DERIVATIVE SECURITIES
FIN2FDR
2019
Credit points: 15
Subject outline
In recent years there has been a dramatic increase in the size and complexity of both the types of financial investments and the institutions which are involved in the markets for investment products. In order to reduce the risks associated with trading in these markets specialized markets for risk management called derivative markets have rapidly developed. Unfortunately in some cases these markets have increased rather than reduced the financial risks faced by individuals, corporations and even governments. The markets for derivative securities have, in the words of Warren Buffett, become potential weapons of Financial Mass Destruction. This subject provides you with a roadmap which will help you to understand derivative securities and derivative markets. You will study four main types of derivative securities: forwards, futures, swaps, and options. The emphases are on how to price derivative securities and how to use them in risk management.
School: La Trobe Business School
Credit points: 15
Subject Co-ordinator: Van Vu
Available to Study Abroad Students: Yes
Subject year level: Year Level 2 - UG
Exchange Students: Yes
Subject particulars
Subject rules
Prerequisites: FIN2FIN or FIN1FOF
Co-requisites: N/A
Incompatible subjects: FIN3FDR
Equivalent subjects: FIN3FDR
Special conditions: N/A
Learning resources
Readings
| Resource Type | Title | Resource Requirement | Author and Year | Publisher |
|---|---|---|---|---|
| Readings | Options, Futures and other Derivatives. | Prescribed | John C Hull | PEAR COLLEGE DIV |
Graduate capabilities & intended learning outcomes
01. Compare and contrast financial derivatives and their markets
- Activities:
- Lecture, tutorial questions, quiz, mid-term test, group assignment, and final exam
- Related graduate capabilities and elements:
- Inquiry and Analytical Skills(Critical Thinking,Creative Problem-solving,Inquiry/Research)
- Inquiry and Analytical Skills(Critical Thinking,Creative Problem-solving,Inquiry/Research)
- Inquiry and Analytical Skills(Critical Thinking,Creative Problem-solving,Inquiry/Research)
02. Explain relevant financial theories and apply them to the pricing and valuation of financial derivatives.
- Activities:
- Lecture, tutorial questions, quiz, mid-term test, group assignment, and final exam
- Related graduate capabilities and elements:
- Inquiry and Analytical Skills(Critical Thinking,Creative Problem-solving,Inquiry/Research)
- Inquiry and Analytical Skills(Critical Thinking,Creative Problem-solving,Inquiry/Research)
- Inquiry and Analytical Skills(Critical Thinking,Creative Problem-solving,Inquiry/Research)
03. Develop analytical and practical skills in trading financial derivatives and using financial derivatives to manage the risk exposure of an asset or a portfolio
- Activities:
- Lecture, tutorial questions, quiz, mid-term test, group assignment, and final exam
- Related graduate capabilities and elements:
- Inquiry and Analytical Skills(Critical Thinking,Creative Problem-solving,Inquiry/Research)
- Inquiry and Analytical Skills(Critical Thinking,Creative Problem-solving,Inquiry/Research)
- Inquiry and Analytical Skills(Critical Thinking,Creative Problem-solving,Inquiry/Research)
Melbourne, 2019, Semester 1, Day
Overview
Online enrolment: Yes
Maximum enrolment size: N/A
Enrolment information:
Subject Instance Co-ordinator: Van Vu
Class requirements
TutorialWeek: 11 - 22
One 1.0 hours tutorial per week on weekdays during the day from week 11 to week 22 and delivered via face-to-face.
LectureWeek: 10 - 22
One 2.0 hours lecture per week on weekdays during the day from week 10 to week 22 and delivered via face-to-face.
Assessments
| Assessment element | Comments | % | ILO* |
|---|---|---|---|
| Mid-term exam: 90 minutes (equivalent to 1,500 words) | 30 | 01, 02, 03 | |
| One 2-hour final examination (equivalent to 2,000 words) | 50 | 01, 02, 03 | |
| One 30 minutes quiz (equivalent to 500 words) | 10 | 01, 02, 03 | |
| One group assignment (equivalent to 500 words per student) | 10 | 01, 02, 03 |
Sydney, 2019, Study Period 1, Day
Overview
Online enrolment: Yes
Maximum enrolment size: N/A
Enrolment information:
Subject Instance Co-ordinator: Van Vu
Class requirements
LectureWeek: 10 - 22
One 2.0 hours lecture per week on weekdays during the day from week 10 to week 22 and delivered via face-to-face.
TutorialWeek: 11 - 22
One 1.0 hours tutorial per week on weekdays during the day from week 11 to week 22 and delivered via face-to-face.
Assessments
| Assessment element | Comments | % | ILO* |
|---|---|---|---|
| Mid-term exam: 90 minutes (equivalent to 1,500 words) | 30 | 01, 02, 03 | |
| One 2-hour final examination (equivalent to 2,000 words) | 50 | 01, 02, 03 | |
| One 30 minutes quiz (equivalent to 500 words) | 10 | 01, 02, 03 | |
| One group assignment (equivalent to 500 words per student) | 10 | 01, 02, 03 |
Sydney, 2019, Study Period 3, Day
Overview
Online enrolment: Yes
Maximum enrolment size: N/A
Enrolment information:
Subject Instance Co-ordinator: Ngan Nguyen
Class requirements
LectureWeek: 46
One 2.0 hours lecture per week on weekdays during the day in week 46 and delivered via face-to-face.
TutorialWeek: 47
One 1.0 hours tutorial per week on weekdays during the day in week 47 and delivered via face-to-face.
Assessments
| Assessment element | Comments | % | ILO* |
|---|---|---|---|
| Mid-term exam: 90 minutes (equivalent to 1,500 words) | 30 | 01, 02, 03 | |
| One 2-hour final examination (equivalent to 2,000 words) | 50 | 01, 02, 03 | |
| One 30 minutes quiz (equivalent to 500 words) | 10 | 01, 02, 03 | |
| One group assignment (equivalent to 500 words per student) | 10 | 01, 02, 03 |
Vietnam (Hanoi University), 2019, Semester 2, Day
Overview
Online enrolment: Yes
Maximum enrolment size: N/A
Enrolment information:
Subject Instance Co-ordinator: Van Vu
Class requirements
LectureWeek: 31 - 43
One 2.0 hours lecture other recurrence on weekdays during the day from week 31 to week 43 and delivered via face-to-face.
Assessments
| Assessment element | Comments | % | ILO* |
|---|---|---|---|
| Mid-term exam: 90 minutes (equivalent to 1,500 words) | 30 | 01, 02, 03 | |
| One 2-hour final examination (equivalent to 2,000 words) | 50 | 01, 02, 03 | |
| One 30 minutes quiz (equivalent to 500 words) | 10 | 01, 02, 03 | |
| One group assignment (equivalent to 500 words per student) | 10 | 01, 02, 03 |