This course aims to facilitate students’ learning of financial derivative instruments, and the practice of risk management. Upon completion of this course, students will be able to apply a variety of derivatives models; use options, futures contracts, and swaps to do arbitrage and to form hedging portfolios; and use derivative securities to manage the risk of financial assets.

The first part of the course concentrates on the practice of risk management. It will address various types of risks that firms are exposed to, how to estimate the risk exposure of firms, and the costs and benefits associated with risk management. Students are required to apply the risk management methodology to real market data and compare various measures of risks.

The second part of the course will focus on financial derivative instruments, including a discussion of the nature of various derivative instruments, how they can be used for investment and hedging purposes, and how they are priced. Students are encouraged to develop their discovery and innovative ability by creating various hedging solutions.