Students' understanding of the functioning of financial derivatives markets.
This course is designed to equip students with theoretical and numeric methods used to price derivative instruments exchanged in stock, exchange, foreign exchange and bond markets. Among the topics covered; There are numeric methods used to price exotic options (Asian, lookback, spread, etc.) in the Black-Scholes-Merton model. Introduction to options, forward foreign exchange and futures markets; determinants of option values; Portfolio strategies using options, trading parity, cash and futures parity, early execution, binominal model, Black-Scholes model, option deltas and elasticities, futures to reduce delta currency risk