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FIN8107 Financial Risk Management

Units : 1
Faculty or Section : Faculty of Business and Law
School or Department : School of Accounting, Economics and Finance

Other requisites

Students are advised that they would be well served having completed a minimum of Level 1 undergraduate finance courses before attempting this course. Advanced mathematical skills will be an advantage in completing this course successfully.

Students are required to have access to a personal computer, e-mail capabilities and Internet access to UConnect. Current details of computer requirements can be found at //


This course commences by examining the nature and scope of financial risk management as it applies to participants in financial markets. Given no arbitrage opportunities or risk neutral pricing as appropriate, the simplest forms of derivatives (forwards and futures) are then introduced in terms of the mechanics and strategies of these markets together with the theoretical pricing of forward/futures contracts. Given that a swap is nothing more than a convenient way of bundling forward contracts, an introductory exploration of the issues relating to interest rate and currency swaps is then undertaken although the detailed pricing of these instruments is left for a more advanced course. The varied world of options is then explored with particular emphasis on the mechanics of options markets and the properties and strategies of option contracts/positions. Both the binomial and Black-Scholes option pricing models are treated in detail together with variations in the application of these models to assets other than equities (stocks). The Greek Letters and Value at Risk are of considerable importance to derivative market makers and/or financial institutions and these concepts are then treated at the introductory level. The course concludes with a general review of contemporary issues with specific reference to any part played by derivatives in those events.

Course offers

Semester Mode Campus
Semester 2, 2012 External
Semester 2, 2012 On-campus Toowoomba