This unit is designed to develop students' understanding of various derivative instruments including futures and options contracts and their use in managing risk. This unit provides an overview of options, futures, forwards and swaps on a range of underlying assets/commodities including stocks, interest rates, foreign exchange as well as more exotic instruments such commodity derivatives. The models used for pricing these instruments and techniques used for risk management are also included.

Learning outcomes

After successful completion of this unit, students will be able to:
1. Analyse and explain how derivatives, such as options, futures, forwards, and swaps, are structured and operate;
2. Use various models to price forward contracts, futures, swaps and options contracts;
3. Develop and apply option trading strategies; and
4. Select and apply appropriate derivatives for various types of risk management.

Graduate attributes

1. UC graduates are professional - employ up-to-date and relevant knowledge and skills
1. UC graduates are professional - communicate effectively
1. UC graduates are professional - use creativity, critical thinking, analysis and research skills to solve theoretical and real-world problems
1. UC graduates are professional - work collaboratively as part of a team, negotiate, and resolve conflict
1. UC graduates are professional - display initiative and drive, and use their organisation skills to plan and manage their workload
2. UC graduates are global citizens - communicate effectively in diverse cultural and social settings
3. UC graduates are lifelong learners - adapt to complexity, ambiguity and change by being flexible and keen to engage with new ideas
3. UC graduates are lifelong learners - evaluate and adopt new technology
2. UC graduates are global citizens - think globally about issues in their profession

Prerequisites

11215 Business Finance

Corequisites

None.

Incompatible units

None.

Equivalent units

None.

Assumed knowledge

School/college level mathematics and/or statistics, accounting or economics knowledge.