Derivatives (BS3385) complete lecture notes

Derivatives (BS3385) Complete Lecture Notes – Aston University is a detailed, 34-page educational resource designed for students encountering the complex world of financial derivatives for the first time. This module offers a thorough introduction to various derivative contracts such as forward contracts, futures, swaps, options, and credit derivatives, emphasizing their roles in financial risk management and modification.

Module Aims:

The primary goal of this module is to elucidate the functions and mechanisms of different types of derivatives, providing a foundational understanding for students who may only have basic prior knowledge of finance. The focus is significantly placed on the practical applications of these financial instruments in real-world scenarios. An integral part of the coursework involves engaging with numerous numerical examples to demonstrate how derivatives can be utilized effectively in managing financial risks.

Module Learning Outcomes:

By the end of this module, students will have developed a comprehensive set of skills and knowledge, enabling them to:

1. Understand and Explain Derivatives: Students will gain a solid understanding of the nature of derivative contracts, including how they are traded and the primary variables that influence their market values.
2. Calculate Profits and Losses: The notes equip students with the mathematical tools necessary to compute profits and losses associated with various derivative positions and trades. This skill is crucial for practical financial management and understanding the impact of derivatives on business outcomes.
3. Apply Hedging Strategies: Students will learn to implement various hedging strategies using derivatives. The notes detail how these strategies can be used to mitigate different types of financial risks, enhancing students’ ability to manage uncertainty in financial portfolios.
4. Evaluate Risk Exposure: The coursework encourages critical evaluation of a company’s risk exposure concerning stock prices, commodity prices, currencies, interest rates, and credit. Students will learn to identify and assess the extent of these risks, providing them with the ability to suggest suitable financial strategies to mitigate identified risks.

These comprehensive lecture notes from the Derivatives course at Aston University are not only an academic resource but also a practical guide that prepares students for future roles in finance, such as risk management, trading, or financial analysis. By the end of the course, students are expected to be proficient in the theoretical underpinnings and practical applications of derivatives in the business world.