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2017/18 Undergraduate Module Catalogue

LUBS3160 Financial Derivatives

10 creditsClass Size: 90

Module manager: Prof. Phil Holmes

Taught: Semester 2 (Jan to Jun) View Timetable

Year running 2017/18


LUBS2205Corporate Finance

This module is mutually exclusive with

LUBS2035Finance for Small Business
MATH2525Financial Mathematics 3

This module is not approved as a discovery module


This module aims to provide students with an understanding of the underlying features and functions of futures and options, developing an appreciation and a practical understanding of the key features of major derivative instruments and the principles of derivative pricing.

Learning outcomes
Upon completion of this module students will be able to interpret and assess:
- key features of a range of derivative instruments
- ways in which financial derivatives can be used for managing risk and for trading

Skills outcomes
Upon completion of this module students will be able to:
- Extract relevant information from structured scenarios and data in order to identify problems and define solutions
- Structure and communicate quantitative and qualitative information, ideas, analysis, argument and commentary
- Communicate in writing
- Think critically

Subject specific
- Apply derivative pricing models and identify payoffs from derivative positions
- Apply core knowledge of financial derivatives to a range of scenarios
- Competently apply their numerical and statistical skills to interrogate financial and other numerical data


Indicative content:
- An introduction to the types of derivatives, derivative markets, purpose of derivatives
- Futures and Forwards
- Mechanics of futures markets
- Determination of futures and forward prices
- Options and Option valuation
- Options Strategies
- The binomial model and the Black-Scholes model of option pricing

Teaching methods

Delivery typeNumberLength hoursStudent hours
Private study hours78.50
Total Contact hours21.50
Total hours (100hr per 10 credits)100.00

Private study

- Follow on reading from lectures and preparation for exercises for classes.
- Students will be expected to contribute to discussion in the classes.

Opportunities for Formative Feedback

Students will receive verbal feedback during classes on the assigned exercises. This will provide a main resource to self-monitoring progress during the course, as will class discussion of required reading.

Methods of assessment

Exam typeExam duration% of formal assessment
Standard exam (closed essays, MCQs etc)2 hr 00 mins100.00
Total percentage (Assessment Exams)100.00

Resit will be 100% by exam.

Reading list

The reading list is available from the Library website

Last updated: 04/12/2017


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