Overview
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Learning activities
Learning outcomes
Discuss the manner in which financial instruments are traded on financial markets;
Explain the concept of arbitrage, and its implications for market efficiency;
Apply arbitrage concepts to the valuation of financial instruments;
Critically evaluate the features and uses of the major derivative instruments;
Describe the role of hedged positions and how they can be set up and maintained; and
Communicate clear and coherent expositions of knowledge, ideas and evidence, both orally and in writing.
Evaluate the likelihood default on derivative positions and the role of reputation capital in enforcing ethical outcomes.
Integrate the concepts of pricing financial instruments with jurisdictional differences in the operation of financial markets.
Assessments
Additional information
Calculations of the price sensitivity of interest rate instruments; The role of futures and options in achieving speculative goals with respect to commodities, financial futures, stocks and indices; Hedging a position in commodities using futures; Establishing a hedge for a position in interest rate instruments using futures, forward rate agreements, options and swaps and other derivative instruments; Establishing arbitrage positions using combinations of financial instruments and derivatives; How the processes of arbitrage restore price equilibrium