Course Overview
Derivatives have become increasingly important and fundamental in effectively managing financial risk and creating exposures to asset classes. This course builds the conceptual framework for understanding derivative investments (forwards, futures, options, and swaps), derivative markets, and the use of options in risk management.
- Retired
- This course has been retired and is no longer offered. Find other Flexible Learning courses that may interest you.
Learning Outcomes
At the end of this course the student will be able to:
- Calculate an arbitrage
- Describe how an arbitrage determines prices and promotes market efficiency
- Calculate and interpret the payoff of an FRA
- Outline the characteristics of currency forward contracts
- Outline price limits and the process of marking to market
- Compute and interpret the margin balance, given the previous day’s balance and the change in the futures price
- Assess interest rate caps, floors, and collars
- Compute and interpret option payoffs
- Evaluate intrinsic value and time value
- Calculate and interpret the lowest prices of European and American calls and puts based on the rules for minimum values and lower bounds
- Generate the value at expiration, profit, maximum profit, maximum loss, breakeven underlying price at expiration, and general shape of the graph of the strategies of buying and selling calls and puts
- Evaluate the value at expiration, profit, maximum profit, maximum loss, breakeven underlying price at expiration, and general shape of the graph of a covered call strategy and a protective put strategy, while considering the risk management application
Effective as of Fall 2011
Programs and courses are subject to change without notice. Find out more about BCIT course cancellations.