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Introduction to Derivative Securities
Undergraduate | CUR-BAN35 | 2024
Take your first foray into derivative securities. These are usually a form of agreement to buy or sell an asset at a fixed price on or before a certain date. You’ll cover areas such as financial forwards and futures, swaps and model risk.
- Study method
- 100% online
- Assessments
- Subject may require attendance
- Entry requirements
- Prior study needed
- Duration
- 14 weeks
- Start dates
- 26 Feb 2024
HECS-HELP and FEE-HELP available
Introduction to Derivative Securities
About this subject
At the completion of this subject students will be able to:
- comprehend the global derivatives market and the general use of derivative instruments
- apply derivative valuation and risk management technology
- analyse and solve practical problems in derivatives markets and extend the application to a larger scope such as health system efficiency evaluation, energy management, infrastructure derivatives pricing, farmers’ hedge against their harvest risk exposure using climate derivatives, and sustainable forest management
- innovate new derivative instruments as effective and impactful channels of maintaining environment and sociality sustainability
- Derivatives Market Overview
- Interest Rates
- Pricing of Forward and Futures Contracts
- Hedging Strategies using Futures and Interest Rate Futures
- Swaps
- Portfolio of Stock Options and Option trading Strategies
- Binomial
- Black-Scholes Model
- Options on Stock Indices
- Currencies and Futures
This subject covers the basics of derivatives such as forward, futures, FRA, swap, and option, and facilitates students' understanding of the global derivatives market through case studies. The freestyle assignment option enables students to take the challenge of using derivatives as a channel to enhance environmental and social sustainability. The teaching is conducted through an inquiry-based pedagogical method rather than presenting facts or portraying a smooth path to knowledge. Kicking off from a single key question, students often find they need to obtain prerequisite knowledge by posing and then answering more questions. That will weave a logic meshwork demonstrating how knowledge evolves. By discovering holes in the meshwork and then bridging these gaps; or finding the boundary of the meshwork and then extending it; or more ambitiously, identifying independent key questions, students learn to innovate. Students are exposed to the techniques such as risk-neutral valuation, and the Black-Scholes-Merton model, to price derivatives and do risk management decisively, and can access Refinitiv real derivatives market data to solve work-integrated problems in their assessment. The techniques can be applied to evaluate health system efficiency, energy management, infrastructure derivatives pricing, hedging hedge farmers' harvest risk exposure using climate derivatives, sustainably manage forests, and more. Ideas will be discussed in the lecture or the assignments.
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Find out more about the Academic Integrity module.
- Case Study (35%)
- Exercise (25%)
- Final Invigilated Exam (40%)
For textbook details check your university's handbook, website or learning management system (LMS).
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Entry requirements
Prior study
You must either have successfully completed the following subject(s) before starting this subject, or currently be enrolled in the following subject(s) in a prior study period; or enrol in the following subject(s) to study prior to this subject:
and one of
Please note that your enrolment in this subject is conditional on successful completion of these prerequisite subject(s). If you study the prerequisite subject(s) in the study period immediately prior to studying this subject, your result for the prerequisite subject(s) will not be finalised prior to the close of enrolment. In this situation, should you not complete your prerequisite subject(s) successfully you should not continue with your enrolment in this subject. If you are currently enrolled in the prerequisite subject(s) and believe you may not complete these all successfully, it is your responsibility to reschedule your study of this subject to give you time to re-attempt the prerequisite subject(s).
Additional requirements
No additional requirements
Study load
- 0.125 EFTSL
- This is in the range of 10 to 12 hours of study each week.
Equivalent full time study load (EFTSL) is one way to calculate your study load. One (1.0) EFTSL is equivalent to a full-time study load for one year.
Find out more information on Commonwealth Loans to understand what this means to your eligibility for financial support.
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