Derivatives – Theory & Applications

Faculty
Commerce & Business Administration
Department
Finance
Course Code
FINC 4380
Credits
3.00
Semester Length
15
Max Class Size
35
Method Of Instruction
Lecture
Seminar
Typically Offered
To be determined

Overview

Course Description
This course will examine topics dealing with derivative securities and specialized financial products. The types of derivative securities and specialized financial products, their use in modern finance as tools for hedging, arbitrage and speculation, and methods for pricing them will be the main subject matter for this course.
Course Content

1.   Mechanics of futures and forward markets
2.   Determination of forward and futures prices
3.   Interest rate futures
4.   Hedging strategies using futures
5.   Swaps and Pricing
6.   Mechanics of options markets
7.   Credit derivatives, securitization and the credit crisis of 2007
8.   Properties of stock options
9.   Trading strategies involving options
10. Option pricing: binomial trees
11. Option pricing: Black-Scholes-Merton model
12. Options on stock indices, interest rate and currencies
13. Value at risk, volatility and risk management
14. Derivatives mishaps and lessons learned

Methods Of Instruction

Lectures and seminar discussion

Means of Assessment

Midterm exam                       30%
Case & Project                   15-25%
Assignments                     10-15%
Participation                        0-10%
Final Exam                             35%      
Total                                    100%

Notes:

1. Students who do not achieve a grade of at least 50% on the combined exam components will fail the course.

2. Students may conduct research as part of their coursework in this class. Instructors for the course are responsible for ensuring that student research projects comply with College policies on ethical conduct for research involving humans, which can require obtaining Informed Consent from participants and getting the approval of the Douglas College Research Ethics Board prior to conducting the research.

 

Learning Outcomes

At the end of the course, the successful student should be able to:
1.  understand different types of derivative securities and specialized financial products, and derivative markets;
2.  examine and utilize derivative securities as tools for hedging, arbitrage, speculation and risk management;
3.  determine the value of different derivative securities; and
4.  analyze the impact of derivative securities on financial markets and lessons learned from derivatives mishaps.

Textbook Materials

Hull, John C. Fundamentals of Futures and Options Markets, Latest Ed. Prentice Hall Canada (or other textbooks as approved by the Finance Department).

Financial calculator as approved by the department.

Requisites

Prerequisites

FINC 3350 or FINC 3390 or equivalent with a grade of “C” or better

Corequisites

Nil

Equivalencies

Nil

Course Guidelines

Course Guidelines for previous years are viewable by selecting the version desired. If you took this course and do not see a listing for the starting semester / year of the course, consider the previous version as the applicable version.

Course Transfers

Institution Transfer Details Effective Dates
Athabasca University (AU) AU FNCE 403 (3) 2016/09/01 to -
Capilano University (CAPU) CAPU BFIN 3XX (3) 2016/09/01 to -
Coast Mountain College (CMTN) No credit 2016/09/01 to -
College of the Rockies (COTR) COTR ACCT 3XX (3) 2016/09/01 to -
Kwantlen Polytechnic University (KPU) No credit 2016/09/01 to -
Simon Fraser University (SFU) SFU BUS 2XX (3) 2016/09/01 to -
University Canada West (UCW) No credit 2016/09/01 to 2016/12/31
University Canada West (UCW) UCW FNCE 4XX (3) 2017/01/01 to -
University of British Columbia - Vancouver (UBCV) UBCV COMM 4th (3) 2016/09/01 to -
University of Northern BC (UNBC) UNBC COMM 421 (3) 2016/09/01 to -
University of the Fraser Valley (UFV) UFV BUS 434 (3) 2016/09/01 to -
University of Victoria (UVIC) UVIC COM 3XX (1.5) 2016/09/01 to -

Course Offerings

Fall 2021

CRN
Days
Dates
Start Date
End Date
Instructor
Status
35619
Wed
07-Sep-2021
- 08-Dec-2021
07-Sep-2021
08-Dec-2021
Dong
Zaidong
Open
Max
Enrolled
Remaining
Waitlist
35
23
12
0
Days
Building
Room
Time
Wed
18:30 - 21:20