Undergraduate Course: Futures and Options (BUST10023)
Course Outline
| School | Business School |
College | College of Humanities and Social Science |
| Course type | Standard |
Availability | Available to all students |
| Credit level (Normal year taken) | SCQF Level 10 (Year 3 Undergraduate) |
Credits | 20 |
| Home subject area | Business Studies |
Other subject area | None |
| Course website |
None |
Taught in Gaelic? | No |
| Course description | The course covers the market structure, use and pricing of futures and options, two key elements of financial markets. Both allow users to modify and transfer risks, take speculative positions, and develop investment strategies and the markets in which they are traded are significant elements of most advanced economies. Key questions as to their applications and pricing form a specialist area in finance. In particular, options involve the development of complex models for, pricing and monitoring their behaviour. A sub-element of the course will examine the use and pricing of interest rate and cross-currency swaps. |
Entry Requirements (not applicable to Visiting Students)
| Pre-requisites |
Students MUST have passed:
Principles of Finance (BUST08003)
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Co-requisites | |
| Prohibited Combinations | |
Other requirements | None |
| Additional Costs | None |
Information for Visiting Students
| Pre-requisites | A pass in Principles of Finance (BUST08003) equivalent.
Visiting students should have at least 3 Business Studies courses at grade B or above (or be predicted to obtain this). We will only consider University/College level courses.
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| Displayed in Visiting Students Prospectus? | Yes |
Course Delivery Information
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| Delivery period: 2013/14 Semester 2, Available to all students (SV1)
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Learn enabled: Yes |
Quota: None |
Web Timetable |
Web Timetable |
| Course Start Date |
13/01/2014 |
| Breakdown of Learning and Teaching activities (Further Info) |
Total Hours:
200
(
Lecture Hours 20,
Summative Assessment Hours 2,
Programme Level Learning and Teaching Hours 4,
Directed Learning and Independent Learning Hours
174 )
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| Additional Notes |
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| Breakdown of Assessment Methods (Further Info) |
Written Exam
60 %,
Coursework
40 %,
Practical Exam
0 %
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| Exam Information |
| Exam Diet |
Paper Name |
Hours:Minutes |
|
|
| Main Exam Diet S2 (April/May) | Futures and Options | 2:00 | | |
Summary of Intended Learning Outcomes
Objectives and Learning Outcomes, Knowledge and Understanding.
After completing this course, students should:
- Understand the nature of derivatives
- Have a better knowledge of the specialised terminology of financial markets
- Know how arbitrage pricing works and how this sets prices in a competitive market
- Comprehend the idea of replicating portfolios or transactions
- Know how futures contracts work
- Know how forward and futures contracts are priced in a competitive market
- Understand the pricing of interest rate and cross-currency swaps
- Comprehend how market users make use of swaps for asset-liability management
- Know the different types of options and their characteristics and payoffs
- Understand how the boundary conditions for option prices are determined
- Know the ways the binomial and the Black-Scholes-Merton option pricing models are used to determine the fair value of a simple option
- Be able to make extensions to the basic models used to price futures and options to take account of dividends and, in the case of options, early exercise
- Have an understanding of how exotic options work
- Be able to use their knowledge of arbitrage pricing methods for options and futures to undertake simple financial engineering |
Assessment Information
This will be a mixture of examination and assignment.
The assignment is worth 40% of the course mark and takes the form of an individual essay (max 2000 words).
The examination represents 60% of course marks. |
Special Arrangements
| None |
Additional Information
| Academic description |
Not entered |
| Syllabus |
Not entered |
| Transferable skills |
Not entered |
| Reading list |
Not entered |
| Study Abroad |
Not entered |
| Study Pattern |
Not entered |
| Keywords | FO |
Contacts
| Course organiser | Dr Peter Moles
Tel: (0131 6)50 3795
Email: P.Moles@ed.ac.uk |
Course secretary | Miss Jen Wood
Tel: (0131 6)50 8335
Email: J.Wood@ed.ac.uk |
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