Financial Literacy: Finding Your Way in the Financial Markets

Course No. 5831
Professor Connel Fullenkamp, Ph.D.
Duke University
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Course No. 5831
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Course Overview

The financial markets create tremendous opportunities that, for many of us, would otherwise be out of reach. A new home. Your child’s college education. Retirement. Without the ability to borrow and invest, life as we know it simply wouldn’t exist.

Taking full advantage of everything the markets have to offer requires not only becoming familiar with its unique instruments, practices, and risks, but understanding the ways the financial world and your own life are inextricably linked in ways both direct and indirect, visible and obscured.

But with record-breaking highs one minute and economy-rocking lows the next—not to mention arcane rules and ambiguous terminology—it can seem as if there’s no way to feel truly comfortable in this mysterious world. But there is, and it’s more accessible than you might think.

Financial Literacy: Finding Your Way in the Financial Markets is an essential primer on this domain, from its functions, strengths, and possibilities to its weaknesses and vulnerabilities. In 24 eye-opening, plainspoken lectures, award-winning Professor Connel Fullenkamp of Duke University reveals the interconnected workings of the financial markets and how society’s financial strength—and your own—depend on money continuing to move through these channels. You’ll not only gain a new appreciation for the variety of financial products and services available to you, but also for how crucial we as individuals are to the functioning of the entire system.

You’ll clearly see how these markets affect you—and vice versa—any time you’re involved in a financial transaction, whether you’re

  • financing a car;
  • applying for a mortgage;
  • receiving a preapproved credit card offer;
  • participating in your company’s 401K plan; or
  • making a deposit at your local bank.

Introductory in nature but by no means taught at a surface level, this course provides the concepts and tools you need to draw direct connections between headlines made globally and what’s happening to your bottom line locally. By the final lecture, you’ll understand just how interdependent the world’s markets have become; feel newly at ease in the realm of stocks, bonds, mutual funds, derivatives, and credit; and be better able to make informed decisions for your financial future.
Learn the Rules of the Game

To many of us, the financial markets seem to play by their own rules—and those rules make little logical sense. For example, when the unemployment rate rises, the stock market sometimes rises along with it. In a short sale, an asset is sold before it is bought. And in the high-stakes world of mergers and acquisitions, financial transactions are routinely done “on paper,” with massive companies being bought and sold despite no money changing hands. How can this be?

Presuming no prior experience in finance, Financial Literacy unravels these and other riddles as it walks you through the fascinating history of banking, which begins with medieval goldsmiths’ vaults, and the functions of the instruments and institutions that constitute the system as a whole.

Carefully connecting the dots each step of the way, Professor Fullenkamp demystifies industry jargon and explains how businesses, governments, and—primarily—households inject funds into the market, revealing that it’s our money flowing through this labyrinthine network that forms the bedrock of the system.

You’ll start the course with an overview of the six essential jobs the financial markets perform for society and how every financial transaction or product attempts to carry out at least one.

You’ll investigate how the markets

  • transfer resources across time and space, allowing you to buy a home without having the entire purchase price on hand;
  • pool resources and share ownership, making it possible for investors to collaboratively lend money to governments and buy into corporations;
  • discover financial prices, which can have serious consequences if assets are not set at the right level;
  • deal with information problems, thereby mitigating the risks associated with a lack of reliable information about borrowers;
  • clear and settle payments, allowing us to easily purchase items anywhere in the world; and
  • manage risks by providing safety nets with products like insurance.

Along the way, you’ll learn answers to questions you’ve likely pondered, from the reasons hedge funds are permitted to sidestep SEC regulation to what the letter grades used by Standard & Poor’s and other credit rating agencies really mean.

  • How is your credit score calculated?
  • What information do lenders take into consideration when you apply for a loan?
  • Why do some stocks pay dividends while others don’t?
  • What happens to your mortgage after you sign on the dotted line?
  • How do currency exchange rates work, and how do they affect international investments?

Become a More Savvy Financial Consumer

Financial Literacy provides a solid foundation for both would-be investors and those who’ve been participating in this space for years without knowing how all the parts fit into the bigger picture. You’ll find out how stocks get introduced to the market; how U.S. dollars leave the country; and how market regulation actually protects healthy competition. You’ll also learn background on Fannie Mae, Freddie Mac, and mortgage-backed securities, as well as a plethora of practical information, including

  • how to calculate payments on amortizing loans;
  • why index funds are often a great choice for investors; and
  • how to read a company’s balance sheet and income statement.

In addition, these lectures offer a rare opportunity to peek inside hedge funds and the money market— territory typically closed to the average investor—as well as the turf battles that occur between the government’s appointed “referees.” You’ll also see how technology and the recent economic crisis are changing the rules around the world.

In the second half of the course, you’ll investigate which major economic indicators have the biggest impact on the markets, including central banks like the Federal Reserve. While you may regularly hear this enigmatic entity reported on in the media, you may not fully be aware of how the Fed’s monetary policy affects inflation, bank lending, and interest rates. But you will after you complete this course.

Objective Information from a Sought-After Expert

You could work your way through the bookstore’s entire finance section or watch hours of cable TV shows on money, but you’ll never encounter a better resource for this kind of robust, reliable, unbiased information. As both an accomplished educator and a consultant for the International Monetary Fund, Professor Fullenkamp presents each well-informed lecture in an encouraging, engaging manner that leads you to not only comprehend the material, but to get as excited about it as he does.

Add the professor’s outstanding guidance to the many explanatory graphs, animations, and graphics featured in video formats, and Financial Literacy: Finding Your Way in the Financial Markets yields an unparalleled learning experience. You simply won’t find a worthier investment to develop financial fluency.

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24 lectures
 |  Average 29 minutes each
  • 1
    Feeling at Home in the Financial Markets
    Sometimes it’s hard to see how the financial markets are connected to the “real” economy. What do financial markets actually do for us? Start to get a handle on how the financial markets operate through an exploration of the societal functions that financial assets perform and the way they’re linked to real assets through contracts. x
  • 2
    Where the Money Goes
    How much are the financial markets worth? Where does the money come from and where does it go? Learn how the stock market’s value compares with other measures of the economy like America’s national debt and GDP. Next, follow how money flows through the market to understand how trillions of dollars of assets are distributed between businesses, governments, and households. x
  • 3
    Financial Markets Run on Information
    There’s one resource in the financial markets that’s even scarcer than money or time: information. Discover the worst problems of asymmetric information and the way lenders build remedies to mitigate risk into the process of writing and trading financial contracts. Also, see how this information gap can work to your advantage. x
  • 4
    Giving Credit Where Credit Is Due
    How can a credit card company preapprove you? How is your credit score calculated? Why do you have to endure a long and drawn-out process to apply for a mortgage? Get answers to these and other questions by taking a close look at the inner workings of credit analysis. x
  • 5
    The Fine Print
    Take some of the fear out of loan contracts by delving into the basic structure of car loans and credit card statements and learning how lenders calculate your monthly charge. Spend time looking at each part of the promissory note, from covenants to enforcement clauses to the security agreement. x
  • 6
    What Is Special about Banks?
    Why does your bank offer free checking? How do banks make money? Discover the advantages banks have in lending to understand why they play such a dominant role in the markets. Learn how banks evolved from goldsmiths’ vaults, how our payment system operates on a clearing house model, and more. x
  • 7
    Billion-Dollar IOUs—Using Bonds to Borrow
    When companies need to borrow enormous sums of money over long periods, they can’t turn to banks, so they issue bonds. Learn what’s involved in issuing these IOUs, the limitations of credit rating agencies that rate bonds, and why the bond market is an increasingly important part of financial markets around the world. x
  • 8
    The Double Identity of Stocks
    Paying dividends isn’t required for stocks. So how do companies issuing stocks repay lenders? And how can stockholders, who pool their resources to share ownership, hold companies to their promise to increase the value of shares? Examine the structure of corporations that issue stock and the potential benefits, rights, and drawbacks inherent with investing in these instruments. x
  • 9
    The Sell Job
    Before companies can get their stocks into the market in an initial public offering, they must register their securities with the Securities and Exchange Commission, which conducts a stringent review. Learn about this process and the system that the financial markets use to sell public and privately held stocks, bonds, and other securities. x
  • 10
    The Mysterious Money Market
    The money market is virtually invisible to most people, yet it forms the financial lifeblood of governments, large banks, and corporations. Differentiate between the money market and the capital market, learn why so many lenders exist, and look closely at three of the most important money market instruments—Treasury bills, commercial paper, and repurchase agreements. x
  • 11
    Think Globally, Lend … Globally
    How do U.S. dollars leave the country? How can companies borrow internationally without having to leave their home country? As you investigate the Eurodollar market and why companies, governments, and individuals choose to borrow and lend globally, see how foreign currencies and exchange rates complicate the process of international investing. x
  • 12
    Trading Securities
    Does the thought of stock trading conjure images of a crowded exchange floor with people yelling “buy!” “sell!” and gesturing wildly? See how technology has changed most securities exchanges around the world (and this popular image) as you learn about the basics of securities trading and how it provides liquidity to the secondary market. x
  • 13
    Returns and Prices in the Secondary Market
    What does it mean when the news reports that the Dow was back above 13,000 or that the 10-year Treasury bond price closed at 92½? Now that you understand how financial instruments are used and the basics of the secondary market, learn how prices are quoted and returns are calculated. x
  • 14
    The Truth about Pricing
    Investors and traders have opinions about what is the right price for the asset they’re trading. But how do they arrive at their values? Compare theories, practical methods, and models that guide market players when pricing assets, including the fundamentals-based approach, the economics-based theory, and the method of comparables, where “like” prices “like.” x
  • 15
    A Tale of Two Funds
    Examine differences between two of the most important types of money management companies or “designated traders”—mutual funds and hedge funds—and contrast the trading strategies they pursue. Learn why index funds are a good investment option, and about the trading technique called a “short sale.” Then consider whether hedge funds have the power to trigger a financial crisis. x
  • 16
    The Market for Corporate Control
    Move on to a market where entire companies are bought and sold, fortunes are made and lost, and yet—frequently—no money changes hands. As you delve into what economists call the market for corporate control, learn what it means to buy and sell corporate control and how mergers, acquisitions, hostile takeovers, and stock swaps operate. x
  • 17
    What Companies Tell the Markets
    From “material information” to CEO compensation packages, which details are publicly held companies required to disclose? Break down what information can be found in the annual and current reports companies file with the SEC, paying particular attention to the importance of the numbers provided on financial balance sheets and income statements. x
  • 18
    What Moves the Markets
    People who can predict market shifts by paying attention to economic indicators have the potential to earn huge profits by buying or selling before everyone else does. But which indicators and price statistics are the most important to follow if you want to understand what’s happening in the financial markets? x
  • 19
    When Central Banks Talk, Markets Listen
    Since the 1950s, central banks such as the U.S. Federal Reserve have become one of the most powerful forces in the financial markets and the global economy. Why are central banks so powerful—and so secretive? How and why do they affect market interest rates so much? Peer inside central banks to find out. x
  • 20
    Interest Rates as Indicators
    Move on to a deeper discussion of how interest rates are connected to each other with a look at benchmark rates such as government bond rates and the controversial LIBOR. Learn how these rates reveal information about the state of the economy, then focus on one of the most important but least understood diagrams in all of finance—the yield curve. x
  • 21
    Risk Management and Insurance
    Even with all the financial tools at our disposal, we can’t completely protect ourselves from risk. Learn about the different types of risks that investors and companies encounter on a daily basis, and the main ways that individuals and companies manage those risks—including the use of financial products such as insurance. x
  • 22
    Mortgages and Securitization
    What happens to your mortgage after you buy a home? Solve this mystery as you investigate the mortgage market and why the securitization process—in the housing market and elsewhere—is attractive for both borrowers and lenders. Learn why mortgage-backed securities exist and how Fannie Mae and Freddie Mac operate. x
  • 23
    The Whys and Hows of Financial Regulation
    Who is in charge of monitoring the financial markets? How are the rules of the “game” enforced? Consider the fundamental reasons that financial institutions require regulation, and learn some of the conflicts that arise between entities charged with this task. Then, see how a cycle of regulation and deregulation began in the 1930s and continued through the financial crisis of 2008 and beyond. x
  • 24
    The Future of Finance
    Big trends are changing the way that financial systems function. Learn what they are, and the opportunities they offer, like peer-to-peer lending. And see why, thanks to these trends, each of us needs to take on much more responsibility for our financial well-being than previous generations did. x

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  • 184-page course synopsis
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  • Suggested readings
  • Questions to consider

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Your professor

Connel Fullenkamp

About Your Professor

Connel Fullenkamp, Ph.D.
Duke University
Professor Connel Fullenkamp is Professor of the Practice and Director of Undergraduate Studies in the Department of Economics at Duke University. He teaches financial economics courses, such as corporate finance, as well as core courses, such as economic principles. In addition to teaching, he serves as a consultant for the Duke Center for International Development. Prior to joining the Duke faculty in 1999, Professor...
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Financial Literacy: Finding Your Way in the Financial Markets is rated 4.5 out of 5 by 45.
Rated 5 out of 5 by from I like the way the professor leads you step by step for a better understanding of the corners stone concepts that are to keep in mind during the course for the goal achieved which I guess is real world knowledge!
Date published: 2020-07-19
Rated 4 out of 5 by from Learn About the Financial Markets This course has a main title and a subtitle, and I think they got switched around somewhere along the line. Prof. Connel Fullenkampf’s “Financial Literacy: Understanding the Financial Markets” will definitely teach you about the titular markets, but whether it bestows financial literacy depends somewhat on what you think that term means. This is not financial literacy in the sense of “how to handle your money” – tips for retirement or investing, say – but is literally about gaining an understanding of finance. If you’ve come here for a list of do’s and don’ts, the material is apt to seem esoteric. If, on the other hand, you’ve been known to flip through the Wall Street Journal but felt a little befuddled by what you saw, this could be worthwhile. If you want a better understanding of what happens to your money after you put it in your bank account; why financial markets sometimes collapse; or why everyone seems so interested in what “the Fed” is doing – among other things – then there’s a lot of potentially interesting material here. Prof. Fullenkampf covers all of those subjects and more, in terms that a dedicated lay listener should mostly be able to understand. That’s not to say none of this is relevant on the individual level. Prof. Fullenkampf argues that we are all lenders, borrowers, and investors in some sense, such as through mutual funds and retirement accounts, our mortgages, or even simply through our bank accounts, the money in which is of course used for investments behind the scenes. He isn’t wrong, and a few of the lessons here would probably help clarify the thinking of someone trying to choose a personal investment, but I’m not convinced that most people are going to see a huge benefit in their daily lives from mastering all of this material. At least it’s presented well: Prof. Fullenkampf is an energetic speaker, and the video includes some useful on-screen lists and visual aids. It also, though, has a penchant for having random words appear on the screen. These aren’t definitions or key concepts, just words the professor happens to be saying at the time. They aren’t exactly bothersome or distracting, but they aren’t helpful, either. (To be fair, this seems to be a tendency of more than one Great Course from recent years, and I assume it’s a choice by the producers, not the individual presenter.) In other words, this is a worthwhile course if you happen to want what it is actually teaching. If you’re just after simple advice, look elsewhere. This is a deep dive into financial markets, credit, risk, and more. You won’t come out as a power investor, but the Wall Street Journal will never be quite so intimidating again. ~
Date published: 2020-06-28
Rated 5 out of 5 by from Clear and well-presented I'm just about a 3rd of the way through this course. I am so excited to finally understand financial markets! Professor Fullenkamp is an engaging speaker and he presents the information very clearly. My confusion about how the markets work was cleared up within the first few lectures.
Date published: 2020-06-09
Rated 5 out of 5 by from Financial Literacy - Find Your Way Excellent course. Professor Fullenkamp is an excellent presentor. He keeps the course interesting yet presents & explains technical ideas & terms. Connel also explains the inter connections of the financial system (I can now understand how in our financial system, a failed sub system can bring down all the other systems due to the way each part of the finance system 'lends' money to itself.). Will use this course for investing (along with others) and teaching my children how to not be 'intimidated' by financial terms & ideas.
Date published: 2019-03-08
Rated 5 out of 5 by from Great course I really enjoyed learning. This course was very interesting as well as informative. I believe everyone should take this course to gain an understanding of our financial system.
Date published: 2018-12-27
Rated 5 out of 5 by from this is a great gift for anyone you know bought this for my daughter who is an English major not a business major. Before anyone you know steps into buying and selling stocks, buy them this and other Great Courses on Capitalism and the markets.
Date published: 2018-07-10
Rated 5 out of 5 by from A very useful course I am an economist, therefore familiar with the concepts discussed in this course. Nevertheless, I found it a useful knowledge refresher. But, I think it will be very valuable to non specialists, who want to gain an understanding of financial markets. The lectures are clear and span the range of most relevant issues for the financial layman. The professor is engaging and never boring.
Date published: 2018-06-15
Rated 5 out of 5 by from Excellent Material A very good course that will lead me through my retirement journey. Informative, and easy to understand. A great course!
Date published: 2018-02-07
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