AF5038 - Derivatives and Risk

You will learn through lectures (24 hours), financial trading software and Microsoft Excel based workshops (24 hours), as well as tutor led (76 hours) and independent study (76 hours). The workshops are designed to help you learn about these financial instruments in a practical way. You will apply your knowledge by answering exam-style questions throughout the semester to provide formative feedback of your progress on a week-by-week basis.

The formal teaching is supplemented using the electronic learning platform to provide:
• Additional reading materials to contextualise the subject content, including news, case study materials and academic journal articles.
• Video and PowerPoint presentations to supplement your independent study.
• Excel spreadsheets taken from the workshops.
• Exam practice materials.

Your assessment will require you to develop, justify, monitor, and reflect on a short-term speculative option trading strategy for an equity option. This comprises forecasting the underlying share price, creating a derivatives strategy consistent with the forecast, and analysing the ultimate financial performance of your strategy, therefore integrating theoretical aspects of finance regarding stock markets and derivatives markets in a practice-inspired context.

You will be supported by a teaching and learning plan (TLP) that outlines the pattern and content of formal sessions. You will be supported by your tutors during interactive lectures and workshops where they will provide you with formative feedback. Lectures will be recorded and uploaded to the e-learning portal to consolidate your knowledge and develop understanding. Your electronic reading list references core material to support your lectures/workshops. It includes a comprehensive range of professional and academic journal articles relevant to your studies. Additionally, tutors will respond to questions using the University’s eLearning Portal so that the whole group can benefit. Weekly drop-in sessions in the NBS Trading Room will be arranged by your tutors so you can benefit from a chance to meet your tutor and ask them questions in a more informal environment.

All modules at Northumbria include a range of reading materials that students are expected to engage with. The reading list for this module can be found at: http://readinglists.northumbria.ac.uk
(Reading List service online guide for academic staff this containing contact details for the Reading List team – http://library.northumbria.ac.uk/readinglists)

Knowledge & Understanding (KU):
• Understand and apply knowledge of derivatives products, specifically in terms of the way that they work and their effect on risks (MLO1).
• Apply Excel-based spreadsheets to the operation of financial products in the development of appropriate financial solutions (MLO2).

Intellectual / Professional skills & abilities (IPSA):
• Conduct investigations of derivative products by proposing an investment and monitoring and reflecting on its performance over time (MLO3).

Formative assessment:
This will take place through interactive workshops where you will be formatively assessed by your tutor. You will have a chance to complete and receive feedback on practice exercises made available through the elp blackboard site. You should be aware that formative feedback can and will occur in any communication with your academic tutor.



Summative Assessment:
The module is assessed by two elements:
1. An assessment which will be an individual piece of work of 2,000 words requiring you to investigate a derivative product in order to demonstrate MLO2 and MLO3 (60%)
2. A closed-book multiple choice exam that covers the whole of the syllabus to address MLO1. You will be given one hour to answer 20 questions (40%).

None

None

The world of complex financial instruments can appear confusing. We pick apart some of those used to examine the problems they’ve been designed to solve, the additional risks they create, how they’re priced and what ultimately impacts the profit or loss of a derivatives transaction. This module builds understanding of the more complex elements of the financial market, demonstrating the way that fortunes can be quickly made or lost. Lectures are research-led and practice informed and the assessment will require you to exercise your research skills using the NBS Trading Room. There you’ll examine an underlying exposure, propose a derivatives transaction, monitor its performance and reflect upon your approach and results to learn lessons and build knowledge. Through workshops you’ll learn about derivatives in an applied way using relevant case studies and financial data. The module builds a theoretical and practical foundation for career-relevant skills in risk management and investment management.