Financial Derivatives

Syllabus

MBAT413: Financial Derivatives

Unit 1

Financial Derivatives

Concept, Features, Uses, Types, Critiques of Derivatives, Traders in Derivative Markets, Factors Contributing to the Growth of Derivatives, Financial Derivatives Market in India, Derivative Centrals and
Market Liquidity.

Unit 2

Future: Introduction, Financial Futures Contracts, Types of Financial Futures, Contracts, Evolution of Futures Market in India, Operators/ Traders in Future Market, Functions Market Growth in Future Market, Future Margin, Market to Market, Cleaning House, Theories of Future Prices. Hedging Concepts– Long, Short, Cross, Forward Contract, Feature of Forward Contract, Classification of Forward Contracts, Forward Prices vs Future Prices, Index Futures.

Unit 3

Financial Swaps

Introduction, Concept, Types, Nature, Evolution, Features, and Types
of Swaps.

Unit 4

Financial Options

Introduction, Concept, Types, Distinction between Option and Futures Contracts, Option Valuation, Determinants of Option Pricing, Option Premium, Greeks of Option Contracts.

Option Models

Black- Scholes Option Pricing Model, Binomial Option Pricing Model, Trading and Hedging with Options.

Unit 5

Carry Trades and Speculative Derivatives-Economic Derivatives, Market Expectations, Carry Trade as a Speculative Investment Strategy; Uncovered Interest Parity, Measurement of Risk and Returns in carry Trades, Rupee Interest Derivatives, Convertible Securities and Warrants, Hedging –Objective Sand Process.