The global derivative markets have emerged as crucial platforms for trading for both financial and non-financial institutions. You'll explore the complex realm of derivative markets, thoroughly examining the fundamental principles and inherent characteristics of different financial instruments. Through the analysis of Futures, Forwards, Options, Swaps, Credit Default Products and Structured Products, you'll acquire a thorough understanding of the functions, importance and operating mechanisms of these financial instruments.
You’ll examine valuation methodologies and the fundamental models necessary for determining the prices and managing the risks of these financial instruments. You’ll analyse information from a constantly changing body of academic research and professional literature in the field of derivatives and their dynamic use in financial markets. This will give you a deep awareness of derivative markets, enhanced by a skilled comprehension of its operational complexities, valuation techniques, and risk management strategies. You’ll gain a competitive advantage by utilising knowledge from academic and professional literature to efficiently use derivatives in financial markets – leading to improved risk management techniques and a stronger financial ecosystem.
Total contact hours: 37
Private study hours: 113
Total study hours: 150
Main assessment methods
Group Technical Report (2000 words) (20%)
Individual Report (2000 words) (20%)
Examination, 2 hour (60%).
Reassessment methods
100% Exam
Hull, John .C. (2011) Options, Futures and Other Derivatives, 8th edn., Prentice Hall.
McDonald , Robert (2005) Derivatives Markets, second edition, Addison Wesley, Boston.
See the library reading list for this module (Canterbury)
The intended subject specific learning outcomes.
On successfully completing the module students will be able to:
- Identify and clearly explain the fundamental concepts of derivatives.
- Apply mathematical skills in pricing derivatives to problems of risk management.
- Develop trading strategies for exploiting arbitrage opportunities.
- Demonstrate knowledge and understanding of the theory of options and futures pricing.
- Analyse various financial instruments in the context of developing portfolios for the purpose of hedging, speculation and arbitrage.
- Assess risk management strategies in terms of relevance for specific corporate applications.
- Demonstrate understanding of and ability to apply models for valuing derivative securities.
The intended generic learning outcomes.
On successfully completing the module students will be able to:
- Analyse, compare, discuss, critically evaluate evidence and hypothesis. To structure, develop and defend complex arguments orally and in writing.
- Plan work, use relevant sources and study independently.
- Work in groups, synthesise debate, respond to different points of view and negotiate outcomes; ability to receive and use criticism and advice.
- Ensure appropriate formats are selected for presentation of work, which includes the acknowledgement and reference of sources.
- Analyse structured and unstructured problems.
- Apply advanced mathematical skills.
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