ProgrammesModule: Derivative Products
Course Title: Derivative Products
Course Code: UU-FNE-4600-MW
Programme: Bachelor of Science (BSc) in Finance - MW
This module’s focus is firmly on the essential properties and institutional trading feature and hedging applications of specific basic derivative instruments as well as the binomial option pricing model. Students will also be able to look at the modelling of asset prices and the Black-Scholes option pricing model.
This module aims at equipping students with knowledge of the most significant financial derivative instruments, techniques to apply in financial derivatives' evaluation, principles to derivatives valuation such as no-arbitrage arguments and risk-neutral valuation methods along with their implications on the pricing and help them be able to analyze the asset price dynamics that are significant in deriving both the binomial and Black-Scholes option pricing models.
Module Learning Outcomes
After completing the module students should be able to:
1. Define the characteristics of the relevant financial derivative instruments.
2. Analyze how financial derivatives are valued based on no arbitrage pricing arguments and risk-neutral valuation methods.
3. Analyze how the instruments covered can be used to implement basic market risk management strategies, appropriate for corporate applications.
4. Solve basic problems requiring the ability to price derivative instruments and hedge market risk based on numerical data and current market conventions.
5. Use kills for pricing financial derivatives, including familiarity with some central techniques, namely risk-neutral valuation, no-arbitrage pricing, the binomial model, and the Black-Scholes model.
6. Demonstrate basic quantitative and mathematical skills in pricing derivative instruments.
7. Demonstrate a capacity for independent and self-managed learning.
Prerequisites: UU-BA-IND100, UU-FNT-103