This course explores derivative instruments and their applications as risk management and yield enhancement tools. The focus is on standard derivatives (futures, forwards, FRA’s, swaps, options) as well as more complex products (exotic options and credit derivatives) and develops the key relationships required to price and hedge them (the cost-of-carry model, risk neutral valuations, binomial trees, Black & Scholes model, etc.). The course also explores best practices in the area of market and credit risk management and addresses topical issues pertaining to the use of derivatives by financial institutions and by non-financial corporations.
This course is essential for students intending to pursue a career in sales and trading, investment banking, and corporate finance.
Prerequisite - COMM 121
This course is restricted to students enrolled in the 3rd or 4th year of the Commerce Program.