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Financial Derivatives

General

Prefix

FIRE

Course Number

481

Course Level

Undergraduate

Department/Unit(s)

Finance, Insurance & Real Estate

College/School

Herberger Business School

Description

Characteristics and functions of financial derivatives. Corporate risk management
applications of financial derivatives. Pricing models of derivatives and trading strategies using derivatives to hedge financial risks.

Prerequisites

Credits

Min

3

Max

3

Repeatable

No

Goals and Diversity

MN Goal Course

No

Cultural Diversity

No

Learning Outcomes

Outcome

Outline the main characteristics of financial derivatives.

Outcome

Apply the binomial model in option pricing.

Outcome

Solve the option pricing problem using the Black-Scholes-Merton method.

Outcome

Design appropriate option strategies to control equity risk.

Course Outline

Course Outline

Characteristics of options, the structure of options markets and the principles of option pricing: 20% Binomial model to price options: 15% Black-Scholes-Merton model to price options: 15% Basic option strategies to control equity risk: 20% Advanced option strategies to control equity risk: 10% Characteristics of futures and forwards, and the structure of forwards and futures market: 10% Interest rate swaps, currency sways and equity swaps and their roles in risk hedging: 10%

Dependencies

Programs

FIRE481 is a completion requirement for: