COURSE UNIT TITLE

: FINANCIAL DERIVATIVES

DEGREE PROGRAMMES

Description of Individual Course Units

Course Unit Code Course Unit Title Type Of Course D U L ECTS
FIN 4235 FINANCIAL DERIVATIVES ELECTIVE 3 0 0 5

Offered By

BUSINESS ADMINISTRATION

Level of Course Unit

First Cycle Programmes (Bachelor's Degree)

Course Coordinator

ASISTANT PROFESSOR BANU ATREK

Offered to

BUSINESS ADMINISTRATION
International Business and Trade

Course Objective

This course aims to introduce the students to the mechanics of financial derivatives markets, futures prices, hedging and trading strategies using derivatives and option pricing.

Learning Outcomes of the Course Unit

1   Describe option pricing, pointing out its determinants.
2   Illustrate the relationship between spot and futures markets in order to determine futures prices.
3   Explain derivatives markets including forwards, futures, swaps and options, highlighting their mechanics and players.
4   Use futures and forwards contracts in order to form hedging strategies.
5   Select options contracts in order to construct trading strategies.
6   Apply the comparative advantage argument in order to design a swap in the absence or presence of a financial intermediary.

Mode of Delivery

Face -to- Face

Prerequisites and Co-requisites

FIN 2002 - BUSINESS FINANCE

Recomended Optional Programme Components

None

Course Contents

Week Subject Description
1 Mechanics of Futures and Forward Markets
2 Hedging Strategies Using Futures Contracts
3 Interest Rate Markets
4 Determination of Forward and Futures Prices
5 Interest Rate Futures
6 Swaps
7 Mechanics of Options Markets and Properties of Options
8 Trading Strategies Involving Options
9 Valuing Stock Options (Binomial Trees)
10 Valuing Stock Options (Black-Scholes-Merton Model)
11 Derivatives Markets in Developing Countries
12 Derivatives mishaps and what we can learn from them

Recomended or Required Reading

Options, Futures and Other Derivatives. John, C. Hull. Prentice Hall. 7th Edition, 2009.

Planned Learning Activities and Teaching Methods

1. Class discussion (the news and articles written in both domestic and global newspapers about current issues on finance and economy)
2. Writing memos on weekly topics (Book sections and the assigned articles must be read to prepare these requirements and be able to discuss them during the class)
3. Solving the assigned cases and problems
4. Termpaper presentations

Assessment Methods

SORTING NUMBER SHORT CODE LONG CODE FORMULA
1 MT Midterm
2 QZ Quiz
3 PRT Participation
4 FN Final
5 FCG FINAL COURSE GRADE MT * 0.25 + QZ * 0.20 +PRT * 0.20 + FN * 0.35
6 RST RESIT
7 FCGR FINAL COURSE GRADE (RESIT) MT * 0.25 + QZ * 0.20 + PRT * 0.20 + BUT * 0.35

Further Notes About Assessment Methods

None

Assessment Criteria

1. The learner will price options and identify its determinants.
2. The learner will describe the relationship between spot and futures markets and determine the futures prices.
3. The learner will define the mechanics of forwards, futures, swaps and options.
4. The learner will design hedging strategies by using futures and forwards.
5. The learner will select between different options to form trading strategies.
6. The learner will design a swap in the absence or presence of a financial intermediary.

Language of Instruction

English

Course Policies and Rules

1. Attending at least 70 percent of the lectures is mandatory.
2. Violations of plagiarism of any kind will result in a disciplinary action.

Contact Details for the Lecturer(s)

Prof. Dr. M. Banu Durukan
E-mail: banu.durukan@deu.edu.tr
Tel: 0232 3018248

Office Hours

To be announced.

Work Placement(s)

None

Workload Calculation

Activities Number Time (hours) Total Work Load (hours)
Lectures 12 3 36
Preparations before/after weekly lectures 12 1 12
Preparation for midterm exam 1 15 15
Preparation for final exam 1 20 20
Preparation for quiz etc. 2 5 10
Preparing presentations 1 3 3
Preparing assignments 10 3 30
Final 1 1,5 2
Midterm 1 1,5 2
Quiz etc. 2 1 2
TOTAL WORKLOAD (hours) 132

Contribution of Learning Outcomes to Programme Outcomes

PO/LOPO.1PO.2PO.3PO.4PO.5PO.6PO.7PO.8PO.9PO.10PO.11PO.12PO.13PO.14PO.15
LO.153
LO.253
LO.353
LO.4533
LO.5533
LO.65

CONTACT INFORMATION
Dokuz Eylül Üniversitesi Cumhuriyet Bulvarı No: 144 35210 Alsancak / İZMİR
Phone: +90(232) 412 12 12 - Fax: +90 (232) 464 81 35

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