Derivatives have become the ultimate tools of financial engineering. Used to hedge the risk of price fluctuations of various assets, study of the derivative is fascinating and continuously expanding. The better an investor understands them, the better protection they provide. You'll learn the basic principles on which derivatives products operate and how their payoffs are derived from the price of a particular underlying asset such as stocks, bonds, currencies and interest rates. You'll master the concepts of forwards, futures and options contracts and use your creative minds to understand how more exotic derivatives have been created by combining them. In the end, you'll acquire valuable risk management and decisional skills that will enable you to select the appropriate derivatives strategy in order to get access to a target financial market, how to transfer risk from one market to another and how to minimise various financial risks.
Private study hours: 116
Total contact hours: 34
Total study hours: 150
Main assessment methods:
VLE test 1 (15%)
VLE test 2 (15%)
Examination – 2 hour closed book (70%)
Reassessment methods:
100% Exam
The intended subject specific learning outcomes.
On successfully completing the module students will be able to:
- Demonstrate in depth knowledge and understanding of various financial derivative instruments and risk management techniques in the context of International Investment Banking.
- Demonstrate knowledge and understanding of complex concepts and principles under which financial derivative instruments are traded.
- Use subject knowledge to critically analyse the problem and provide a reasoned response to that problem in the context of risk management.
- Compare and contrast complex risk management strategies and prepare appropriate payoff diagrams to reflect various trading strategies.
The intended generic learning outcomes.
On successfully completing the module students will be able to:
- Apply numeracy skills to solve complex numerical problems.
- Develop and define complex argument and provide critical insights on the use of financial instruments and risk management.
- Read and critically summarise transactions and economic events related to financial management and derivative securities.
- Use information technology to acquire, systematically analyse, and communicate effectively.
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