Overview

This unit enables students to analyse the sources of financial risk as well as the importance of implementing hedging procedures in order to mitigate risk. The unit is designed to equip students with quantitative skills and understanding of a variety of derivative instruments that can be used for hedging purposes, while broadening their knowledge of managing risk within an ethical framework. The increasing instability of global financial markets and ethical scandals that underscores the importance of this unit, whereby it has become a basic best practice in order to mitigate unforeseen losses. Students will also learn how to mitigate financial risks using a variety of financial derivatives.

Requisites

Teaching Periods
Location
Start and end dates
Last self-enrolment date
Census date
Last withdraw without fail date
Results released date
Semester 1
Location
Hawthorn
Start and end dates
26-February-2024
26-May-2024
Last self-enrolment date
10-March-2024
Census date
31-March-2024
Last withdraw without fail date
12-April-2024
Results released date
02-July-2024
Semester 2
Location
Hawthorn
Start and end dates
29-July-2024
27-October-2024
Last self-enrolment date
11-August-2024
Census date
31-August-2024
Last withdraw without fail date
13-September-2024
Results released date
03-December-2024

Learning outcomes

Students who successfully complete this unit will be able to:

  • Analyse the sources of financial risk and the importance of implementing effective financial risk management procedures in business entities
  • Apply the understanding of a variety of derivative instruments in hedging and trading strategies and how these instruments are priced
  • Evaluate hedging strategies and their outcomes using derivative instruments, to hedge financial risks in a variety of assets
  • Evaluate the need for sound financial risk management policies and procedures in organisations within an ethical framework
  • Apply research principles to conduct a piece of work collaboratively

Teaching methods

Hawthorn Online

Type Hours per week Number of weeks Total (number of hours)
Online
Directed Online Learning and Independent Learning
12.50 12 weeks 150
TOTAL150

Swinburne Online and OUA

Type Hours per week Number of weeks Total (number of hours)
On-campus
Class
2.00 12 weeks 24
Online
Lecture
1.00 12 weeks 12
Unspecified Activities
Independent Learning
9.50 12 weeks 114
Online
Directed Online Learning and Independent Learning
12.50 12 weeks 150
TOTAL300

Assessment

Type Task Weighting ULO's
AssessmentIndividual 40 - 60% 1,2,3,4 
AssessmentIndividual 20 - 30% 1,2,3 
AssignmentGroup 20 - 30% 1,3,5 

Content

  • Introduction to financial risk management 
  • Futures and forwards – pricing, valuation and their use in hedging financial risk
  • Options – option types, option payoffs, principles of option pricing, option strategies, hedging with options 
  • Interest rate and foreign currency swaps
  • Interest rate derivatives, using interest rate caps and collars for hedging
  • Credit derivatives – credit default swaps (CDS); collateralised debt obligations (CDO)
  • Financial risk management policies and procedures, ethics and governance
  • Currency risk management

Study resources

Reading materials

A list of reading materials and/or required textbooks will be available in the Unit Outline on Canvas.