1 x 3-hour workshop weekly
1 BUSN9119 - Managing Company Finances
2 Admission into MAF-Master of Accounting and Finance
2a Admission into MACC-Master of Accounting
2b Admission into MAFFP-Master of Accounting and Finance - City Campus
Must Satisfy: (1 and (2 or 2a or 2b))
Topic description
The objective of this topic is to provide students with the knowledge, ability and understanding required to price derivative securities and implement effective risk management strategies. This topic will consider both exchange traded and over the counter (OTC) derivative instruments. Investment strategies employed by institutional investors, such as hedge funds, that utilise these derivative instruments will also be covered in the advance stages of this course.
Educational aims
This topic aims to:
  1. Identify and analyse the distinctive features of derivative instruments that can be used to manage risk
  2. Understand and utilise the concepts and tools used in measuring and hedging various types of risks
  3. Apply risk management practices to real-world case studies
Expected learning outcomes
On successful completion of this topic students should be able to:
  1. Discuss the operation of futures and forward markets
  2. Calculate the price and value of futures and forwards contracts
  3. Discuss the operation of option markets and distinguish between American and European options
  4. Compute option prices using both the binomial and Black-Scholes pricing models
  5. Calculate and discuss the exposure of a portfolio or security to different types of risk
  6. Explore risk management strategies, in particular for interest rate, exchange rate, commodity prices and equity prices
  7. Explain the mechanics of interest rate and currency swaps and their comparative advantage to users
  8. Discuss issues that may limit the ability of an investor to form an effective hedge