## LUBS3160 Financial Derivatives

### 10 creditsClass Size: 90

Module manager: Prof. Phil Holmes
Email: P.R.Holmes@lubs.leeds.ac.uk

Taught: Semester 2 (Jan to Jun) View Timetable

Year running 2022/23

### Pre-requisite qualifications

LUBS2205 Corporate Finance
OR
LUBS2206 Corporate Financial Management

### This module is mutually exclusive with

 LUBS2035 Finance for Small Business MATH2525 Financial Mathematics 3 MATH2540 Financial Mathematics 3

This module is not approved as a discovery module

### Objectives

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:
Transferable
- 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

### Syllabus

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 type Number Length hours Student hours Lecture 11 1.50 16.50 Seminar 5 1.00 5.00 Private study hours 78.50 Total Contact hours 21.50 Total hours (100hr per 10 credits) 100.00

### Private study

This could include a variety of activities, such as reading, watching videos, question practice and exam preparation.

### Opportunities for Formative Feedback

Students receive feedback through: (i) a number of MCQ tests on Minerva during the module and (ii) worksheets provided as the basis for discussion in seminars with feedback provided during the seminar and outline answers provided after the seminars.

### Methods of assessment

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

The resit for this module will be 100% by 2 hour examination.