This unit entry is for students who completed this unit in 2016 only. For students planning to study the unit, please refer to the unit indexes in the the current edition of the Handbook. If you have any queries contact the managing faculty for your course or area of study.

BFF5915 - Options, futures and risk management

6 points, SCA Band 3, 0.125 EFTSL

Postgraduate - Unit

Refer to the specific census and withdrawal dates for the semester(s) in which this unit is offered.

Faculty

Business and Economics

Organisational Unit

Department of Banking and Finance

Offered

Caulfield

First semester 2016 (Day)
First semester 2016 (Evening)
Second semester 2016 (Day)
Second semester 2016 (Evening)

Malaysia

First semester 2016 (Evening)

Synopsis

This unit examines how options and futures can be used for hedging risk in the process of risk management. Several aspects of risk management are examined, including the reasons why investors indulge in this activity, how value is created via risk management, and the firm-wide approach to risk management (given that any firm is exposed to a wide variety of risks). Once the importance of risk management has been established, emphasis turns to the use of derivatives (futures and options) to manage risk. To understand how they are used to manage risk, the unit also considers the characteristics and pricing of these instruments, including some exotic versions.

Outcomes

The learning goals associated with this unit are to:

examine the financial risk management function and its evolution in the corporate world
understand the characteristics of futures and options markets and be able to apply these instruments so as to hedge the risk exposure of the firm
design appropriate risk management strategies using options and futures for hedging and speculation
demonstrate effective research skills to produce a professional quality business report recommending a solution to a risk management problem
demonstrate in an individual summative assessment task the acquisition of a comprehensive understanding of derivative instruments in financial markets, both the mechanism of their operation and their application in hedging risk exposures.

Assessment

Within semester assessment: 30%
Examination: 70%

Workload requirements

Minimum total expected workload to achieve the learning outcomes for this unit is 144 hours per semester typically comprising a mixture of scheduled learning activities and independent study. Independent study may include associated readings, assessment and preparation for scheduled activities. The unit requires on average three/four hours of scheduled activities per week. Scheduled activities may include a combination of teacher directed learning, peer directed learning and online engagement.

Chief examiner(s)

Dr Binh Do (First semester)
Dr Li Ge (Second semester)

Co-requisites

Only students enrolled in one of the following courses may undertake this unit:
0028, 0396, 0503, 0504, 0790, 0826, 1445, 1499, 1679, 2098, 2619, 3174, 3176, 3177, 3179, 3189, 3818, 3822, 3843, 3844, 3848, 3850 or 4412.

Prohibitions

AFF5290, AFF3751, BFF3751, AFF9150