This course serves as a comprehensive introduction to derivative securities and financial risk management. Naturally, forward contracts, futures, options, and swaps are the focal point of the course. While the main emphasis is on the use of derivatives as risk-transferring/minimizing devices, valuations of such contracts are also included. A solid coverage of no arbitrage based pricing is provided as the common underlying premise to valuing derivative securities. Therewith, cost-of-carry valuation of forwards and futures, , binomial pricing of options, the Black- Scholes option pricing formula, and swap pricing are introduced. Also, the emphasis is on how derivative securities are used against common risk factors such as interest rates, exchange rates and credit risk. In addition to hedging strategies to be created by any of the derivative securities, various other trading strategies involving options (spreads and combinations) are presented. Topics such as delta- hedging and portfolio insurance are also covered.
Derivatives & Risk Management (MFIN 862)
| Programs\Type | Required | Core Elective | Area Elective |
| Masters in Finance - Non Thesis | * |
CONTENT
PROGRAMME OUTCOMES
1. Develop the ability to use critical, analytical, and reflective thinking and reasoning 3
2. Reflect on social and ethical responsibilities in his/her professional life. 3
3. Gain experience and confidence in the dissemination of project/research outputs 3
4. Work responsibly and creatively as an individual or as a member or leader of a team and in multidisciplinary environments. 3
5. Communicate effectively by oral, written, graphical and technological means and have competency in English. 3
6. Independently reach and acquire information, and develop appreciation of the need for continuously learning and updating. 3
1. Develop, interpret and use statistical analyses in decision making. 5
1. Demonstrate knowledge of financial theory as well as practice and to be able to display critical evaluation of the knowledge. 5
2. Comprehend the international financial markets, practices, and accounting standards. 5