Subject details

On successful completion of this subject you will:

  • CLO1: Explore the characteristics of derivative securities and determine how to apply these instruments to hedge the risk exposure of the business 
  • CLO2: Use fundamental payoff concepts and the no-arbitrage principle to determine price and fair value for forward contracts and futures contracts 
  • CLO3: Apply established market models including the BlackScholes-Merton models and Binomial models to determine fair prices for option contracts 
  • CLO4: Analyse the derivative components of structured financial products and evaluate their role in modern portfolio management 
  • CLO5: Design appropriate risk management strategies using options and futures for hedging and portfolio management.
  • Topics
    • Review of Derivatives
    • Futures and Forward
    • Interest Rate Markets
    • Swaps
    • Options
    • Using Derivatives in Portfolio Management
    • Introduction to Binomial Trees
    • Executive Stock Options and Options on Stock Indices, Currencies and Futures
    • Greek Letters
    • Credit Risk
    • Credit Derivatives
    • Derivatives Mishaps and Review
  • Study resources
    • Instructional Methods
      • Disscusion forum/Discussion Board
      • Online assignment submission
      • Online Quizzes/Tests
    • Online Materials
      • Printable format materials
      • Online Assessment

No eligibility requirements

Special requirements

No special requirements

This subject was previously known as Risk Management and Financial Engineering.

The degree examines derivative contracts and their use in managing financial risk. It provides you with the knowledge and skills to assess major classes of derivative securities - options, futures and forward contracts, how they are constructed, how they work and how they are valued and priced. You will explore how options and futures can be used for hedging risk in the process of risk management and portfolio construction.

  • Assignment 1 - Research Proposal (20%)
  • Assignment 2 - Final Exam (50%)
  • Assignment 3 - Research Report (30%)

Textbooks are subject to change within the academic year. Students are advised to purchase their books no earlier than one to two months before the start of a subject

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