Derivatives
| Module title | Derivatives |
|---|---|
| Module code | BEF2022DA |
| Academic year | 2023/4 |
| Credits | 30 |
| Module staff |
| Duration: Term | 1 | 2 | 3 |
|---|---|---|---|
| Duration: Weeks | 10 |
| Number students taking module (anticipated) | 40 |
|---|
Module description
The module is an introduction to derivatives markets and instruments. It provides a basic knowledge of the regulations and practices in financial and commodity derivatives, their underlying markets, trading and the principles of investment strategies. The module prepares you to undertake the Chartered Institute for Securities and Investments’ “Derivatives” exam.
Module aims - intentions of the module
The module delves into the core principles and defining features of primary derivative markets, encompassing various financial products and instruments like Futures, Forward contracts, Options, and Swaps. It scrutinizes the functions, importance, and operational mechanisms of these diverse derivative offerings, exploring their valuation techniques and the theoretical models that form the foundation for pricing and risk mitigation in derivative instruments. Students will learn to apply the principles of financial derivatives theory to address real-word challenges in risk management, demonstrating their practical proficiency in this domain.
Intended Learning Outcomes (ILOs)
ILO: Module-specific skills
On successfully completing the module you will be able to...
- 1. Critically discuss the basic concepts and fundamental characteristics of derivatives based on various underlying assets and their associated risks and rewards
- 2. Differentiate the structure, trading orders and environment of the Exchanges and OTC markets
- 3. Discuss the functions of clearing house and clearing process
- 4. Define delivery and settlement in the context of derivative contracts and the mechanisms for ensuring the fulfilment of derivatives
- 5. Analyse and devise different trading, hedging and investment strategies by utilizing derivatives
- 6. Explain the cope of regulation on derivatives in different countries
ILO: Discipline-specific skills
On successfully completing the module you will be able to...
- 7. Utilize financial theories and accounting expertise to analyse derivative-related investment strategies in real-world scenarios.
- 8. Explain a solid comprehension of the derivatives market and key derivative products.
- 9. Exhibit a comprehensive understanding of various markets, diverse asset classes, financial instruments, and fundamental accounting principles pertinent to derivative-based investment management.
ILO: Personal and key skills
On successfully completing the module you will be able to...
- 10. Develop the ability to analyse complex concepts, theories, and data critically
- 11. Gather, evaluate, and synthesize information from various sources, contributing to the development of well-informed arguments and insights
- 12. Improve written communication skills
Syllabus plan
- Introduction to derivatives
- Underlying markets
- Market structure
- Principles of Exchange-Traded derivatives
- Principles of OTC derivatives
- Principles of clearing
- Delivery and settlement
- Trading, hedging and investment strategies
- Regulatory requirements
Learning activities and teaching methods (given in hours of study time)
| Scheduled Learning and Teaching Activities | Guided independent study | Placement / study abroad |
|---|---|---|
| 90 | 210 | 0 |
Details of learning activities and teaching methods
| Category | Hours of study time | Description |
|---|---|---|
| Scheduled Learning and Teaching Activities | 25 | Masterclasses (in-person and online) |
| Scheduled Learning and Teaching Activities | 65 | Online guided learning |
| Guided Independent Study | 110 | Research, reading, assessment preparation and web-based activities including external resources if applicable. |
| Placement | 100 | Apply knowledge to practical situations in the workplace |
Formative assessment
| Form of assessment | Size of the assessment (eg length / duration) | ILOs assessed | Feedback method |
|---|---|---|---|
| Weekly online quizzes | 10-20 minutes | 1-9 | Marks and online answer option feedback |
| Mock Exam | 2 hours - 1 mock exam | 1-9 | Marks and generic written cohort feedback |
Summative assessment (% of credit)
| Coursework | Written exams | Practical exams |
|---|---|---|
| 50 | 50 | 0 |
Details of summative assessment
| Form of assessment | % of credit | Size of the assessment (eg length / duration) | ILOs assessed | Feedback method |
|---|---|---|---|---|
| Multiple choice exam | 50 | 100 MCQ questions 2 hours | 1-9 | Marks and generic written cohort feedback |
| Applied exercise / written assignment | 50 | 2500-word written assignment or equivalent total | 1-12 | Marks and individual feedback (written) |
Details of re-assessment (where required by referral or deferral)
| Original form of assessment | Form of re-assessment | ILOs re-assessed | Timescale for re-assessment |
|---|---|---|---|
| Multiple choice exam | 100 MCQ questions 2 hours | 1-9 | In line with university regulations |
| Applied exercise / written assignment | 2500-word written assignment or equivalent total | 1-12 | In line with university regulations |
Re-assessment notes
Deferral – if you have been deferred for any assessment you will be expected to submit the relevant assessment. The mark given for a re-assessment taken as a result of deferral will not be capped and will be treated as it would be if it were your first attempt at the assessment.
Referral – if you have failed the module overall (i.e. a final overall module mark of less than 40%) you will be expected to submit the relevant assessment. The mark given for a re-assessment taken as a result of referral will be capped at 40%
Indicative learning resources - Basic reading
- Derivatives (Level 3), CISI Workbook, The Chartered Institute for Securities and Investment (CISI)
Indicative learning resources - Other resources
- CISI Revision Express online learning platform, Yahoo Finance, MarketWatch, Financial Times
- Journal of Derivatives
- The Journal of finance
- Journal of financial and quantitative analysis
| Credit value | 30 |
|---|---|
| Module ECTS | 15 |
| Module pre-requisites | None |
| Module co-requisites | None |
| NQF level (module) | 5 |
| Available as distance learning? | No |
| Origin date | 10/09/2023 |
| Last revision date | 19/03/2024 |
