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This course covers derivative markets and contracts including options, forward contracts, futures contracts, and swaps. By the end of this course the student will have a good knowledge of the markets where these contracts are traded and how these contracts work, how they are used, and how they are priced.
After completing this course, the student will be able to:
- Describe theworkings of derivative markets and the derivative instruments industry
- Identify key distinctive features of the most common derivatives (i.e., futures, forwards, options and swaps)
- Define Arbitrage and explain the role it plays in determining the prices of derivative contracts and promoting market efficiency.
- Understanding the motives, reasons and explanations for use ofderivative instruments for hedging, speculation and arbitrage.
- Analyse payoffs and strategies involved in trading derivative instruments and combinations of derivatives
- Use the pricing modelsfor individual and combinations of derivative instruments
- Collect and synthesise information and materials from a variety of different sources to support an argument.
- The mechanics of derivatives markets
- Types of common derivatives investments and their key features
- Hedging Strategies Using Futures
- Interest Rates futures
- Trading Strategies
- Binomial Trees and Pricing of Stock Options using theBlack-Scholes-Merton pricing model
Hull, J. (2014). Options, futures & other derivatives. Upper Saddle River, NJ: Prentice Hall.
Johnson, RS. (2017). Derivatives markets and analysis.(Bloomberg Financial) 1st Edition.
Case Studies: will be distributed.