Derivatives and Risk Management

10 Units

A broad range of derivative products is examined with a primary focus on how to use these for the management of financial risks. The course introduces standard models of pricing forward, futures and options on diverse underlying assets. The course then explores hedging methods to conduct risk management for business operations, speculative trades, and issued financial instruments. After completing this course students will be familiar with derivatives valuation and their use in risk management.

Faculty Faculty of Business and Law
School Newcastle Business School
Availability Trimester 2 - 2014 (Newcastle City Precinct)
Trimester 1 - 2015 (Newcastle City Precinct)
Trimester 3 - 2015 (Newcastle City Precinct)

On completion of this course, students will be able to:

  1. Analyse and price diverse derivatives products to generate an optimal risk management strategy.
  2. Demonstrate critical thinking, analytical and problem solving skills in the context of derivatives pricing and hedging practice.
  3. Explain the binomial model and its extension in continuous time to the Black-Scholes model.
  4. Demonstrate an understanding of pricing forwards, futures and options contracts

The content of this course may include:

  1. Operation of derivatives market.
  2. Risk and return characteristics of derivative securities.
  3. Pricing forward and future contracts.
  4. Mechanics of option trading.
  5. Option pricing with the Binomial and Black-Scholes models.
  6. Options on stock indices, futures and exotic options.
  7. Managing financial risk using derivative securities.
  8. Credit derivatives markets and instruments
Replacing Course(s) Not applicable.
Transition Not applicable.
Industrial Experience 0
Assumed Knowledge GSBS6140 Investment Analysis
Modes of Delivery Internal Mode
Teaching Methods Lecture
Assessment Items
  • Examination: Class -
  • Essays / Written Assignments - Group
  • Examination: Formal -
Contact Hours
  • Lecture: for 3 hour(s) per Week for Full Term
Compulsory Components None listed
Course Materials None listed
Timetable 2015 Course Timetables for GSBS6142

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