Financial Derivatives

Course Description

This course describes the types of traders in the derivative markets and the evolution of future contracts. The course introduces interest rate swaps, and currency swap. It displays the use of joint-stock companies when issuing bonds or preferred shares, and the influencing factors in determining the price. Black & Scholes model and the binomial model in pricing purchase options are introduced.

Course Aims

By the end of the course, the student will be able to acquire the following skills and knowledge:
1 .Learn about financial engineering and its role in creating derivatives.
2 .Understand the types of dealers in the derivatives markets.
3 .Learn about options contracts, their types, and their applications
4 .Option contracts are quoted
5 .Apply future contracts and know their most important characteristics and pricing.
6 .Understands the development of futures contracts, their applications, their most important characteristics, and pricing.
7 .Knowing the role of margin in future contracts.
8. He applies swap contracts and learns about their characteristics, types, and pricing.

Course Contents:

1 .Fundamentals of Derivatives:

• Concept of financial engineering.
• The difference between financial engineering and innovation.
• The economic effects of financial innovation.
• Islamic financial engineering.
• The concept of financial derivatives and the requirements for their success.
• The reasons for the explosive growth in the financial derivatives markets.
• Dealers in financial derivatives.
• Types of financial derivatives and their uses.
• The risks of financial derivatives and ways to properly manage them.

2 .Options contracts:

• The concept of an option contract.
• Financial options divisions.
• Philosophy of financial options.
• Elements of an option contract.
• Types of options contracts and their applications.
• The difference between buy and sell options.
• The position of the issuer (seller) of the option right and the buyer of the option right.

3 .Pricing of Options Contracts:

• The concept of the premium and the factors affecting it.
• The Black-Scholes Model.
• Model of the principle of symmetry of the rights of the call and put options.
• Binary option pricing model.

4 .Futures contracts:

• The concept of futures contracts.
• The main advantages of futures contracts.
• The risks of dealing in futures contracts.
• How futures payments work.
• How to determine future prices.
• Futures pricing:

5 .Futures Contracts:

• The concept of future contracts.
• Elements of future contracts.
• Purposes of dealers in future contracts.
• The role of margin in future contracts.
• Pricing the futures.
• Comparison between futures and other derivative contracts.

6 .Exchange Contracts:

• The origination of swap contracts.
• The concept of swap contracts.
• Reasons for using swap contracts.
• Types of swap contracts and their applications.
• Basics of interest rate swap contracts.
• Types of interest rate swap contracts.
• Pricing of interest rate swap contracts.
• Currency exchanges and their applications.
• Stock exchange swaps.

Course ID: FIN488