FINANCIAL LITERACY

OECD defines Financial Literacy as "a combination of awareness, knowledge, skill, attitude and behaviour necessary to make sound financial decisions and ultimately achieve individual financial wellbeing". Such a combination should be build around 4 thematic areas: "Money and transactions", "Planning and managing finances", "Risk and reward" and "Financial landscape". The PISA 2015 recent assessment of financial literacy of Italian students show that about 20% of students do not reach the baseline level of proficiency and cannot identify common financial products and terms or make simple decisions on everyday spending in contexts that they are likely to have experienced personally (source: OECD). The Italian Parliament has recently taken measures to fill the gap and develop a "National Strategy for financial, social security and insurance", recognizing the need to improve the financial literacy of several groups of citizens.

a) Knowledge and understanding:
- knowing the terms commonly used to describe financial situation, issues and problems;
- knowing the functioning of basic financial products;
- understand the simple mechanics of interest rates, compounding, diversification. risk-reward trade-off.

b) Applying knowledge and understanding:
- ability to understand articles on financial issues (for example taken from newspapers and non-specialized press);
- ability to compute the underlying interest rate (or other convenient summaries) of simple financial operations like mortgages and consumer loans and makes sense of the numeric figure;
- ability to broadly assess the risk and rewards of some important asset classes and make sense of the legal documents provided by banks and other intermediaries.

c) Making judgements:
- ability to understand (some) relevant issues of everyday investments and comment on (some of) the advantages and drawbacks of financial products and individual allocations.

None, the course is elective and devoted exclusively to students who did not enroll in economic or managerial degrees.

The course will cover (some of) the following topics, also depending on students' tastes:

(Financial) interests
Annuities, mortgages, loans
Investing in stocks and related risks
Investing in bonds and related risks
Mutual funds, Exchange Traded Funds (ETF) and pension funds
International markets
Are you a stock or a bond? Long-term investing strategies
Billy the KIID: intermediaries and legal documents
Discussion of cases:
* sad stories: Veneto Banca and BPVI, Bernie Madoff and other cons;
* stories: derivatives and SWAPs;
* happy ending: Poste Italiane and the protection of subscribers of real estate investment funds

Lecture notes, reports by OECD and other financial institutions (and articles taken mainly from "Focus", the Saturday'ssupplement fo "Il Sole 24 Ore").

Optional readings (excerpts):
- "Are you a stock or a bond?", M. Milevsky, FT Press, 2013;
- "Appunti di matematica finanziaria", A. Basso e P. Pianca, Giappichelli, several editions.
- "International markets", B. Solnik and D. Mc.Leavey, Addison Wesley, 2003.
- "Stories of Capitalism: Inside the Role of Financial Analysts", Stefan Leins, University of Chicago Press (2018), an anthropologist's view on the financial ecosystem

Written examination, with exercises to be solved and open-ended or mutiple-choice questions.
[Update of May 2020: due to the state of prolonged covid-19 emergency, the exam will be now an oral one on GMeet or similar platforms. See the moodle page of the course for additional info and details]

Lectures, problem solving and group sessions, discussion of press articles. Some lectures will feature the participation of financial operators, bank officials and consultants.

Italian

written

This subject deals with topics related to the macro-area "Human capital, health, education" and contributes to the achievement of one or more goals of U. N. Agenda for Sustainable Development