AF5002 - Derivatives & Risk

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What will I learn on this module?

You will learn about the simplest forms of complex financial instruments, including the way that they work, the risks they are often designed to manage or speculate upon, and the ways that money flows ‘through’ the transactions and the means of calculating whether they have made either a profit or a loss. Instruments covered include:
• Futures
• Forwards
• Options, and
• Swaps

You will also examine the way that the market for an underlying commodities can impact the way such derivatives operate as well as examining the way such derivative instruments have been used to construct a derivative market for carbon. You will learn about these instruments in the context of the worldwide markets using real-time data taken from the NBS Trading Terminals.

How will I learn on this module?

You will learn through lectures, excel-based workshops, independent study and seminars. The workshops are designed to help you follow the way the instruments work and the seminars are structured to incorporate exam-style questions throughout to provide formative feedback of your progress on a week-by-week basis.

The formal teaching is supplemented using the electronic learning platform to provide:
• Additional reading materials to contextualise the subject content, including news, case study materials and academic journal articles.
• Audio and PowerPoint presentations to supplement your independent study.
• Excel spreadsheets taken from the workshops to supplement your seminar work and enhance your understanding.
• Exam practice materials.

Your assessment will require you to create and monitor a derivative over part of the semester and you will therefore learn about the research process, which you will then enact, based upon the research-led content taught in the lectures, seminars and workshops.

How will I be supported academically on this module?

Your support within this module will include interactive lecture sessions, excel workshops and feedback from your tutors during small-group seminars. There are audio and PowerPoint presentations on the eLearning Portal that will help you. Additionally, tutors will respond to questions individually and for more general and/or important issues will respond using the University’s eLearning Portal so that the whole group can benefit.

What will I be expected to read on this module?

All modules at Northumbria include a range of reading materials that students are expected to engage with. The reading list for this module can be found at:
(Reading List service online guide for academic staff this containing contact details for the Reading List team –

What will I be expected to achieve?

At the end of the module, you will have achieved:

Knowledge & Understanding of:
• Understand and apply knowledge of derivatives products, specifically in terms of the way that they work and the risks they create (MLO1).
• Apply Excel-based spreadsheets to the operation of financial products in the development of appropriate financial solutions (MLO2).

Intellectual / Professional skills & abilities:
• Apply your knowledge of derivatives to investigate a derivative product and propose an investment that you will then monitor and subsequently reflect upon the performance thereof (MLO3).

Personal Values Attributes (Global / Cultural awareness, Ethics, Curiosity) (PVA):

How will I be assessed?

You will be assessed by means of a written assessment and a closed-book exam.

The assessment will be an individual piece of work that is 2,000 words long and requires you to investigate a derivative product inorder to demonstate MLO2 and MLO3 (The assessment comprises 60% of the assessment for this module).

The exam is a closed-book multiple choice exam that covers the whole of the syllabus to address MLO1. You will be given one hour to answer 20 questions (The exam comprises 40% of the assessment for this module).





Module abstract

The world of complex financial instruments is opaque and often confusing. We take some of the key instruments used in the world’s financial markets, pick them apart and examine the problems they have been designed to solve and the additional risks that they create.
This module creates the foundation for understanding the more complex elements of the financial markets, the way that they operate and demonstrates the way that fortunes can be quickly made or lost. The lectures are research-led and practice informed and the assessment will require you to exercise your research skills using the NBS Trading Room to examine an underlying exposure, propose a derivatives transaction, monitor its performance and reflect upon your approach and results to learn lessons and build your knowledge.

Course info

UCAS Code N390

Credits 20

Level of Study Undergraduate

Mode of Study 3 years full-time or 4 years with a placement (sandwich)/study abroad

Department Newcastle Business School

Location City Campus, Northumbria University

City Newcastle

Start September 2020

Fee Information

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