This unit is designed to further students’ understanding of futures and options contracts and their use in managing risk. It builds upon material covered in FINM1001: Foundations of Finance. FINM2002 provides an overview of options, futures, forwards and swaps on a range of underlying assets/commodities including stocks, interest rates, foreign exchange as well as more exotic instruments such as weather and electricity derivatives. The models used for pricing these instruments will be covered as well as techniques used for risk management. 

On satisfying the requirements for this course, students will have the knowledge and skills to:

• understand options, futures, forwards, and swaps on a range of underlying assets/commodities
• understand and be able to utilise option trading strategies
• understand the types of assets/commodities we use including stocks, interest rates, foreign exchange as well as exotic instruments and weather and electricity derivatives
• use various models to price forward, futures, swap and option contracts
• use these pricing models for risk management.

May include in class assessment (quizzes), an assignment, a mid-semester, and final examination.

At least three contact hours per week (a two hour lecture and a one hour tutorial) plus private study time.

Completion of FINM1001 Foundations of Finance and STAT1008 Quantitative Research Methods

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