FINAN 6410 - Financial Markets Laboratory

Financial economics is often perceived as abstract and mathematical and out of reach for those who prefer a “hands on” approach. In this class, students will learn about finance through participation in a series of eight online market trading sessions. Through trading in a “closed economy” (where your classmates are the only other traders in the online markets, see http://uleef.business.utah.edu/newsite/index-2.html for sample lectures and http://www.flexemarkets.com for the online trading platform) students will gain invaluable experience while trading in different roles across different market structures. Students will read the rules of engagement the week before and will prepare for each trading session. Then the results from the trading sessions will form the basis for the lectures on the underlying theory. Students will also be able to configure and operate their own markets (i.e., become market makers). We will cover both intermediate and advanced Finance topics: Continuous Open Book Systems, Call Markets, Capital Asset Pricing Model, Contingent Claims, Performance Evaluation (Alphas, Betas, and Sharpe Ratios), Hedging, Income Smoothing, Return Predictability, Self-Fulfilling Expectations, Efficient Markets Hypothesis, Information Aggregation, Decentralized (Over-The-Counter) Markets, Dark Pools, Information Percolation, Adverse Selection, Default, Credit Spread and Leverage, Pooling and Separation, Insurance Premium and Deductible, Insurance Mandate, Asset-Backed Securities, Credit Rollover, Bubbles and Crashes, and Bank Runs. Grading is based on a mixture of trading performance (with the luck component filtered out), quizzes and tests.