Undergraduate Course: Futures and Options (BUST10023)
Course Outline
| School | Business School |
College | College of Humanities and Social Science |
| Credit level (Normal year taken) | SCQF Level 10 (Year 3 Undergraduate) |
Availability | Available to all students |
| SCQF Credits | 20 |
ECTS Credits | 10 |
| Summary | 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. |
| Course description |
Not entered
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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 |
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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Course Delivery Information
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| Academic year 2014/15, Available to all students (SV1)
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Quota: None |
| Course Start |
Semester 2 |
Timetable |
Timetable |
| 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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| Assessment (Further Info) |
Written Exam
60 %,
Coursework
40 %,
Practical Exam
0 %
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| Additional Information (Assessment) |
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. |
| Feedback |
Not entered |
| Exam Information |
| Exam Diet |
Paper Name |
Hours & Minutes |
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| Main Exam Diet S2 (April/May) | Futures and Options | 2:00 | |
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
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Additional Information
| Graduate Attributes and Skills |
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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