Business and management studies
Module code: N1559
15 credits in spring semester
Teaching method: Lecture, Seminar
Assessment modes: Coursework, Open examination
You examine the markets and look at the trading and valuation of common derivative products such as forwards/futures, swaps and options, as well as equity and interest rate markets.
You look at practical applications of derivatives for hedging or investment purposes, including risk-return profiles, advantages and limitations.
You also explore fundamental concepts of no arbitage and risk neutral pricing and examine the Black Scholes formula.
Module learning outcomes
- Describe the function of derivatives in financial markets and discuss their advantages and limitations.
- Identify the main derivatives commonly traded in equity and interest rate markets, as well as some of the more exotic instruments.
- Explain the concept of no arbitrage and recognize the central role it places in derivatives pricing
- Implement the binomial tree and Black-Scholes models to find the no arbitrage price of a range of derivative securities. Understand the assumptions and limitations of the approach