes to Monetary and Credit Aggregates                     

 

                     8             Chapter 3 - Overview of the Financial System

 

                      10           Chapter 4 - Interest Rates and Rates of Return

                                                     Chapter 4 Handouts -

                                                     1.  Present & Future Value Calculations Tables A1-A5

                                                     2.  Starbucks

                                                     3.  Why a Mortgage May be Your Best and Worse Move

                                                     4.  Settlement Statement

                                                     5.  How a 401-K Works

                                                     6.  Prize Winner Announcement

                                                     7.  Lifetime Costs of Some Common Habits

                                                     8.  Benefits of Smoking Cessation

                                                     9.  Can I Count on Social Security?

 

                                               To Calculate Mortgage Rates:

 

                                    bankrate.com and Mortgage Comparison Calculator and amortization table

 

 

                                                              For Tennessee Comptroller of the Treasury see:

 

                                    TN Comptroller

 

                                                    

                     15           Chapter 5 - The Theory of Portfolio Allocation

                                                      Chapter 5 Handout – Pocket Guide to Money

 

                      17           Chapter 6 - Determining Market Interest Rates

             

                      22           Chapter 7 - Risk Structure and Term Structure of Interest Rates

 

                        For Money Market Rates See: moneyrates

                                     For Treasury Yield Curve See: bondsonline and US Treasury

 

                     24           Extra Credit Field Study Day - no class

 

                     29           Chapter 8 - The Foreign-Exchange Market and Exchange Rates

                                                      Chapter 8 Handouts –

                                                      1.  Balance of Payments

                                                      2.  Countries that use the U.S. Dollar

                                                      3.  Top 50 Banks in the World

 

                                    For Exchange Rates See: 

                                    Exchange Rates Site 1 and Exchange Rates Site 2

 

 

 

Oct.              1             Chapter 10 - Information and Financial Market Efficiency

                       Chapter 11 - Reducing Transactions and Information Costs

 

                      6             Chapter 12 - What Financial Institutions Do

                                                      Chapter 12 Handouts

                                                      Banking Industry Handout

                                                      1.  Cover Page

                                                      2.  How Financial Institutions Make Money

                                                      3.  Net Income of Banks & Thrifts

                                                      4.  TennCity Bank's Balance Sheet & Income

                                                            Statement

                                                                        Exhibit 1

                                                                        Exhibit 2        

                                                      5.  FDIC Report on All FDIC-Insured Institutions

                                                      6.  History of Bank Laws

 

                     8             Chapter 13 - The Business of Banking

                                                      Chapter 13 Handout - Top 50 Banks in the World

 

                     13           Chapter 14 - The Banking Industry                 

 

                      15           Chapter 15 - Banking Regulation: Crisis and Response

                                                     Chapter 15 Handout – History of Banking Laws

 

                      16           Deadline to drop this course with a grade of “W”

                    

                      17-20      Fall Break - No Classes            

 

                     22           Chapter 16 - Banking in the International Economy

                                                      Chapter 16 Handouts -    

                                                      1.  Forbes World's Largest Financial Companies

                                                      2.  World GDP Ranked in Order (Purchasing Power Parity)

                                                       3.  Trade, Investment & the Current Account

             

                      27           1st Hour Exam:  Chapters 1-8 & 10-16

                                     *Bring blue MC answer sheet, pencil and a financial calculator

                     

                     29           Chapter 19 - Organization of Central Banks (including the U.S. Federal Reserve System)

                                                      Chapter 19 Handouts - (also used for Chap. 17 & 18)

                                                      1.  Fed Condition/Income Statement

                                                      2.  Monetary Model

                                                      3.  Monetary Model Map

                                                      4.  Monetary Model Money Supply

                                                      5.  Multiple Expansion of Deposits

                                                      6.  Monetary Policy & International Trade

                                                      7.  Organization & Authority of the Federal Reserve System

                                                     

 

Nov.              3             Chapter 17 - The Money Supply Process

                                                      Chapter 17 Handouts - (See Chap.19 Handouts)

 

        5             Chapter 18 - Changes in the Monetary Base

                                         Chapter 18 Handouts - (See Chap. 19 Handouts)

 

                      10           Chapter 20 - Monetary Policy Tools

 

                      12           Chapter 21 - The Conduct of Monetary Policy

 

                     17           Chapter 22 - The International Financial System & Monetary Policy

 

                      19           Chapter 25 - Aggregate Demand and Aggregate Supply

                                    Research Assignment Due to Ms. Hardebeck

 

                     24           Chapter 26 - Money and Output in the Short Run        

 

                     26-28      Thanksgiving Holidays - no classes

       

Dec.              1             Chapter 27 - Information Problems and Channels for Monetary Policy          

                    

                     3             Chapter 28 - Inflation:  Causes and Consequences

                                                      Chapter 28 Handout – The Power of $50

             

                     8             2nd Hour Exam - 9:40 a.m. - 11:05 a.m. BAS S128

                                     Chapters 17-22 & 25-28

                                     *Bring blue MC answer sheet, pencil and a financial calculator

 

*Please Note:  You are required to bring an answer sheet (Form No. 19641) and pencil, for both of the hour exams.  The blue forms can be purchased at the bookstore.  They are not required for quizzes.

                                   

                                   

 

 

 

 

 

 

 

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                NOTICE TO STUDENTS WITH DISABILITIES:  Please see me or the Director for Disabled Student Services (John Harris, 898-2783) if you need any special help or accommodations to complete your work in this course successfully.  This should be done as soon as possible.

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Dr. Ford’s Background

 

Professor William F. Ford holds the Weatherford Chair of Finance in the College of Business at Middle Tennessee State University.  He formerly served as Dean of the Business School at the University of Denver; President and CEO of the Federal Reserve Bank of Atlanta; President and COO of First Nationwide Bank; Senior Vice President of Wells Fargo Bank and as Executive Director and Chief Economist of the American Bankers Association.  Dr. Ford often appears on nationwide and regional TV and radio business news shows as an economic policy expert and served as TeleCheck’s senior economic advisor from 1990 – 2001. He has authored or coauthored over 100 articles in business and academic journals, has served on the boards of six private corporations as well as the U.S. Chamber of Commerce.  He also chaired MTSU’s Tennessee Lottery Task Force which prepared the campus for lottery scholarships. Dr. Ford received the Tennessee Board of Regents’ Academic Excellence Award for 2003.

 

A veteran of the U.S. Navy Submarine Service, Dr. Ford earned his B.A. in economics (summa cum laude), from the University of Texas; his M.A. and Ph.D. degrees from the University of Michigan and is a graduate of the Senior Executive Program at Stanford University’s Business School.

 

 

 

 

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 - - - IMPORTANT - - -

Tennessee Education Lottery Scholarship Criteria and Expectations

 

To retain Tennessee Education Lottery Scholarship eligibility, you must earn a cumulative TELS GPA of 2.75 after 24 and 48 attempted hours and a cumulative TELS GPA of 3.0 thereafter.  You may qualify with a 2.75 cumulative GPA after 72 attempted hours (and subsequent semesters), if you are enrolled full-time and maintain a semester GPA of at least 3.0. A grade of C, D, F, or I in this class may negatively impact TELS eligibility. Dropping a class after 14 days may also impact eligibility; if you withdraw from this class and it results in an enrollment status of less than full time, you may lose eligibility for your lottery scholarship. Lottery recipients are eligible to receive the scholarship for a maximum of five years from the date of initial enrollment, or until a bachelor degree is earned.  For additional Lottery rules, please refer to your Lottery Statement of Understanding form, review lottery requirements on the web at http://scholarships.web.mtsu.edu/telsconteligibility.htm, or contact the Financial Aid Office at 898-2830.

 

 

 

 

 

Jennings A. Jones College of Business

Vision Statement

 

The Jennings A. Jones College of Business intends to become recognized by appropriate national  publications, both popular and professional, as a premier college of business, first in the state of Tennessee and then in the region, at both the undergraduate and master’s level. We also intend to be recognized by Tennessee business executives as the supplier of choice for education and training for corporate employees and executives.

 

Philosophies and Attributes

The most important accomplishments of the University happen in the classrooms, in the research environments, and in the professional interactions. All other activities are designed to facilitate these important accomplishments.

 

We will strive for Accessibility, Quality and Value. Accessibility means we use creative and innovative methods to make education available to all who meet the requirements for admission. Quality means we will continuously raise the academic bar to produce graduates who distinguish themselves in their chosen fields. Value means we will appropriately intersect accessibility and quality with cost.

 

Mission

The Jennings A. Jones College of Business provides the intellectual foundation for our students’ success. We create a positive environment for quality teaching and learning while contributing to intellectual pursuits and serving middle Tennessee and the broader business community. We will be responsive and accountable as we enhance accessibility, quality and value to our constituents.  Simply stated, our job is to increase the scope and dissemination of the body of knowledge in our relevant disciplines.