Options and Futures

(3-5 Credit Hours) · Undergraduate

Provides an introduction into the economics of "risk" and demonstrates how quantitative techniques can allow analysts to manage risk in the field. This module provides the student with an introduction to standard techniques in risk and insurance. The implementation of sound quantitative risk models to assess and insure against risk is a vital concern for all financial institutions. The module provides a comprehensive treatment of the theoretical concepts and modelling techniques of quantitative risk management. It provides students with practical tools to solve real world problems, in the context of portfolio management and credit risk. A major theme underlying all topics is the importance of ambiguity, especially regarding partial knowledge of asset distributions and investor preferences. Throughout we will relate the class discussion to current economic conditions. Trinity College, Dublin (IT): Derivatives are financial instruments whose value is based on underlying assets such as equities, commodities, interest rates, currencies, or inflation-linked indices. Over the last three decades, they have become integral to global financial markets, enabling institutions and investors to manage exposures or pursue speculative opportunities in response to market expectations. This module explores the primary types of derivatives: forwards, futures, options, and swaps, demonstrating how they are utilised to achieve various hedging and speculation objectives while providing a framework for pricing derivatives. The aim is to equip learners with a comprehensive understanding of derivative instruments and their application in financial risk management, pricing strategies, and speculative decision-making.