Syllabus for FIN-382

RISK MANAGEMENT

COURSE DESCRIPTION

Risk Management presents an overview of the measurement and management of risks in modern financial institutions. The course begins with a review of topics, such as the efficient frontier and capital asset pricing model (CAPM), that serve as a basis for understanding risk-return analysis. The course then moves on to examine various tools used in measuring and analyzing risks, placing emphasis on value at risk (VaR) approaches. This course also discusses off-balance-sheet items such as loan commitments and securitization and examines the role of regulators in controlling such risks. As a foundation for understanding financial crises, the course describes the U.S. mortgage market, asset-backed securities (ABSs) and collateralized debt obligations (CDOs). Finally, the course evaluates the benefits of scenario analysis and stress testing.

Advisory: This is an upper-level course. It is advisable to have completed FIN-301 (Principles of Finance); either MAT-119 (Quantitative Business Analysis) or MAT-128 (Precalculus for Business); and STA-201 (Principles of Statistics) with grades of C or better in order to succeed in this course. Students are responsible for making sure that they have the necessary knowledge.

COURSE OBJECTIVES

After completing this course, students will be able to:

  1. Discuss risk-return analysis and the methods used by financial analysts to manage risk.
  2. Distinguish between the roles of commercial and investment banking; insurance companies and pension plans; and mutual and hedge funds in the economy.
  3. Characterize financial instruments and how they are used to manage risk.
  4. Evaluate interest rate risk management approaches
  5. Assess the strengths and weakness of value at risk (VaR) measures.
  6. Analyze methods for monitoring volatilities and correlations.
  7. Evaluate the historical simulation and model-building approaches to calculating market risk VaR.
  8. Analyze the management of credit risk, distinguishing between risk-neutral and real-world estimates.
  9. Explain the origins of the 2007 U.S. financial crisis and the contributions of the mortgage market, asset backed securities, and collateralized debt obligations
  10. Evaluate the role of scenario analysis and stress testing in risk management.
  11. Differentiate between operational, liquidity, and model risks.
  12. Discuss approaches for estimating economic capital for different risks as well as risk-adjusted return on capital (RAROC).

                                                                                                                                                                       

COURSE MATERIALS

You will need the following materials to do the work of the course. The required textbook is available from the College's textbook supplier, MBS Direct.

Required Textbook

  1. Hull, J. (2012). Risk management and financial institutions, 3d ed. Hoboken, NJ: John Wiley & Sons, Inc..

ISBN-13: 978-1-118-26903-9

COURSE STRUCTURE

Risk Management is a three-credit online course, consisting of eight (8) modules. Modules include an overview, topics, learning objectives, study materials, and activities. Module titles are listed below.

 

  1. Module 1: Introduction to Risk Management
  2. Module 2: Financial Instruments and Interest Rate Risk
  3. Module 3: Value at Risk, Volatility, and Correlations
  4. Module 4: Market Risk VaR
  5. Module 5: Credit Risk
  6. Module 6: The Credit Crunch and Stress-Testing
  7. Module 7: Operational, Liquidity, and Model Risks
  8. Module 8: Economic Capital and Risk-Adjusted Return on Capital (RAROC)

Consult the course Calendar for assignment due dates.

ASSESSMENT METHODS

For your formal work in the course, you are required to participate in online discussion forums, complete written assignments, take a proctored online midterm examination, and complete a final project. See below for more details.

Consult the course Calendar for assignment due dates.

Discussion Forums

You are required to participate in seven (7) graded discussion forums as well as an ungraded "Introductions" forum. Your course space contains a rubric that will aid in the grading of online discussions.

For posting guidelines and help with discussion forums, please see the Student Handbook located within the General Information page of the course Web site.

Located within the Evaluation Rubrics section of the course Web site is the rubric used in the grading of online discussions.

Written Assignments

You are required to complete eight (8) written assignments. Most include both content questions and problems. These problems will help to prepare you for similar problems on the midterm examination.

For help regarding preparing and submitting assignments, see the Student Handbook located within the General Information page of the course Web site.

Midterm Examination

You are required to take a proctored online midterm examination.

The midterm is a closed-book, proctored online exam. It is two hours long and covers all reading and assignments through module 4 of the course (textbook chapters 1 through 5, 7, and 8 through 13). It consists of four problem-type questions. You may use a non-programmable calculator to use for the exam.

For the midterm, you are required to use the College's Online Proctor Service (OPS). Please refer to the "Examinations and Proctors" section of the Online Student Handbook (see General Information area of the course Web site) for further information about scheduling and taking online exams and for all exam policies and procedures. You are strongly advised to schedule your exam within the first week of the semester.

Online exams are administered through the course Web site. Consult the course Calendar for the official dates of exam weeks.

Statement about Cheating

You are on your honor not to cheat during an exam. Cheating means:

  1. Looking up any answer or part of an answer in an unauthorized textbook or on the Internet, or using any other source to find an answer.
  2. Copying and pasting or, in any way copying responses or parts of responses from any other source into your exams. This includes but is not limited to copying and pasting from other documents or spreadsheets, whether written by yourself or anyone else.
  3. Plagiarizing answers.
  4. Asking anyone else to assist you by whatever means available while you take an exam.
  5. Copying any part of an exam to share with other students.
  6. Telling your mentor that you need another attempt at an exam because your connection to the Internet was interrupted when that is not true.

If there is evidence that you have cheated or plagiarized in an exam, the exam will be declared invalid, and you will fail the course.

Final Project

The final project consists of a paper of 2,500 to 3,000 words (10 to 12 pages) in which you will  analyze the risk management practices of a real-world corporation. Located within the Evaluation Rubrics section of the course Web site is the rubric used in the grading of the final project.

See the Final Project area of the course for a fuller description.

For help regarding preparing and submitting the final project, see the Student Handbook  located within the General Information page of the course Web site. 

GRADING AND EVALUATION

Your grade in the course will be determined as follows:

  1. Online discussions (7)—10 percent
  2. Written assignments (8)—40 percent
  3. Midterm Examination (proctored online, modules 1 - 4)—30 percent
  4. Final project—20 percent

All activities will receive a numerical grade of 0–100. You will receive a score of 0 for any work not submitted. Your final grade in the course will be a letter grade. Letter grade equivalents for numerical grades are as follows:

A

=

93–100

C+

=

78–79

A–

=

90–92

C

=

73–77

B+

=

88–89

C–

=

70–72

B

=

83–87

D

=

60–69

B–

=

80–82

F

=

Below 60

To receive credit for the course, you must earn a letter grade of C or better (for an area of study course) or D or better (for a nonarea of study course), based on the weighted average of all assigned course work (e.g., exams, assignments, discussion postings, etc.).

STRATEGIES FOR SUCCESS

First Steps to Success

To succeed in this course, take the following first steps:

  1. Read carefully the entire Syllabus, making sure that all aspects of the course are clear to you and that you have all the materials required for the course.
  2. Take the time to read the entire Online Student Handbook. The Handbook answers many questions about how to proceed through the course and how to get the most from your educational experience at Thomas Edison State College.
  3. Familiarize yourself with the learning management systems environment—how to navigate it and what the various course areas contain. If you know what to expect as you navigate the course, you can better pace yourself and complete the work on time.
  4. If you are not familiar with Web-based learning be sure to review the processes for posting responses online and submitting assignments before class begins.

Study Tips

Consider the following study tips for success:

  1. To stay on track throughout the course, begin each week by consulting the course Calendar. The Calendar provides an overview of the course and indicates due dates for submitting assignments, posting discussions, and scheduling and taking examinations.
  2. Check Announcements regularly for new course information.

ACADEMIC INTEGRITY

Students at Thomas Edison State College are expected to exhibit the highest level of academic citizenship. In particular, students are expected to read and follow all policies, procedures, and program information guidelines contained in publications; pursue their learning goals with honesty and integrity; demonstrate that they are progressing satisfactorily and in a timely fashion by meeting course deadlines and following outlined procedures; observe a code of mutual respect in dealing with mentors, staff, and other students; behave in a manner consistent with the standards and codes of the profession in which they are practicing; keep official records updated regarding changes in name, address, telephone number, or e-mail address; and meet financial obligations in a timely manner. Students not practicing good academic citizenship may be subject to disciplinary action including suspension, dismissal, or financial holds on records.

Academic Dishonesty

Thomas Edison State College expects all of its students to approach their education with academic integrity—the pursuit of scholarly activity free from fraud and deception. All mentors and administrative staff members at the College insist on strict standards of academic honesty in all courses. Academic dishonesty undermines this objective. Academic dishonesty takes the following forms:

  1. Cheating
  2. Plagiarizing (including copying and pasting from the Internet without using quotation marks and without acknowledging sources)
  3. Fabricating information or citations
  4. Facilitating acts of dishonesty by others
  5. Unauthorized access to examinations or the use of unauthorized materials during exam administration
  6. Submitting the work of another person or work previously used without informing the mentor
  7. Tampering with the academic work of other students

Academic dishonesty will result in disciplinary action and possible dismissal from the College. Students who submit papers that are found to be plagiarized will receive an F on the plagiarized assignment, may receive a grade of F for the course, and may face dismissal from the College.

A student who is charged with academic dishonesty will be given oral or written notice of the charge. If a mentor or College official believes the infraction is serious enough to warrant referral of the case to the academic dean, or if the mentor awards a final grade of F in the course because of the infraction, the student and the mentor will be afforded formal due process.

If a student is found cheating or using unauthorized materials on an examination, he or she will automatically receive a grade of F on that examination. Students who believe they have been falsely accused of academic dishonesty should seek redress through informal discussions with the mentor, through the office of the dean, or through an executive officer of Thomas Edison State College.

Plagiarism

Using someone else's work as your own is plagiarism. Although it may seem like simple dishonesty, plagiarism is against the law. Thomas Edison State College takes a strong stance against plagiarism, and students found to be plagiarizing will be severely penalized. If you copy phrases, sentences, paragraphs, or whole documents word-for-word—or if you paraphrase by changing a word here and there—without identifying the author, then you are plagiarizing. Please keep in mind that this type of identification applies to Internet sources as well as to print-based sources. Copying and pasting from the Internet, without using quotation marks and without acknowledging sources, constitutes plagiarism.  (For information about how to cite Internet sources, see Online Student Handbook > Academic Standards > "Citing Sources.")

Accidentally copying the words and ideas of another writer does not excuse the charge of plagiarism. It is easy to jot down notes and ideas from many sources and then write your own paper without knowing which words are your own and which are someone else's. It is more difficult to keep track of each and every source. However, the conscientious writer who wishes to avoid plagiarizing never fails to keep careful track of sources.

Always be aware that if you write without acknowledging the sources of your ideas, you run the risk of being charged with plagiarism.

Clearly, plagiarism, no matter the degree of intent to deceive, defeats the purpose of education. If you plagiarize deliberately, you are not educating yourself, and you are wasting your time on courses meant to improve your skills. If you plagiarize through carelessness, you are deceiving yourself.

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