Derivative Investment

Code

BUSI4445

School

Business

Level

4

Credits

20

Semesters

Spring UK

Summary

The module offers a comprehensive exploration of derivative instruments. The curriculum begins with an introduction to derivatives, providing a foundational understanding of this financial concept. The course then delves into the intricacies of forward and futures contracts, elucidating their trading mechanisms and practical applications in hedging strategies. Static hedging is introduced as a risk management approach, followed by an in-depth examination of stock indices and stock index futures. The differentiation between European and American styles in derivatives is thoroughly explored. Derivative valuation techniques will be used, incorporating the practical use of Binomial trees and the Black-Scholes model. Financial engineering is introduced as a critical aspect, offering insights into the development of financial products. The curriculum concludes with a discussion on the Greeks and dynamic hedging, providing students with a well-rounded understanding of derivative investments and their various applications in the financial landscape.

Target Students

Only available for MSc Finance and Investment students and MSc Exchange students.

Classes

• One 4-hour lecture each week for 10 weeks
• One 4-hour computing

This module is taught through a combination of lectures and computer lab sessions.

Assessment

• 30% Coursework: Group coursework.
• 70% Exam (2-hour): Written in-person exam.

Assessed by end of spring semester

Educational Aims

Learning Outcomes

Knowledge and understanding: 
This module develops a knowledge and understanding of:
•    Finance - the sources, uses and management of finance

Intellectual Skills: 
This module develops:
•    Being able to think critically and be creative: manage the creative processes in self and others; organise thoughts, analyse, synthesise and critically appraise. This includes the capability to identify assumptions, evaluate statements in terms of evidence, detect false logic or reasoning, identify implicit values, define terms adequately and generalise appropriately
•    Being able to solve complex problems and make decisions: establish criteria, using appropriate decision-making techniques including identifying, formulating and solving business problems; and the ability to create, identify and evaluate options; the ability to implement and review decisions
•    Using information and knowledge effectively in order to abstract meaning from information and to share knowledge, including the use of quantitative skills

Professional Practical Skills: 
This module develops:
•    The ability to conduct research and enquiry into business and management issues either individually or as part of a team through research design, the collection and analysis of quantitative data, synthesis and reporting

Transferable (key) Skills: 
This module develops:
•    Effective communication: networking, listening, oral and written communication of complex ideas and arguments, using a range of media, including the preparation of business reports
•    High personal effectiveness: critical self-awareness, self-reflection and self-management; time management; conflict  resolution, displaying commercial acumen, the ability to continue to learn through reflection on practice and experience

Conveners

• Dr Vera Zhao