FIN2325–001

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Prerequisites: FIN 2227 + FIN 2323 + FIN 2114

Class: MW 3–4:15pm, Bartley 2045
Office Hours: Wednesday 1:30-2:30pm, and by appointment

Dr. Raisa Velthuis
raisa.velthuis@villanova.edu
Office: Bartley 2085, (610) 519–4319
Message me on Microsoft Teams or Google Chat

Futures and options contracts are among the most actively traded financial instruments. They are an important segment of contemporary financial markets. This course examines exchange-traded and over-the-counter derivative contracts such as futures, forwards, options, and swaps. The goal is to develop a core set of principles that will help us understand the diverse ways that derivatives are used in practice. These principles are developed through a series of real-world examples with an emphasis on simultaneously developing intuition and familiarity with a broad spectrum of markets, as well as valuation, and risk-management applications. The course is quantitative, and we will work with various equations. However, a large emphasis is placed on understanding the economic concepts behind the equations. The material in this course should be useful to anyone who is planning a career in trading, corporate finance, risk management, management consulting, or any other field involving financial decision making. In my class, you can expect to be challenged, engaged, and supported as you explore the multifaceted world of financial derivatives!

Learning outcomes: What you will know

Upon successful completion of FIN2325, you will be able to:

1. Understand how derivative markets operate
2. Compare and contrast various basic derivative contracts, including forwards, futures, swaps, and options.
3. Implement hedging and trading strategies using derivatives
4. Employ the binomial model, Black-Scholes model, and use simulations to price options
5. Discuss financial news and gain awareness of the risks involved with derivatives.

What book and other materials do I need?

• Textbook: Fundamentals of Futures and Options Markets, 9th Edition, by John C. Hull, Pearson, 2017. ISBN 978 - 0134083247. The latest version of the software Derivagem can be downloaded from the author’s website.
• Access to news sources, e.g., Wall Street Journal, Financial Times. Refer to the Library site for info on how to access your free VSB subscriptions.
• Office 365: Files will be shared on OneDrive, which you can sync to your computer automatically. For more details, see http://office.villanova.edu
• Calculator: A financial calculator will be required for this course and should brought to each class for solving problems. I recommend the Texas Instruments BAII Plus (which I will be using) or the Hewlett Packard HP 10bII+. Calculators with storage capability will not be allowed for exams.
• Q&A: Please use the Q&A discussion forum on Blackboard to ask any questions you may have that relate to the course. This tool may help you get help fast and efficiently from classmates and myself. I encourage you to post all your questions here, instead of relying on email. It can be especially helpful to learn what made a concept “click” from a classmate that just mastered it. Your contributions also count towards your class participation grade.

PDF Syllabus to be added.