Knowledge
The course provides knowledge about the basic derivative instruments, the principles of derivative pricing and how such instruments are used in risk management. Students understand pricing by arbitrage.
Skills
- know how to replicate any derivative instrument's cashflow either by other derivatives or by so-called underlying assets.
- can apply specific models based on no-arbitrage pricing theory to value new kinds of derivative instruments.
- suggest proper use of derivatives for various hedging situations.
General competence
A student will be able to communicate knowledge, both written and orally to both academic and market specialists of derivatives and to assess risk connected to the use of basic derivatives.