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Indiana University Bloomington

Department of Finance

US News

U.S. News & World Report ranked our undergraduate finance program #10 out of all universities in the nation in 2013.

  1. F421
    Derivative Securities and Corporate Risk Management
    • 16-weeks
    • 3 credits
    • Prerequisite: F303 and F305 with grades of C- or better

    Advanced treatment of options, futures, and other derivative securities. Detailed description of the entire spectrum of derivative products. Theoretical and numerical valuation of derivative securities. How corporate risk managers use derivatives to hedge exchange rate risk, interest rate risk, commodity risk, credit risk, etc.

    Learning Objectives:
    I. Overview    
       A. Instruments        
           1. Futures/Forwards/Swaps        
           2. Options    
       B. Markets
    II. Forwards/Futures    
       A. Valuation    
       B. Risk management        
           1. Equity markets        
           2. Fixed-income (interest rate) instruments        
           3. Currencies        
           4. Commodities    
       C. Speculation, Arbitrage, and Spreading
    III. Options    
       A. Pricing        
            1. Theoretical        
            2. Numerical valuation, such as binomial or simulation    
        B. Risk management techniques with options    
        C. Option trading strategies (speculative)        
            1. Directional        
            2. Volatility plays    
        D. "Exotic" options
    IV. Financial Engineering  

    Typical Text:  An Introduction to Options and Futures, Chance                         
                        Introduction to Futures and Options Markets, Hull                         
                        Futures and Option Contracting: Theory and Practice, Marshall                         
                        @RISK software