Memra

academic · beginner · ≈ 14 h · University of Waterloo

AFM 121 — Introduction to Global Financial Markets

The Canadian securities industry, the markets, and the Excel that prices them — 90 lessons

The whole of AFM 121 as the paper examines it: the Canadian securities industry, dealers and self-regulation under CIRO, the capital market and how issues reach it, the regulators and the rules on disclosure and insider trading, the economy and the Bank of Canada, then the calculation half — time value of money in Excel, bond pricing and yields, equity valuation by the dividend model and P/E, margin and short selling, derivatives and their payoffs, risk, return and diversification, market efficiency, and pooled investments. Every memorisation question is drilled as multiple choice in the register of the Canadian Securities Course; every calculation is graded on the number with the Excel function that produces it; the 12-versus-12 stock experiment is taught as the efficiency demonstration it is.

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How the paper is marked, and how to study for it

7 m

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How AFM 121 Is Examined, and the Excel Conventions It Assumes

0 / 5 lessons
  1. How the paper is marked, and how to study for it 7 m
  2. Excel’s TVM functions and the sign convention 9 m
  3. Rate per period and periods in total 8 m
  4. NPV, IRR and the time-zero convention 9 m
  5. Fast track, and what you can skip 6 m

What a Financial Market Is For

0 / 4 lessons
  1. Surplus units, deficit units and intermediation 8 m
  2. Securities as claims: debt, equity and priority 9 m
  3. Depository and non-depository institutions 8 m
  4. Risk, return, liquidity and time value 8 m

The Canadian Securities Industry

0 / 7 lessons
  1. Investment dealers: principal versus agent 9 m
  2. Full-service, discount, and the two kinds of underwriting 9 m
  3. Chartered banks, the Bank Act, and the other institutions 8 m
  4. Self-regulation, CIRO and registration categories 9 m
  5. CIPF, CDIC, and what each does not cover 9 m
  6. CDS: clearing, settlement and T+1 8 m
  7. Canadian exchanges, marketplaces, and the project brief 9 m

The Capital Market

0 / 6 lessons
  1. Primary versus secondary markets, IPOs and the prospectus 9 m
  2. Money market versus capital market, and their instruments 8 m
  3. T-bill price and yield 9 m
  4. Auction markets, dealer markets, listing and the ATS 8 m
  5. The bid–ask spread and the market maker 8 m
  6. Indices, interlisting, and why markets matter 9 m

Regulation, Disclosure and Ethics

0 / 6 lessons
  1. Why regulate, and provincial jurisdiction 8 m
  2. The CSA, passport, National Instruments and the OSC 9 m
  3. The enforcement ladder, know-your-client and suitability 9 m
  4. The prospectus requirement and the exempt market 8 m
  5. Continuous disclosure, insiders and insider reporting 10 m
  6. Manipulation, protection layers and trading halts 9 m

Time Value of Money in Excel I: Lump Sums and Rates

0 / 6 lessons
  1. Future value, and compound versus simple interest 9 m
  2. Present value and discounting 9 m
  3. Compounding frequency: monthly, quarterly, semi-annual 9 m
  4. Effective annual rate: EFFECT and NOMINAL 10 m
  5. Solving for n and r: NPER, RATE and the Rule of 72 10 m
  6. The five-variable method and eyeballing the answer 9 m

Time Value of Money in Excel II: Annuities, Perpetuities and Cash-Flow Streams

0 / 8 lessons
  1. Timelines and the ordinary-annuity present value 10 m
  2. Annuity future value, and solving for the payment 10 m
  3. Annuity due and the type argument 9 m
  4. Perpetuities and growing perpetuities 9 m
  5. Uneven cash flows: NPV and IRR 10 m
  6. Deferred annuities 9 m
  7. Loan amortisation: IPMT, PPMT and the balance 10 m
  8. The Canadian mortgage convention 10 m

Economics, the Bank of Canada, Interest Rates and the Dollar

0 / 8 lessons
  1. GDP, the business cycle and economic indicators 9 m
  2. Unemployment, inflation and the Fisher relation 10 m
  3. Money, the Bank of Canada and the 2 % target 9 m
  4. The policy rate, the operating band and how it is enforced 10 m
  5. How a rate change reaches you: the transmission channels 10 m
  6. Fiscal policy, deficits, debt and what sets interest rates 9 m
  7. The yield curve, term-structure theories and forward rates 11 m
  8. Exchange rates and the floating dollar 10 m

Fixed-Income Securities: Features and Types

0 / 7 lessons
  1. Bond anatomy and the semi-annual convention 9 m
  2. Bonds, debentures and the government issuers 8 m
  3. Corporate bonds, covenants and the feature table 10 m
  4. Strips, real return bonds and mortgage-backed securities 9 m
  5. Preferred shares as fixed income 9 m
  6. Credit ratings and the eight bond risks 10 m
  7. Bond quotation, accrued interest and the invoice price 9 m

Bond Pricing and Trading

0 / 7 lessons
  1. Holding-period return and the valuation premise 8 m
  2. Bond price as PV of coupons plus par 10 m
  3. Discount, par, premium and pull to par 9 m
  4. Yield to maturity and yield to call with RATE 10 m
  5. Current yield and where it sits 8 m
  6. Price–yield curvature, strips and duration intuition 10 m
  7. Credit spreads, bond trading and realised return 10 m

Equities: Shares, Dividends, Valuation, Rights, Margin and Short Selling

0 / 8 lessons
  1. Common shares, rights, dividend dates and splits 10 m
  2. Preferred-share valuation and the feature table 9 m
  3. The Gordon growth model: D₀ versus D₁ 10 m
  4. DDM inputs: g from ROE, r from the premium, and the implied return 10 m
  5. Two-stage DDM: the “never seen” shape 10 m
  6. EPS, P/E, price-to-book and market cap 9 m
  7. Rights, warrants and order types 10 m
  8. Margin buying and short selling 12 m

Derivatives: Forwards, Futures, Options and Swaps

0 / 6 lessons
  1. What a derivative is, who uses it, and why it is risky 8 m
  2. Forwards versus futures: the six-attribute table 9 m
  3. Futures payoffs and hedging 9 m
  4. Option vocabulary and call payoffs 10 m
  5. Put payoffs, intrinsic value and time value 10 m
  6. Covered calls, protective puts and swaps 10 m

Returns, Risk, Market Efficiency and Pooled Investments

0 / 7 lessons
  1. Stock returns, arithmetic and geometric averages 9 m
  2. Portfolio return, expected return and standard deviation 10 m
  3. Diversification, correlation and the two-asset portfolio 10 m
  4. Beta and the CAPM 10 m
  5. Market efficiency, its three forms and anomalies 9 m
  6. Mutual funds: NAV, MER, loads and objectives 10 m
  7. ETFs versus mutual funds, and active versus passive 9 m

The 12-vs-12 Experiment, and the Final Rehearsal

0 / 5 lessons
  1. The experiment: hypothesis and random selection 7 m
  2. The tracking spreadsheet and adjusted returns 9 m
  3. Benchmarking in CAD and risk-adjusting 9 m
  4. Reading the result as evidence, and presenting it 8 m
  5. Final rehearsal: the “never seen” set 12 m
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