Course overview
- Study period
- Semester 2, 2024 (22/07/2024 - 18/11/2024)
- Study level
- Postgraduate Coursework
- Location
- St Lucia
- Attendance mode
- In Person
- Units
- 2
- Administrative campus
- St Lucia
- Coordinating unit
- Business School
Use of swaps and futures to manage interest rate, commodity price and exchange rate risk. Practical application of important risk management principles and tools in a bond trading game.
Corporations now face a far more complex financial environment than they did up to the 1980s when governments exercised significant control over interest rates, foreign exchange rates and commodity markets. Today, the operating performance of a corporation can be severely impacted by movements in interest rates, exchange rates and commodity prices and the risk of these movements must be professionally managed. This course details the nature of these risks, their financial consequences and the tools and derivative products that can be used to manage them such as futures, swaps and options. The course also emphasises the management of interest rate risk, reflecting its relative importance to Australian corporations and government authorities.
The later part of the course involves a 'game' designed by the Queensland Treasury Corporation, where teams of students are required to take on the role of central treasury in the management of a portfolio of fixed interest securities for several small government authorities. The management of interest rate risk associated with the portfolio is the focus of this game.
To prepare students for the game, the first portion of the course details the nature and measurement of interest rate risk, and the financial products that can be employed to manage the risk including interest rate futures and swaps.
Course requirements
Assumed background
Before attempting this course, you are advised that it is important to complete the appropriate prerequisite course(s) listed on the front of this course profile. No responsibility will be accepted by UQ Business School, the Faculty of Business, Economics and Law or The University of Queensland for poor student performance occurring in courses where the appropriate prerequisite(s) has/have not been completed, for any reason whatsoever.
Prerequisites
You'll need to complete the following courses before enrolling in this one:
FINM7065 or 7401 or 7805
Restrictions
Quota: Minimum of 15 enrolments
Course contact
Course staff
Lecturer
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, and
- the Course Code
Aims and outcomes
This course aims to provide you with a foundation in the principles and practices of financial risk management with an emphasis on interest rate risk management. You will develop practical skills in risk management through participation, as part of a team, in a trading game where the team will be required to manage various financial risks associated with a portfolio of bonds, and commodity/foreign exchange exposures.
Learning outcomes
After successfully completing this course you should be able to:
LO1.
Appreciate how the economic environment influences the financial risks faced by a corporation.
LO2.
Understand and measure the impact of interest rate changes on the value of fixed income securities.
LO3.
Understand how to use futures and swaps to hedge interest rate risk.
LO4.
In teams, appreciate how to play the role of central treasury in the efficient management of a portfolio of fixed interest securities.
LO5.
Understand how a range of financial products can be employed to manage foreign exchange and commodity price risk.
LO6.
Understand a variety of derivative products and in what situations they are employed.
LO7.
Understand the financial crisis and the role derivatives played in it.
Assessment
Assessment summary
| Category | Assessment task | Weight | Due date |
|---|---|---|---|
| Examination |
Blackboard Based Online In-Semester Exam
|
30% |
30/08/2024 6:00 pm |
| Paper/ Report/ Annotation, Role play/ Simulation |
Trading Game
|
15% |
Workshop 1 4/10/2024 4:00 pm Workshop 2 11/10/2024 4:00 pm Workshop 3 18/10/2024 4:00 pm |
| Paper/ Report/ Annotation | Individual Report | 15% |
25/10/2024 3:00 pm |
| Examination |
End of Semester Examination
|
40% |
End of Semester Exam Period 2/11/2024 - 16/11/2024 |
Assessment details
Blackboard Based Online In-Semester Exam
- Online
- Mode
- Written
- Category
- Examination
- Weight
- 30%
- Due date
30/08/2024 6:00 pm
- Other conditions
- Time limited.
- Learning outcomes
- L01, L02, L03
Task description
The In-Semester Exam will be scheduled by the school.
The In-Semester Exam covers material from lectures 1-4 inclusive and will be a digital Blackboard exam scheduled outside of normal class hours. More details will be given on the course Blackboard site.
This assessment task is to be completed online.
AI Statement:
The use of generative Artificial Intelligence (AI) tools will not be permitted. Any attempted use of Generative AI may constitute student misconduct under the Student Code of Conduct.
Exam details
| Planning time | 10 minutes |
|---|---|
| Duration | 90 minutes |
| Calculator options | Any calculator permitted |
| Open/closed book | Open Book examination |
| Exam platform | Learn.UQ |
| Invigilation | Not invigilated |
Submission guidelines
Deferral or extension
You may be able to defer this exam.
Late submission
Exams submitted after the end of the submission time will incur a late penalty.
Trading Game
- Team or group-based
- Online
- Mode
- Activity/ Performance, Written
- Category
- Paper/ Report/ Annotation, Role play/ Simulation
- Weight
- 15%
- Due date
Workshop 1 4/10/2024 4:00 pm
Workshop 2 11/10/2024 4:00 pm
Workshop 3 18/10/2024 4:00 pm
- Other conditions
- Peer assessed, Longitudinal.
- Learning outcomes
- L01, L03, L04, L05, L06
Task description
This semester we will be doing the QTC trading game. In the game students will work in groups to make hedging decisions given a real world economic scenario.
The trading game will run for 3 weeks and students, in groups, will be required to give a report every week discussing the trading decisions they made. Each report is worth 5% for a total of 15% over the 3 weeks. More information will be provided at a later date.
AI Statement:
This assessment task evaluates students' abilities, skills and knowledge without the aid of generative Artificial Intelligence (AI). Students are advised that the use of AI technologies to develop responses is strictly prohibited and may constitute student misconduct under the Student Code of Conduct.
Submission guidelines
Via Blackboard
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.
Individual Report
- Mode
- Written
- Category
- Paper/ Report/ Annotation
- Weight
- 15%
- Due date
25/10/2024 3:00 pm
- Learning outcomes
- L01, L02, L03, L05, L06, L07
Task description
This piece of assessment involves the content of the lecture on "The Financial Crisis and other Case Studies" and involves short answers and calculations. It is done individually. The assessment has two parts:
1. Students will be required to do research into specific elements of the financial crisis and answer questions using their own words and appropriate references.
2. Students will be given a fictional financial institution that is facing various types of financial risk. They will have to critique the current risk management set up as well as provide improvements. This part of the assessment will require the students doing calculations in excel.
More information will be given during the semester.
AI Statement:
This assessment task evaluates students' abilities, skills and knowledge without the aid of generative Artificial Intelligence (AI). Students are advised that the use of AI technologies to develop responses is strictly prohibited and may constitute student misconduct under the Student Code of Conduct.
Submission guidelines
Via Blackboard
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.
End of Semester Examination
- Identity Verified
- In-person
- Mode
- Written
- Category
- Examination
- Weight
- 40%
- Due date
End of Semester Exam Period
2/11/2024 - 16/11/2024
- Other conditions
- Time limited.
- Learning outcomes
- L01, L02, L03, L05, L06, L07
Task description
The final exam will be during the University examination period at the end of the semester.
The timetabling of this exam is the responsibility of the University of Queensland Examinations Section.
This is in-person, invigilated, paper-based written exam comprises short answer and problem solving questions.
AI Statement:
This assessment task is to be completed in-person. The use of generative Artificial Intelligence (AI) tools will not be permitted. Any attempted use of Generative AI 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 - specified written materials permitted |
| Materials | One A4 sheet of handwritten or typed notes, single sided, is 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 |
Course Introduction and Important Terminologies Learning outcomes: L01, L02 |
Week 2 |
Tutorial |
Tutorial 1 - Important Terminologies Learning outcomes: L01, L02 |
Lecture |
Interest Rate Risk 1 Learning outcomes: L01, L02 |
|
Week 3 |
Tutorial |
Tutorial - Interest Rate Risk 1 Learning outcomes: L01, L02 |
Lecture |
Interest Rate Risk 2 Learning outcomes: L01, L02 |
|
Week 4 |
Tutorial |
Tutorial - Interest Rate Risk 2 Learning outcomes: L01, L02 |
Lecture |
Futures Learning outcomes: L01, L02, L03, L05 |
|
Week 5 |
Tutorial |
Tutorial - Futures Learning outcomes: L01, L02, L03, L05 |
Lecture |
Swaps Learning outcomes: L01, L02, L03 |
|
Week 6 |
Tutorial |
Tutorial: Swaps Learning outcomes: L01, L02, L03 |
Lecture |
Derivatives 1 Learning outcomes: L01 |
|
Week 7 |
Tutorial |
Tutorial: Derivatives 1 Learning outcomes: L01 |
Lecture |
Options 1 Learning outcomes: L01, L06 |
|
Week 8 |
Tutorial |
Tutorial: Options 1 Learning outcomes: L01, L06 |
Lecture |
Options 2 Learning outcomes: L01, L06 |
|
Week 9 |
Tutorial |
Tutorial: Options 2 Learning outcomes: L01, L06 |
Lecture |
The Financial Crisis Learning outcomes: L01, L06, L07 |
|
Mid Sem break |
No student involvement (Breaks, information) |
In-Semester Break |
Week 10 |
Workshop |
Trading Game 1 Learning outcomes: L01, L02, L03, L04, L05 |
Week 11 |
Workshop |
Trading Game 2 Learning outcomes: L01, L02, L03, L04, L05 |
Week 12 |
Workshop |
Trading Game 3 Learning outcomes: L01, L02, L03, L04, L05 |
Week 13 |
Lecture |
Revision Week Learning outcomes: L01, L02, L03, L04, L05, L06, L07 |
Tutorial |
Tutorial: The Financial Crisis Learning outcomes: L01, L06, L07 |
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 - Students Policy and Procedure
Learn more about UQ policies on my.UQ and the Policy and Procedure Library.