Financial Derivatives

Course Objective

  • Understand derivatives and their market operations.
  • Price and analyze forwards, futures, options, and swaps.
  • Develop hedging, arbitrage, and speculation strategies.
  • Evaluate risks and regulatory aspects of derivatives.
  • Apply derivatives in corporate finance.

    • Course Outcomes (CO)

    CO No. Course Outcome PO Mapping
    CO1 Explain the functioning and types of financial derivatives. PO1, PO2
    CO2 Price and evaluate derivatives using mathematical models. PO2, PO4
    CO3 Design hedging and trading strategies. PO1, PO5
    CO4 Assess risk and leverage in derivative instruments. PO4, PO6
    CO5 Analyze real-world derivative applications and regulations. PO2, PO7

Syllabus of Financial Derivatives

  • Introduction to Derivatives
  • Forward and Futures Contracts
  • Options – Types and Payoffs
  • Option Pricing Models (Binomial, BSM)
  • Swaps and Their Applications
  • Trading Strategies with Derivatives
  • Hedging and Risk Management
  • Margining and Clearing Mechanisms
  • Regulatory Framework for Derivatives
  • Commodity and Currency Derivatives
  • Credit Derivatives and CDS
  • Case Studies of Derivative Disasters
  • Use of Derivatives in Corporate Finance
  • Software Tools and Trading Simulations
  • Fintech in Derivatives Trading