Gold Coast, Australia
Area of Study
Taught In English
Prerequisite: 2201AFE/2281AFE Corporate Finance
Course Level Recommendations
ISA offers course level recommendations in an effort to facilitate the determination of course levels by credential evaluators.We advice each institution to have their own credentials evaluator make the final decision regrading course levels.
Recommended U.S. Semester Credits3 - 4
Recommended U.S. Quarter Units4 - 6
Hours & Credits
This course has a prerequisite requirement which means you MUST successfully complete the listed course or requirement/s BEFORE enrolling in this course. If you have enrolled in the course without meeting this requirement you MUST WITHDRAW immediately or contact the Program Director if you believe you have extenuating circumstances. It is our experience that students who have not completed the prerequisite course struggle to complete the course and often Fail as a result. It is your responsibility to have any Transfer Credit appearing on your academic transcript before enrolling. This course considers theoretical, empirical and practical aspects of financial risk management. It provides an in-depth study of some of the risk management aspects of derivative securities eg options, futures, and forward contracts. The course highlights practical applications of these securities focusing on the concept of financial engineering. The central question with which this course is concerned is "What are the characteristics of the most commonly used derivatives securities, how are these instruments priced and which strategies are available in order to manage financial risk with them?
This course covers derivatives such as options, forward contracts, futures contracts, and swaps. By the end of the course you will have a good knowledge of how these contracts work, how they are used, and how they are priced. Derivatives have become an integral part of finance. Whether you end up working for a financial or a non-financial institution, you will find the material you learn on this course important.
The central objective of this course is to provide students with an understanding of how deriviates such as futures and options work, and how firms and individuals can use the available techniques to manage financial risks, which are fundamental to successful management of a firm or a portfolio of personal investments.
Interrelationship of the Course with Other Courses
This course builds on students' knowledge of Corporate Finance introduced in 2201AFE or 2210AFE Investment Planning and guides students through basic risk management principles particularly related to financial instruments.
After successfully completing this course you should be able to:
1 explain the basic characteristics of forward and futures contracts;
2 describe the basic characteristics of options;
3 explain the basic characteristics of swaps;
4 demonstrate an understanding about how derivatives are used for risk management purposes;
5 understand fundamental issues concerned with measuring interest rates which are a factor in the valuation of derivatives;
6 understand the mechanics of derivatives markets;
7 develop the ability to price derivatives;
8 calculate and interpret a measure of the total risk to which a financial asset portfolio is exposed - VaR.
Mid-Semester Exam-Weighted 30%/100
Exam (Selected and Constructed Responses)-Weighted 15%/100
End-of-Semester Examination-Weighted 50%/100
Courses and course hours of instruction are subject to change.
Eligibility for courses may be subject to a placement exam and/or pre-requisites.
Credits earned vary according to the policies of the students' home institutions. According to ISA policy and possible visa requirements, students must maintain full-time enrollment status, as determined by their home institutions, for the duration of the program.