XCPD-687 Risk Management & Hedging
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This course covers the basics of risk management and hedging. The objective of the course is to introduce students to the derivatives markets, which includes futures, forwards, options, swaps, and other derived instruments. Students will gain an understanding of common derivative products and valuation models. Students will also learn how financial and non-financial organizations use derivative products to manage risk. Students will construct their own simple hedge fund as an exercise in risk management.
Upon completion of this course, the successful student should able to:
- Understand the basics of the risk vs. return relationship
- Understand common derivative financial instruments
- Compute the values of forwards, futures, and swaps
- Understand common option strategies and application
- Compute the value of an option using the Binomial Option Pricing model
- Compute the value of an option using the Black-Scholes Pricing model
- Build and manage a simple hedge fund
Who should attend
This is an intermediate course in finance. Students are expected to have a basic understanding of core financial concepts. Students who have not completed academic coursework in finance or do not have the requisite professional experience must complete Principles of Finance (XCPD-684) before enrolling in the course. Students without basic knowledge of financial concepts must receive permission from the instructor to enroll in the course.