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Financial Risk Management

Duration: 1 Teaching Period

Unit Code: FIN30014

Contact Hours: Recommended 10 hours of study per week

About this unit

This unit enables students to analyse the sources of financial risk as well as the importance of implementing hedging procedures in order to mitigate risk. The unit is designed to equip students with quantitative skills and understanding of a variety of derivative instruments that can be used for hedging purposes, while broadening their knowledge of managing risk within an ethical framework. The increasing instability of global financial markets and ethical scandals underscores the importance of this unit, whereby it has become a basic best practice in order to mitigate unforeseen losses. Students will also learn to how to mitigate financial risks using a variety of financial derivatives.

Content

  • Introduction to financial risk management
  • Futures and forwards – pricing, valuation and their use in hedging financial risk
  • Options – option types, option payoffs, principles of option pricing, option strategies, hedging with options
  • Interest rate and foreign currency swaps
  • Interest rate derivatives, using interest rate caps and collars for hedging
  • Credit derivatives – credit default swaps (CDS); collateralised debt obligations (CDO)
  • Financial risk management policies and procedures, ethics and governance

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