final exam

John Molson School of Business

Department of Finance

COMM 220 - Analysis of Markets

Winter 2020 Section K

General Information

Class time and location: Friday 8:45-11:30 in MB 2.210

Course instructor: Tingting Wu

Office location: MB-12.236

Email: [email protected] (please write COMM220 at the start of subject line)

Office hours: Thursday and Friday 11:45–12:45 or by appointment

*Email is the best way to reach me. Please DO NOT message me through moodle.

COMM 220/4 K 2

Course Description

This course provides a general perspective on the history, operation and relationships between Canadian and international product, labour and financial markets. Specifically, students will be introduced to issues of fundamental importance to today’s managers and entrepreneurs such as changes in structure and competitiveness in these markets in response to government policies, the determination and behaviour of interest rates, inflation, market integration, and the role and function of financial intermediation. It further provides students with the knowledge of the role and impact of regulation and other government interventions in these markets. Prerequisite: COMM 210, 215; ECON 201 or equivalent; ECON 203 or equivalent previously or concurrently.

Learning Objectives

COMM 220 builds upon the pre-requisite micro- and macro-economic courses students have previously taken and develops an integrated conceptual framework for the economic analysis of the relationships between firms, consumers, and the economic environment in which they operate. This course provides the necessary foundations for courses in areas of Finance, Management, Accounting, Marketing, and Entrepreneurship. The course objective is to provide students with an understanding of the key economic concepts used in the analysis of markets as well as the ability to draw upon these in application. After studying this course students should be able to explain and illustrate

 How a competitive market works and how supply and demand determine the prices and quantities of goods and services.

 The effect of government policies and the resulting impact on consumers and producers.

 What the labour market does and how it works.

 The firm’s profit-maximization and cost-minimization processes.

 People’s preferences toward risk and the ways that people can compare and choose among risky alternatives.

 The basic function and effects of financial markets and financial intermediaries on the economy.

 How asymmetric information problems interfere with the efficient functioning of financial markets and how government regulation and financial intermediaries can lessen asymmetric information problems.

 The factors that cause interest rates to change.

 The movement of short-term interest rates in the future using the yield curve.

 The elements of international economic integration.

 The gains from trade and the concepts of absolute advantage, comparative advantage, and competitiveness.

 The factors that cause exchange rates to change and the interest rate parity condition.

COMM 220/4 K 3

Required Textbook

Etext COMM 220 Analysis of Markets for Concordia University

Edition: 4

ISBN: 978-0-13-650558-7

Publisher: Pearson

Course Evaluation

The final grade for the course will be based on the following components:

Two In-Class Tests @10% each 20% Midterm Exam 30% Final Exam 50% Total 100%

No make-up test or midterm will be allowed. If you are unable to write a test or the midterm for a valid and documented reason, you must notify me before the test/midterm and provide the documentation (i.e., the original of your doctor's note) within seven days of the test/midterm and the test/midterm weight will be added to the final exam. Otherwise, you will receive a zero for the test/midterm.

The tests/exams are closed book. Only non-programmable calculators are permitted. All electronic devices (e.g., cell phones, laptops, etc.) must be turned off and deposited at the front or rear of the classroom during the test/exam. A student will need a minimum of 40% in the final exam and an overall minimum of 50% to pass the course. Students cannot write a 100% final.

Exam Date Chapters

In-Class Test 1 Feb 7 (Friday) 1, 2, 3

Midterm Feb 23 (Sunday 18:00–20:30) 1, 2, 3, 4, 5

In-Class Test 2 Mar 27 (Friday) 6, 7, 8, 9, 10, 11

Final To be announced (Apr 16 – May 3) Cumulative

I collect and keep all the tests/exams. Please email me for an appointment to review your test/exam. If you have questions about the grades, please convey them to me in writing.

Letter Grades and Numerical Scores

Letter Score Letter Score Letter Score Letter Score

A+ 90 – 100 B+ 77 – 79 C+ 67 – 69 D+ 57 – 59

A 85 – 89 B 73 – 76 C 63 – 66 D 53 – 56

A- 80 – 84 B- 70 – 72 C- 60 – 62 D- 50 – 52

FNS < 50

* D- is the minimum requirement to pass the course.

COMM 220/4 K 4

Class Schedule

The schedule may change depending on class progress; any changes will be announced in class. You are expected to read the assigned chapter(s) before coming to class.

# of Lectures and Date(s)

Textbook Topic(s)

0.5

Jan 10

Chapter 11 Preliminaries

1.1 The Themes of Microeconomics

1.2 What is a Market?

1.3 Real versus Nominal Prices

1.4 Why Study Microeconomics?

1.5

Jan 10, 17

Chapter 2

The Basics of Supply and Demand

2.1 Supply and Demand

2.2 The Market Mechanism

2.3 Changes in Market Equilibrium

2.4 Elasticities of Supply and Demand

2.6 Understanding and Predicting the Effects of Changing Market Conditions

2.7 Effects of Government Intervention – Price Controls

1.5

Jan 24, 31

Chapter 3 The Analysis of Competitive Markets

3.1 Evaluating the Gains and Losses from Government Policies – Consumer and Producer Surplus

3.2 The Efficiency of a Competitive Market

3.3 Minimum Prices

3.4 Price Supports and Production Quotas

3.5 Import Quotas and Tariffs

3.6 The Impact of a Tax or Subsidy

0.5

Jan 31

Chapter 4 Overview of the Labor Market

 The Labor Market: Definitions, Facts, and Trends

 How the Labor Market Works

 Applications of the Theory

Feb 7 Class Test 1

1 Only section 1.3 will be covered in class. However, you are expected to read the entire chapter so that you are familiar with the concepts used in the analysis of markets. If you have trouble with any of the concepts, please feel free to meet me during office hours.

COMM 220/4 K 5

# of Lectures and Date(s)

Textbook Topic(s)

1.5

Feb 7, 14

Chapter 5

Appendix 5A

The Demand for Labor

 Profit Maximization

 The Short-Run Demand for Labor When Both Product and Labor Markets Are Competitive

 The Demand for Labor in Competitive Markets When Other Inputs Can be Varied

 Policy Application: The Labor Market Effects of Employer Payroll Taxes and Wage Subsidies

Graphical Derivation of a Firm’s Labor Demand Curve

 The Production Function

 Demand for Labor in the Short Run

 Demand for Labor in the Long Run

1

Feb 21

Chapter 6 Supply of Labor to the Economy: The Decision to Work

 Trends in Labor Force Participation and Hours of Work

 A Theory of the Decision to Work

 Policy Applications

Feb 23 (Sun) Midterm Exam Time: 18:00–20:30 Venue: MB2.210

1

Mar 6

Chapter 7 Uncertainty and Consumer Behavior

7.1 Describing Risk

7.2 Preferences Toward Risk

7.3 Reducing Risk

7.4 The Demand for Risky Assets

0.5

Mar 13

Chapter 8 An Overview of the Financial System

 Function of Financial Markets

 Structure of Financial Markets

 Financial Market Instruments

 Internationalization of Financial Markets

 Function of Financial Intermediaries: Indirect Finance

 Types of Financial Intermediaries

 Regulation of the Financial System

COMM 220/4 K 6

# of Lectures and Date(s)

Textbook Topic(s)

0.5

Mar 13

Chapter 9 An Economic Analysis of Financial Structure

 Basic Facts about Financial Structure Throughout the World

 Transaction Costs

 Asymmetric Information: Adverse Selection and Moral Hazard

 The Lemons Problem: How Adverse Selection Influences Financial Structure

 How Moral Hazard Affects the Choice Between Debt and Equity Contracts

 How Moral Hazard Influences Financial Structure in Debt Markets

0.5

Mar 20

Chapter 10 The Meaning of Interest Rates

 Measuring Interest Rates

 The Distinction between Interest Rates and Returns

 The Distinction between Real and Nominal Interest Rates

0.5

Mar 20

Chapter 11 The Behaviour of Interest Rates

 Determinants of Asset Demand

 Supply and Demand in the Bond Market

 Changes in Equilibrium Interest Rates

 Supply and Demand in the Market for Money: The Liquidity Preference Framework

 Changes in Equilibrium Interest Rates in the Liquidity Preference Framework

 Money and Interest Rates

0.5

Mar 27

Chapter 12 The Risk and Term Structure of Interest Rates

 Risk Structure of Interest Rates

 Term Structure of Interest Rates



Mar 27 Class Test 2

1

Apr 3

Chapter 13

Chapter 14

An Introduction to the World Economy

 Introduction: International Economic Integration

 Elements of International Economic Integration

Comparative Advantage and the Gains from Trade

 Introduction: The Gains from Trade

 Comparative Productivity Advantage and the Gains from Trade

 Absolute and Comparative Productivity Advantage Contrasted

 Gains from Trade with No Absolute Advantage

 Comparative Advantage and “Competitiveness”

 Economic Restructuring

COMM 220/4 K 7

# of Lectures and Date(s)

Textbook Topic(s)

1

Apr 10

Chapter 15

Appendix

Exchange Rates and Exchange Rate Systems

 Introduction: Fixed, Flexible, or In-Between?

 Exchange Rates and Currency Trading

 The Supply and Demand for Foreign Exchange

 The Real Exchange Rate

 Alternatives to Flexible Exchange Rates

 Choosing the Right Exchange Rate System

The Interest Rate Parity Condition

Final Exam (Apr 16 – May 3)

Important Dates

Jan 20 (Monday): Deadline for withdrawal from the course with tuition refund (DNE)

Mar 23 (Monday): Last day for academic withdrawal from the course without tuition refund (DISC)

Tutorials

There will be three tutorials each week starting Jan 9, 2020. Any change to the schedule will be posted in the “COMM 220 All Sections” course on Moodle.

Day Time Location 1st Tutorial Last Tutorial

Thursdays 20:30–22:30 MB 1.210 Jan 9 Apr 9

Saturdays 12:00–14:00 MB S2.210 Jan 11 Apr 4

Sundays 12:00–14:00 MB S2.210 Jan 12 Apr 5

The tutorials will use material that is not available in the textbook and give review prior to test/exam. Attending tutorials is not mandatory. However, you are strongly encouraged to attend at least one tutorial per week.

Please note that private tutorial companies, some of whom aggressively promote their services on and off campus, are not authorized by Concordia University to distribute flyers on University premises and may not use Concordia University facilities to promote or provide their services.

Concordia University and its academic departments do not have any affiliation with these companies even though names such as JMSB, Concordia, or references to specific departments often appear in a visible way on some flyers. If you are interested in the University’s approved tutoring services, all you need to do is ask your professor or consult the services listed in your course outline.

COMM 220/4 K 8

Assessment of Learning Objectives

The learning objectives are assessed through class tests, midterm and final examinations.

Class Tests Midterm

Exam Final Exam

Explain and illustrate how a competitive market works and how supply and demand determine the prices and quantities of goods and services

Theory and

algorithmic-

type multiple-

choice

questions

Theory and

algorithmic-

type multiple-

choice and

exam

questions

Theory and

algorithmic-

type multiple-

choice and

exam

questions

Explain and illustrate the effect of government policies and the resulting impact on consumers and producers

Explain and illustrate what the labour market does and how it works

Explain and illustrate the firm’s profit- maximization and cost-minimization processes

Explain and illustrate people’s preferences toward risk and the ways that people can compare and choose among risky alternatives

Explain the basic function and effects of financial markets and financial intermediaries on the economy

Explain how asymmetric information problems interfere with the efficient functioning of financial markets and how government regulation and financial intermediaries can lessen asymmetric information problems

Explain and illustrate the factors that cause interest rates to change

Explain and illustrate the movement of short-term interest rates in the future using the yield curve

Explain the elements of international economic integration

Explain and illustrate the gains from trade and the concepts of absolute advantage, comparative advantage, and competitiveness

Explain and illustrate the factors that cause exchange rates to change and the interest rate parity condition

Learning Objective

Learning Activity

COMM 220/4 K 9

Moodle

We will use Moodle to facilitate interaction. To access our Moodle course, open your browser and log in to the MyConcordia Portal using your Concordia netname and password. You will find our Moodle course appear in the My Moodle Courses section. Problems should be directed to [email protected].

Student Responsibilities

You are strongly advised to attend all the classes. Read the assigned material before coming to class and be prepared to participate in class discussions. Please understand that the class time is very limited and the material to be covered is very extensive; it is impossible to go over or even mention everything in class. Therefore, it is crucial that you read the assigned chapters and do the end-of-chapter problems on your own. If you have any questions, you can come and discuss them with me during office hours. You are responsible for what is covered in class and any absence on your part leaves you responsible for finding out what was presented in class.

Classroom Discipline

It is important to observe silence and respect your classmates’ right to hear and benefit from what is being said during class. Please turn your cell phones to silent mode and do not use them in class. Laptops are allowed in the classroom provided they are being used to take notes or for other class- related activities. A student who distracts attention of other students by consistently talking in classes will be asked to leave the room. For a second offence, the penalty will be 15% off her/his final grade for the course.

Academic Integrity

The Academic Code of Conduct states that “The integrity of University academic life and of the degrees, diplomas and certificates the University confers is dependent upon the honesty and soundness of the instructor-student learning relationship and, in particular, that of the evaluation process. Therefore, for their part, all students are expected to be honest in all of their academic endeavours and relationships with the University.” (Academic Code of Conduct, Article 1)

All students enrolled at Concordia are expected to familiarize themselves with the contents of this Code. You are strongly encouraged to read the pertinent section in the Concordia Undergraduate Calendar at http://www.concordia.ca/academics/undergraduate/calendar.html, and visit the following web address: http://www.concordia.ca/students/academic-integrity.html, both of which provide useful information about proper academic conduct.

Policy on Copyright Compliance

As in all Canadian universities, members of the Concordia community are users of copyrighted materials and, as such, are subject to copyright legislation. The necessity of complying with the Copyright Act is not open to question.

This Policy deals with the responsible use of copyrighted materials by members of the University. Its objective is to ensure copyright compliance in accordance with federal legislation, thus protecting the rights of creators and the interests of the University’s faculty members, staff and students.

COMM 220/4 K 10

This Policy applies to all members of the University (faculty, staff and students). Compliance with the Copyright Act and this Policy is the responsibility of each member of the University. Failure to comply with the Copyright Act is a violation of federal legislation. In addition to any action that may be taken by any copyright owner, its licensing agent or the police authorities, the University reserves the right to take disciplinary or other action against a member with respect to any breaches of this Policy.

Policy on Audio and/or Video Recording of Lectures

Taking notes of classroom lectures and discussions can be an aid to comprehension and retention of the material. As such, this forms part of the recognized and accepted practice of students. The University also recognizes that there are valid personal and academic reasons for allowing and using lecture recordings as study tools.

This Policy sets out the rules and regulations surrounding the recording of lectures by students and staff. This Policy applies to all members of the University community.

Students shall not make any recording (audio or video) of a classroom lecture without having obtained the prior written permission from the instructor. Permission to record may be granted to a student at the discretion of the instructor and normally for the sole purpose of accommodating a student’s particular needs and only for the purpose of private study. Students who have obtained permission to record a lecture must do so in a manner which ensures the privacy of other students present. Students who have obtained permission to record a lecture shall respect all related intellectual property rights in accordance with applicable laws and the University’s Policy on Copyright Compliance.

Recordings of lectures made by students shall not be shared, reproduced or uploaded to any publically accessible web environment or used for any purpose not specifically authorized by the instructor. Recording of lectures shall not be made, used, distributed for any commercial purposes or compensation. Students who have access to authorized recorded lectures (ex: via Moodle) may use such recordings only for personal or group study and shall not reproduce, share or upload the recording to any publically accessible web environment. Any violation of this Policy shall be treated as a violation of the applicable University policy, such as the Code of Rights and Responsibilities and the Academic Code of Conduct.

Support Services

Concordia University offers many on-campus support services that are available to help students achieve academic and personal success. LIST OF STUDENT SERVICES

1. Undergraduate Academic Advising: JMSB Undergraduate Academic Advising

2. Counselling and Psychological Services: concordia.ca/students/counselling-life-skills

3. Concordia Library Citation and Style Guides: library.concordia.ca/help/howto/citations.html

4. Student Success Centre: concordia.ca/students/success

5. Health Services: concordia.ca/students/health

6. Financial Aid and Awards: concordia.ca/offices/faao

7. HOJO (Off Campus Housing and Job Bank): concordia.ca/students/international/hojo

8. Academic Integrity: concordia.ca/students/academic-integrity

COMM 220/4 K 11

9. Access Centre for Students with Disabilities: concordia.ca/offices/acsd

10. Student Advocacy Office: concordia.ca/offices/advocacy

11. Dean of Students Office: concordia.ca/offices/dean-students

12. International Students Office: concordia.ca/students/international

13. Student Hub: concordia.ca/students

Disclaimer

The instructor reserves the right to change or update this outline, and any other course related materials, as required. The student will be informed in a timely manner through announcements during class and/or on Moodle.

In the event that the University is unable to provide services or that courses are interrupted due to events beyond the reasonable control of the University, including classroom disruptions, the University reserves the right to modify any element contained in the course outline including but not limited to the grading scheme and the weight accorded to exams or assignments.