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Summary

This seminar provides insight into the basics of financial instruments. It treats the design and valuation of futures and options written on stocks, stock market indices, synthetic government bonds and short-term interest rates as well as their application in terms of portfolio hedging problems. In addition to this, it provides an introduction into the rules and regulations on the exchanges by referring to the Eurex Exchange Rules. Finally, it gives an example for the financial consequences caused by neglecting the inherent risk.

Learning outcomes

The students are able to state the defining conventions and to evaluate futures and options written on stocks, stock market indices, synthetic government bonds and short-term interest rates. They can use these instruments to design complex trading strategies (e.g. butterflies) and to apply them for portfolio hedging and market risk tracking. They can reproduce the Eurex Exchange Rules concerning the trading and the clearing of the available financial products as well as the Eurex market model. Furthermore, they are aware of the risk inherent in the considered financial products. Upon the completion of the case study, the students are able to understand and discuss in depth the reasons why (the risk management of some) global performing companies failed in the past. In addition, students will be able to deal with contrasting opinions on these matters and to work out and present a joint group solution.
Number of credit hours per week 2
Total number of credit hours 120
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