CIB Syllabus

LUISS University LUISS Business School

CIB Course Outline	Corporate and Investment Banking Spring 2016

Instructor Name: John Teall	Starting Date: 04/04/2016
Office Location: TBA	Tel. No.: TBA
Office Hours: TBA
Class Meeting Time: Wednesdays: 9:00 - 1:00	Email Address: jteall@jteall.com
Class Meeting Days: April 4, 6, 7, 11, 13, 14, 18, 20, 21 and 28 (Exam)	URL Code: http://www.jteall.com; http://www.jteall.com/cib.htm

COURSE DESCRIPTION:

This course introduces the functions of corporate and investment banks in the modern economy. Their essential roles will be discussed along with their regulation, activities and histories. Key financial concepts such as laddering, moral hazard, lemons and agency problems will be among the important theoretical and analytical concepts introduced. The efficiency and rationality of financial markets will also be examined as will possible institutional dark sides, such as their potential contributions to bubbles, crashes and financial scandals.

Corporate and Investment Banking introduces institutional and market characteristics concerning corporate and investment banking along with the environments in which these institutions function. The course seeks to provide the basic theoretical background and analytical tools necessary to understand the general workings of such financial institutions and the markets in which they operate. The course will focus on a variety of developments, technologies and key concerns in financial institutions, markets and other arenas, particularly those that significantly affect the global economy.

Some introductory material will be discussed to review background topics and to ensure that all students are comfortable proceeding with more advanced materials. We will assume that students in the class have some very basic exposure to most topics discussed in the course, but are interested in enhancing this background.

COURSE OBJECTIVES:

Corporate and Investment Banking introduces institutional and market characteristics concerning corporate and investment banking along with the environments in which these institutions function. The course seeks to provide the basic theoretical background and analytical tools necessary to understand the general workings of such financial institutions and the markets in which they operate. The course will focus on a variety of developments, technologies and key concerns in financial institutions, markets and other arenas, particularly those that significantly affect the global economy.

EXPECTED STUDENT LEARNING OUTCOMES:

- Students successfully completing this course should have an appreciation for the structures, functions, efficiency and complexity of modern corporate and investment banking institutions, the instruments that they create and the markets in which they operate.

- Students successfully completing this course should expect to possess and be able to apply quantitative skills and the theoretical background along with related empirical knowledge to enable them to better function in and with these financial institutions in professional settings.

- Students will demonstrate a functional grasp of how general and certain unique financial tools are applied in valuation and hedging scenarios.

- Students successfully completing this course will be able to discuss the complex relationships between and among financial institutions and regulators, producers in the real sectors, and the general public.

PREREQUISITES:

An introductory financial management or investments course or an appropriate combination of accounting and economics courses. Feel free to discuss this issue with your instructor.

RECOMMENDED TEXT:
Primary reading materials for this course, the "Coursepack," "PowerPoint Slides" and "Additional Readings Package," which include the cases, will be described later in the document and will be available online. While no textbook will be required, and a number of texts will make suitable reference sources, the instructor recomends the following:

Fabozzi, Frank J., Franco P. Modigliani and Frank J. Jones (2009): Foundations of Financial Markets and Institutions, 4/E, Englewood Cliffs, New Jersey, Prentice Hall. ISBN-10: 0136135315 • ISBN-13: 9780136135319.

The instructor will make a course pack available to students at cibcoursepack.htm . This course pack will follow course lectures topic-by-topic.

Additional Readings will be suggested and listed at cibadditional_readings.htm.

COURSE REQUIREMENTS AND GRADING POLICY:

The grade for the course will be based on performance in three activities: a mid-term exam, a final exam and a project. Overall grades for students will be assigned on the basis of the following percentage system:

                Case presentation/Project 30%
                Class Participation 20%
              Exam                     50%

STATEMENT ON ACADEMIC INTEGRITY
Student-teacher relationships are built on trust. For example, students must trust that teachers have made appropriate decisions about the structure and content of the courses they teach, and teachers must trust that the assignments that students submit are their own. Acts that violate this trust undermine the educational process. The LUISS University Code of Academic Integrity defines various forms of academic dishonesty with which you should be familiar. In this class, all assignments, including exams that are turned in for a grade must represent the student’s own work. In cases where help was received, or teamwork was allowed, a notation on the assignment should indicate your collaboration (e.g., all collaborating students place their names on the assignment). Submission of any assignment that is in violation of this policy will result in a grade of “F” for the course. The University may take further action. If you have any question concerning this policy before submitting an assignment or taking an exam, please feel free to ask for clarification. The instructor emphasizes this; you should not hesitate to discuss such matters and clarify any uncertainties with your instructor to ensure that no problems are encountered and that you are comfortable that you are acting in a proper manner given the complexities that might arise. Additional details concerning academic integrity in this particular course are on line at https://www.jteall.com/integrity.htm.

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CIB Course Outline	Corporate and Investment Banking Spring 2016

The outline below reflects course coverage, with topics arranged in their anticipated order. Topics on this outline are the same as in the course pack for the class (http://www/jteall.com/cibcoursepack.htm) and will follow the same order. Dates are not given to each topic to allow flexibility in timing based on ongoing scenarios affecting financial institutions, student interest and questions.

LESSON 1, April 4, 9:00 - 11:00
Money, Financial Institutions and Financial Intermediation: An Introduction
A. An Introduction to Financial Institutions
B. An Introduction to Money and Central Banks
C. Key International Banking and Financial Institutions
D. An Introduction to Financial Intermediation

LESSON 2, April 6, 9:00 - 11:00
Securities and Essential Microeconomics
A. Corporate Securities as Options and Capital Structure
B. The Principal-Agent Problem
C. Moral Hazard
D. Contracting
E. Adverse Selection and Lemons Markets

LESSON 3, April 7, 9:00 - 11:00
Commercial Banking: An Introduction
A. Commercial Banks
B. Variations of the Commercial Bank
C. Bank Safety
D. What Makes Banks Special?
E. Adverse Selection and Rationing
F. Moral Hazard and the Asset Substitution Problem

LESSON 4, April 11, 9:00 - 11:00
Issues in Depository Institutions and Hedging
A. Bank Issues of Securities
B. Eurocurrency Issues
C. Banks as Monitors and Fiduciaries
D. Structured Lending
E. Thrift Institutions
F. Asset-Liability Hedging

LESSON 5, April 13, 9:00 - 11:00
Bank Crises, Failure, Regulation and Regulators
A. Bank Failures and Crises
B. Bank Regulators
C. Resolving Bank Failures
D. Banking Legislation

Experiential Exercises
Readings:
Case Study: Northern Rock

LESSON 6, April 14, 9:00 - 11:00
Investment Banks, Equities and Initial Public Offerings
A. Common and Preferred Stock Characteristics
B. Benefits and Costs of Going Public
C. Investment Banking and the Underwriting Process
D. Alternatives to Traditional Underwriting

LESSON 7, April 18, 9:00 - 11:00
Experiential Exercises

Readings:
Case Study: Alibaba IPO
Case Study: Lehman Brothers

LESSON 8, April 20, 9:00 - 11:00
IPO Anomalies and Seasoned Offerings
A. The IPO Underpricing Anomaly
B. Explaining the Short-run IPO Anomalies
C. Long-Run IPO Performance
D. Seasoned Equity Offerings
Experiential Exercises

Readings:
Case Study: Ferrari IPO

LESSON 9, April 21, 9:00 - 11:00
Bond Underwriting, Securitization and Trading
A. Bond Underwriting
B. Structured Securities and Securitization
C. Trading and Secondary Markets

EXAM, April 28, 9:00 - 11:00