Unit Outline

In this face-to-face and flexible delivery unit, we develop an understanding of one of the fastest growing types of financial markets - those of derivative securities. They are called derivative securities because they ‘derive’ their value from the value of something else—an underlying right or interest. Underlying rights or interests (or assets in general) include (a) bonds or loans, which involve interest rate, credit, and currency risks, and (b) commodities and equities, which involve price risks. Underlying rights can also be groups of assets, such as equity or commodity indexes, or relationships between prices, such as the spread between two benchmarks. Derivatives securities play an important role in risk management.

Intended Learning Outcomes

As per the Assessment and Results Policy 1.3, your results will reflect your achievement against specified learning outcomes.

On completion of this unit, you will be able to:


1.	Describe the concept of options, forwards, futures and swaps and their markets.
2.	Critically analyse the mechanics of options, forwards, futures and swaps, and their applications in real-world scenarios.
3.	Compute prices of options, forwards, futures, and swaps, and evaluate their implementation incorporating various factors such as risk management, market liquidity, and contract specifications.

Alterations as a result of student feedback

To Be Determined

How will I be Assessed?

For more detailed assessment information please see MyLO.

Assessment schedule


ASSESSMENT TASK #	ASSESSMENT TASK NAME	DATE DUE	WEIGHT	LINKS TO INTENDED LEARNING OUTCOMES
Assessment Task 1:	Online Test 1	Week 5	20 %	LO1, LO2
Assessment Task 2:	Online test 2	Week 9	20 %	LO2, LO3
Assessment Task 3:	Assignment	Week 11	20 %	LO1, LO2, LO3
Assessment Task 4:	Final Exam	Exam Period	40 %	LO1, LO2, LO3

Assessment details

Assessment Task 1: Online Test 1

Task Description:

Online test 1 - This is an online test consisting of both theory and numerical questions. It will test the student’s knowledge on lecture material covered in weeks 1- 4.

Further information about the test will be provided on MyLO in Week 3.

Task Length:

60 minutes

Due Date:

Week 5

Weight:

20 %

CRITERION #

CRITERION

MEASURES INTENDED

LEARNING OUTCOME(S)


1	Explain and interpret financial derivatives.	LO1
2	Differentiate the concepts of derivative securities and discuss their fundamental principles and distinctive characteristics.	LO1
3	Critically evaluate the mechanics of derivative markets.	LO2

Assessment Task 2: Online test 2

Task Description:

Online test 2 - This is an online test consisting of both theory and numerical questions. It will test the student’s knowledge on lecture material covered in weeks 5 - 8.

Further information about the test will be provided on MyLO in Week 7.

Task Length:

60 minutes

Due Date:

Week 9

Weight:

20 %

CRITERION #

CRITERION

MEASURES INTENDED

LEARNING OUTCOME(S)


1	Critically analyse the mechanics of derivative markets.	LO2
2	Analyse derivative prices, quantities and positions	LO2
3	Determine the fair value of derivatives by accounting for environmental and social impacts.	LO3
4	Use the Binomial Option Pricing Model to price options	LO3

Assessment Task 3: Assignment

Task Description:

This assessment task is an individual research report, which accounts for 20% of your total grade in this unit. It aims to evaluate current issues in the derivative market and how firms use derivatives for both speculating and hedging purposes. To complete this assignment, you will need to use financial media such as Google Finance, Yahoo Finance, and WSJ, etc. You are expected to apply the financial models covered in the course, analyse data, graphs and effectively interpret and present financial information in a professional manner.

The specific topic and detailed requirements for the research report will be provided on MyLO under the Assessment link.

Task Length:

1800 words

Due Date:

Week 11

Weight:

20 %

CRITERION #

CRITERION

MEASURES INTENDED

LEARNING OUTCOME(S)


1	Describe the potential risks and benefits associated with derivatives and make well-informed decisions about their suitable usage.	LO1
2	Evaluate the role of derivative markets in promoting economic growth and stability.	LO2
3	Analyse and implement speculative and hedging strategies.	LO2
4	Calculate the price of forwards, futures, swaps and options contracts.	LO3

Assessment Task 4: Final Exam

Task Description:

Final Examination - The examination consists of a series of problem-solving questions. It is a non-invigilated take-home exam. This exam will cover all the topics delivered in weeks 1 to 12. Further information about the examination will be provided in week 13.

Task Length:

24 hours

Due Date:

Exam Period

Weight:

40 %

CRITERION #

CRITERION

MEASURES INTENDED

LEARNING OUTCOME(S)


1	All criteria as listed for assessment tasks 1, 2 and 3.	LO1, LO2, LO3

How your final result is determined

To pass this unit, you need to demonstrate your attainment of each of the Intended Learning Outcomes, achieve a final unit grade of 50% or greater, and pass any hurdle tasks.

Submission of assignments

Where practicable, assignments should be submitted to an assignment submission folder in MYLO. You must submit assignments by the due date or receive a penalty (unless an extension of time has been approved by the Unit Coordinator). Students submitting any assignment in hard copy, or because of a practicum finalisation, must attach a student cover sheet and signed declaration for the submission to be accepted for marking.

Academic integrity

Academic integrity is about acting responsibly, honestly, ethically, and collegially when using, producing, and communicating information with other students and staff members.

In written work, you must correctly reference the work of others to maintain academic integrity. To find out the referencing style for this unit, see the assessment information in the MyLO site, or contact your teaching staff. For more detail about Academic Integrity, see Important Guidelines & Support.

Requests for extensions

If you are unable to submit an assessment task by the due date, you should apply for an extension.

A request for an extension should first be discussed with your Unit Coordinator or teaching support team where possible. A request for an extension must be submitted by the assessment due date, except where you can provide evidence it was not possible to do so. Typically, an application for an extension will be supported by documentary evidence: however, where it is not possible for you to provide evidence please contact your Unit Coordinator.

The Unit Coordinator must notify you of the outcome of an extension request within 3 working days of receiving the request.

Late penalties

Assignments submitted after the deadline will receive a late penalty of 5% of the original available mark for each calendar day (or part day) that the assignment is late. Late submissions will not be accepted more than 10 calendar days after the due date, or after assignments have been returned to other students on a scheduled date, whichever occurs first. Further information on Late Penalties can be found on the Assessments and Results Procedure.

Review of results and appeals

You are entitled to ask for a review of the marking and grading of your assessment task if there is an irregularity in the marking standards or an error in the process for determining the outcome of an assessment. Details on how to request a review of a mark for an assignment are outlined in the Review and Appeal of Academic Decisions Procedure.

Required Resources

Required reading materials

You will need the following text [available from the Co-op Bookshop]:

An Introduction to Derivative Securities, Financial Markets, and Risk Management (2nd Edition) by (author): Robert Jarrow (Cornell University, USA) and Arkadev Chatterjea (Indiana University, USA). Pages: 772 | July 2019. ISBN: 9781944659653 (paperback).