This unit provides an introduction to financial derivatives. It deals with the investment decision making process, derivative markets and securities, pricing, risk management and trading strategies, as well as the application of derivatives in modern financial markets. Topics include: forwards and futures, options, warrants, swaps, exotics, derivative valuation models, and hedging and trading techniques.
Topic 1 Introduction to derivative markets
Topic 2 The mechanics of forward and futures market
Topic 3 Principles of pricing forward and futures
Topic 4 Hedging strategies using forward and futures
Topic 5 Swaps
Topic 6 The mechanics of options markets
Topic 7 Option pricing models: Binomial and Black-Scholes-Merton
Topic 8 Trading strategies involving option
Topic 9 Financial risk management techniques and applications
Topic 10 Derivatives mishaps and lessons
Unit Learning Outcomes express learning achievement in terms of what a student should know, understand and be able to do on completion of a unit. These outcomes are aligned with the graduate attributes. The unit learning outcomes and graduate attributes are also the basis of evaluating prior learning.
Learning outcomes and graduate attributes
|On completion of this unit, students should be able to:||GA1||GA2||GA3||GA4||GA5||GA6||GA7|
|1||Evaluate risks associated with financial asset ownership||Intellectual rigour||Creativity||Knowledge of a discipline|
|2||Discuss the characteristics of financial derivative securities||Knowledge of a discipline||Cultural competence|
|3||Value financial derivatives using appropriate models||Intellectual rigour||Knowledge of a discipline|
|4||Implement risk management and trading strategies using financial derivatives||Intellectual rigour||Creativity||Knowledge of a discipline|
|5||Discuss the value of derivative securities in the current financial environment||Intellectual rigour||Creativity||Knowledge of a discipline|
- Chance, DM & Brooks R, 2013, An Introduction to Derivatives and Risk Management, 9th edn, South-Western, Mason, OH, USA. ISBN: 13- 9781133190196.
Teaching and assessment
|Lecture online 1 hour (10 weeks)|
|Short written response||20%|
|Short written response||30%|
|Exam: closed book||50%|
Commonwealth Supported courses
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Commencing 2014 Commonwealth Supported only. Student contribution band: 3
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