Study-Unit Description

Study-Unit Description


CODE INS3018

 
TITLE Investments and Derivative Markets

 
LEVEL 03 - Years 2, 3, 4 in Modular Undergraduate Course

 
ECTS CREDITS 4

 
DEPARTMENT Insurance

 
DESCRIPTION This study-unit will provide a comprehensive look at Investment Science: clarifying what is known about best investment practices by using objective academic sources that academics have developed and tested about optimal investment practices. clarifying theories and statistical modeling techniques, and ever more powerful computational devices, which have allowed academics and analytical professionals to push the science of investing forward.

Looking at:
    -- The Basic Theory of Interest;
    -- Fixed Income Securities;
    -- The Term Structure of Interest Rates;
    -- Applied Interest Rates Analysis.
Forwards / Futures:
    -- Mechanics of the future markets;
    -- Hedging strategies using futures;
    -- Interest Rate Futures.
Swaps:
    -- Interest rate swaps;
    -- Currency swaps.
Options:
    -- Mechanics of the options market;
    -- Properties of stock options;
    -- Trading strategies involving options.

Study-unit Aims:

The first part of the unit aims to introduce the basic concepts of investments to students. The second part of the unit aims to provide an understanding of the markets for derivatives instruments (forwards,futures, options and swaps) and of their uses for hedging and trading by corporations and financial institutions.

Learning Outcomes:

1. Knowledge & Understanding
By the end of the study-unit the student will be able to:

i) comprehend the basics of investment science; (that is clarifying what is known about best investment practices by using objective academic sources that academics have developed and tested about optimal investment practices. Clarifying theories and statistical modeling techniques, and ever more powerful computational devices, which have allowed academics and analytical professionals to push the science of investing forward);
ii) demonstrate an understanding of the basic financial derivative instruments, which include;
- Forwards;
- Futures;
- Swaps;
- Options.
iii) grasp the importance of derivative instruments as a tool for both trading and hedging purposes;
iv) solve investment problems by finding, analyzing, summarizing, and commenting on selected scientific investment models that can be relevant to the rational decisions of individual investors.

2. Skills
By the end of the study-unit the student will be able to:

i) use interest rates theory in several application;
ii) price and calculate the market value of most plain vanilla derivatives;
iii) undertake a critical analysis of how derivative markets operate.

Main Text/s and any supplementary readings:

Main Texts:

- Luenberger, D.G., 2013. Investment Science, Oxford University Press.
- Hull, J., 2015. Options, futures and other Derivatives, Prentice Hall, Eighth edition.

 
STUDY-UNIT TYPE Lecture and Tutorial

 
METHOD OF ASSESSMENT
Assessment Component/s Assessment Due Resit Availability Weighting
Examination (2 Hours) SEM1 Yes 100%

 
LECTURER/S Antonio Gannino (Co-ord.)

 
The University makes every effort to ensure that the published Courses Plans, Programmes of Study and Study-Unit information are complete and up-to-date at the time of publication. The University reserves the right to make changes in case errors are detected after publication.
The availability of optional units may be subject to timetabling constraints.
Units not attracting a sufficient number of registrations may be withdrawn without notice.
It should be noted that all the information in the description above applies to study-units available during the academic year 2020/1. It may be subject to change in subsequent years.

https://www.um.edu.mt/course/studyunit