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Unit Summary
Unit type
UG Coursework Unit
Credit points
12
AQF level
Level of learning
Advanced
Former School/College
Pre-requisites
FIN10254 - Financial Institutions, Instruments and Markets FIN10709 - Foundations of Finance 120 credit points in any SCU units
Unit aim
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.
Unit content
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
Learning outcomes
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.
| 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 | |||||||
| 2 | Discuss the characteristics of financial derivative securities | |||||||
| 3 | Value financial derivatives using appropriate models | |||||||
| 4 | Implement risk management and trading strategies using financial derivatives | |||||||
| 5 | Discuss the value of derivative securities in the current financial environment | |||||||
On completion of this unit, students should be able to:
-
Evaluate risks associated with financial asset ownership
- GA1:
- GA2:
- GA4:
-
Discuss the characteristics of financial derivative securities
- GA4:
- GA7:
-
Value financial derivatives using appropriate models
- GA1:
- GA4:
-
Implement risk management and trading strategies using financial derivatives
- GA1:
- GA2:
- GA4:
-
Discuss the value of derivative securities in the current financial environment
- GA1:
- GA2:
- GA4:
Prescribed texts
- Chance, DM & Brooks, R, 2013, An Introduction to Derivatives and Risk Management, 9th edn, South-Western, Mason, OH, USA. ISBN: 13- 9781133190196.