Course coordinator
Mr Jon Aster
Course overview
- Study period
- Semester 2, 2025 (28/07/2025 - 22/11/2025)
- Study level
- Undergraduate
- Location
- St Lucia
- Attendance mode
- In Person
- Units
- 2
- Administrative campus
- St Lucia
- Coordinating unit
- Business School
Introduces forwards, futures and options as securities for risk management and speculation. Exposures to equity, currency, interest rate and commodity risk are examined. Pricing derivatives using analytical and numerical techniques.
In the last three decades, there have been some remarkable losses seen in the financial markets; for example, the October 1987 market crash, 1998 LTCM crisis, the 2007-2008 subprime mortgage crisis, and the COVID19 market jolt, to name but a few. Accordingly, organisations have embraced sound risk management practices to avoid exposing themselves to unnecessary financial risks on the one hand, and take calculated risks on the other. In particular, organisations have embraced derivatives as a risk management and hedging vehicle to the extent that many corporations now feature risk management divisions. It is likely that risk management issues will continue to arise in the majority of business scenarios. With these in mind, this course is designed to equip students with the essential frameworks and tools needed to understand and effectively manage financial risks. The primary focus will be on pricing and managing risk with derivatives, particularly forwards, futures, options and swaps, using various fundamental techniques.
Course requirements
Prerequisites
You'll need to complete the following courses before enrolling in this one:
FINM2401 or 2411 or 2412 or 2416
Course contact
Course staff
Lecturer
Mr Jon Aster
Timetable
The timetable for this course is available on the UQ Public Timetable.
Additional timetable information
Please note: Teaching staff do not have access to the timetabling system to help with class allocation. Therefore, should you need help with your timetable and/or allocation of classes, please ensure you email business.mytimetable@uq.edu.au from your UQ student email account with the following details
- Full Name
- Student ID
- Course Code
Aims and outcomes
The aims of the course are for the student to gain a solid understanding of (i) the operation of derivatives markets, (ii) a wide range of derivative products and how they can be used to manage and speculate risk, and of (iii) valuing derivatives (particularly forward, futures, options and swaps) using different analytical and numerical methods.
Learning outcomes
After successfully completing this course you should be able to:
LO1.
Identify different derivative products that are available in the financial market.
LO2.
Understand the operation of derivatives markets (options, futures, forwards and swaps).
LO3.
Master the fundamental concepts in pricing derivative instruments using various state-of-the-art techniques.
LO4.
Demonstrate how a range of derivative products can be used to hedge and speculate market risk.
LO5.
Work collaboratively in a team to collect and analyse financial/derivative data, and price/evaluate different financial derivatives.
Assessment
Assessment summary
| Category | Assessment task | Weight | Due date |
|---|---|---|---|
| Paper/ Report/ Annotation, Reflection |
Team Project
|
30% (Report 25%; Reflection 5%) |
Group Report 24/10/2025 4:00 pm Individual Reflective Piece 29/10/2025 4:00 pm Peer Assessment 29/10/2025 4:00 pm |
| Examination |
In-Semester Exam
|
20% |
In-semester Saturday 6/09/2025 - 20/09/2025 |
| Examination |
Final exam
|
50% |
End of Semester Exam Period 8/11/2025 - 22/11/2025 |
Assessment details
Team Project
- Team or group-based
- Mode
- Written
- Category
- Paper/ Report/ Annotation, Reflection
- Weight
- 30% (Report 25%; Reflection 5%)
- Due date
Group Report 24/10/2025 4:00 pm
Individual Reflective Piece 29/10/2025 4:00 pm
Peer Assessment 29/10/2025 4:00 pm
- Other conditions
- Peer assessment factor.
- Learning outcomes
- L01, L02, L03, L04, L05
Task description
Students are required to work in teams of 4 students for this Team Project.
The Team Project has three components: a Report, a Reflective Piece and a compulsory Peer Assessment Review.
- The Report is to be submitted to both Blackboard and Turnitin. One member per group is to submit the Report on behalf of the team.
- The Reflective Piece is to be submitted to Blackboard. This is an individual submission item.
- The Peer Assessment Review is an individual submission item.
Your team is required to produce a Report on a set of cases using various financial derivatives instruments. The Report should cover computation, theory discussion and hedging suggestions. The Report focuses on examining your critical analytical skills and ability to work with real-life case scenarios. You are expected to undertake a certain amount of research to complete this Report.
You are also required to complete a Reflective Piece and Peer Assessment Review individually after your team has submitted the Report. The Peer Assessment Review will be used to compute your final grade on the Report. Completing the Peer Assessment Review is mandatory. The Peer Assessment Review will be completed on Blackboard and is integrated into the Blackboard teams.
Further details about the Team Project will be discussed during the semester.
AI Statement:
Artificial Intelligence (AI) and Machine Translation (MT) are emerging tools that may support students in completing this assessment task. Students may appropriately use AI and/or MT in completing this assessment task. Students must clearly reference any use of AI or MT in each instance.
A failure to reference generative AI or MT use may constitute student misconduct under the Student Code of Conduct.
Submission guidelines
- The Report is to be submitted to both Blackboard and Turnitin. One member per group is to submit the Report on behalf of the team.
- The Reflective Piece is to be submitted to Blackboard. This is an individual submission item.
- The Peer Assessment Review is an individual submission item.
Deferral or extension
You may be able to apply for an extension.
Late submission
A penalty of 10% of the maximum possible mark will be deducted per 24 hours from time submission is due for up to 7 days. After 7 days, you will receive a mark of 0.
In-Semester Exam
- Identity Verified
- In-person
- Mode
- Written
- Category
- Examination
- Weight
- 20%
- Due date
In-semester Saturday
6/09/2025 - 20/09/2025
- Other conditions
- Time limited.
- Learning outcomes
- L01, L02, L03, L04
Task description
- The In-Semester Exam will be held during the In-Semester Exam period.
- The date will be advised as soon as we are made aware by the university. At this stage, you should keep all these Saturdays free.
- The topics of coverage depend on the date of the exam, and will include topics covered in the course up to the tutorial prior to the exam.
- More details about the In-Semester Exam will be posted on Blackboard.
AI Statement:
This assessment task is to be completed in-person. The use of generative Artificial Intelligence (AI) or Machine Translation (MT) tools will not be permitted. Any attempted use of AI or MT may constitute student misconduct under the Student Code of Conduct.
Exam details
| Planning time | 10 minutes |
|---|---|
| Duration | 90 minutes |
| Calculator options | (In person) Casio FX82 series only or UQ approved and labelled calculator |
| Open/closed book | Closed book examination - no written materials permitted |
| Exam platform | Paper based |
| Invigilation | Invigilated in person |
Submission guidelines
Deferral or extension
You may be able to defer this exam.
Final exam
- Identity Verified
- In-person
- Mode
- Written
- Category
- Examination
- Weight
- 50%
- Due date
End of Semester Exam Period
8/11/2025 - 22/11/2025
- Other conditions
- Time limited.
- Learning outcomes
- L01, L02, L03, L04
Task description
The final exam will be a closed-book, in-person, paper based exam held in the end of semester, centrally managed and invigilated exam period, consisting of problem-solving and short-answer questions.
AI Statement
This assessment task is to be completed in-person. The use of generative Artificial Intelligence (AI) or Machine Translation (MT) tools will not be permitted. Any attempted use of AI or MT may constitute student misconduct under the Student Code of Conduct.
Exam details
| Planning time | 10 minutes |
|---|---|
| Duration | 120 minutes |
| Calculator options | (In person) Casio FX82 series only or UQ approved and labelled calculator |
| Open/closed book | Closed book examination - no written materials permitted |
| Exam platform | Paper based |
| Invigilation | Invigilated in person |
Submission guidelines
Deferral or extension
You may be able to defer this exam.
Course grading
Full criteria for each grade is available in the Assessment Procedure.
| Grade | Cut off Percent | Description |
|---|---|---|
| 1 (Low Fail) | 0 - 29 |
Absence of evidence of achievement of course learning outcomes. |
| 2 (Fail) | 30 - 46 |
Minimal evidence of achievement of course learning outcomes. |
| 3 (Marginal Fail) | 47 - 49 |
Demonstrated evidence of developing achievement of course learning outcomes |
| 4 (Pass) | 50 - 64 |
Demonstrated evidence of functional achievement of course learning outcomes. |
| 5 (Credit) | 65 - 74 |
Demonstrated evidence of proficient achievement of course learning outcomes. |
| 6 (Distinction) | 75 - 84 |
Demonstrated evidence of advanced achievement of course learning outcomes. |
| 7 (High Distinction) | 85 - 100 |
Demonstrated evidence of exceptional achievement of course learning outcomes. |
Additional course grading information
Grades will be allocated according to University-wide standards of criterion-based assessment.
Supplementary assessment
Supplementary assessment is available for this course.
Learning resources
You'll need the following resources to successfully complete the course. We've indicated below if you need a personal copy of the reading materials or your own item.
Library resources
Library resources are available on the UQ Library website.
Learning activities
The learning activities for this course are outlined below. Learn more about the learning outcomes that apply to this course.
Filter activity type by
Please select
| Learning period | Activity type | Topic |
|---|---|---|
Week 1 |
Lecture |
Introduction to Derivatives & Forwards and Futures I An introduction to the course and its fundamental concepts, plus how to hedge risk using forwards and futures on various underlying assets. Readings: Hull, Chapters 1, 2 and 3. Learning outcomes: L01, L02, L04 |
Week 2 |
Tutorial |
Introduction to Derivatives & Forwards and Futures 1 Learning outcomes: L01, L02, L04 |
Lecture |
Forwards and Futures 2 How to price forwards and futures contracts. Readings: Hull, Chapter 5. Learning outcomes: L01, L02, L03 |
|
Week 3 |
Tutorial |
Forwards and Futures 2 Learning outcomes: L01, L02, L03 |
Lecture |
Options 1: Introduction Types of options, features of options contracts, and some basic ideas about option prices. Readings: Hull, Chapters 10 and 11. Learning outcomes: L01, L02 |
|
Week 4 |
Tutorial |
Options 1: Introduction Learning outcomes: L01, L02 |
Lecture |
Options 2: Valuation Using the Black-Scholes Model A quantitative method to price European options. Hull, Chapter 15. Learning outcomes: L01, L02, L03 |
|
Week 5 |
Tutorial |
Options 2: Valuation Using the Black-Scholes Model Learning outcomes: L01, L02, L03 |
Lecture |
Free Study for In-Semester Exam A practice mid-semester exam will be provided on Blackboard. There will be no formal lecture this week. Please use this extra time to study for the upcoming in-semester exam. NOTE: The timing of the in-semester exam study week will depend on the date that the exam is scheduled. It will be in the second week before the exam weekend. Please see Blackboard for up-to-date information about which week the lecture break occurs in. Learning outcomes: L01, L02, L03, L04 |
|
Week 6 |
Tutorial |
In-Semester Exam Practice Your tutor will step through the answers to the practice exam this week. NOTE: The timing of in-semester practice week will depend on the date that the exam is scheduled. It will occur in the week immediately before the scheduled exam weekend. Please see Blackboard for up-to-date information about which week this will be. Learning outcomes: L01, L02, L03, L04 |
Lecture |
Options 3: The Greeks and Implied Volatility How to define and measure different kinds of risk exposure for options, and back-calculating volatility from the B/S model using market prices. Hull, Chapter 19 and 20. Learning outcomes: L02, L04 |
|
Week 7 |
Tutorial |
Options 3: The Greeks and Implied Volatility Learning outcomes: L02, L04 |
Lecture |
Options 4: Trading Strategies A look at interesting combinations of options, bonds and stocks together Hull, Chapter 12. Learning outcomes: L02, L04 |
|
Week 8 |
Tutorial |
Options 4: Trading Strategies Good Friday Public Holiday - Friday 18 April 2025 - Check Blackboard for announcements about affected classes. Learning outcomes: L02, L04 |
Lecture |
Options 5: Valuation Using Numerical Methods How to value options using the binomial trees method and a short introduction to Monte Carlo valuation Hull, Chapter 21. Learning outcomes: L02, L03 |
|
Week 9 |
Tutorial |
Options 5: Valuation Using Numerical Methods Learning outcomes: L02, L03 |
Lecture |
Options 6: Exotic Options Different types of OTC options with terms that differ from standard vanilla options Hull, Chapter 26. Learning outcomes: L01, L02, L03, L04 |
|
Mid Sem break |
No student involvement (Breaks, information) |
In-Semester Break No lecture or tutorials during In-Semester break. |
Week 10 |
Tutorial |
Options 6: Exotic Options Labour Day Public Holiday - Monday 5 May 2025 - Check Blackboard for announcements about affected classes. Learning outcomes: L01, L02, L03, L04 |
Lecture |
Swaps 1: Credit Default Swaps An insurance-like instrument for trading credit risk directly. Hull, Chapter 25. Learning outcomes: L01, L02, L03, L04 |
|
Week 11 |
Tutorial |
Swaps 1: Credit Default Swaps Learning outcomes: L01, L02, L03, L04 |
Lecture |
Swaps 2: Interest Rate Swaps An intrument for trading one stream of fixed-income payments for another. Hull, Chapter 7. Learning outcomes: L01, L02, L03, L04 |
|
Week 12 |
Tutorial |
Swaps 2: Interest Rate Swaps Learning outcomes: L01, L02, L03, L04 |
Lecture |
Value at Risk (VaR) and Expected Shortfall (ES) How to measure downside risk using some common methods. Hull, Chapter 22. Learning outcomes: L04 |
|
Week 13 |
Tutorial |
Value at Risk (VaR) and Expected Shortfall (ES) Learning outcomes: L04 |
Lecture |
Revision Lecture Course review lecture. Learning outcomes: L01, L02, L03, L04 |
Policies and procedures
University policies and procedures apply to all aspects of student life. As a UQ student, you must comply with University-wide and program-specific requirements, including the:
- Student Code of Conduct Policy
- Student Integrity and Misconduct Policy and Procedure
- Assessment Procedure
- Examinations Procedure
- Reasonable Adjustments for Students Policy and Procedure
Learn more about UQ policies on my.UQ and the Policy and Procedure Library.