Syllabus Mfc 3rd Sem

THIRD SEMESTER MFC-3.1

FINANCIAL DERIVATIVES AND RISK MANAGEMENT

Objective This course with familiarize the students in the application of various tools and techniques of financial risk management Course Input UNIT- I Risk: Definition, Types of Risk, Process of Risk Management, The Tools of risk management Derivatives: Definition and Evolution of Derivatives, Derivatives Markets, Types of Derivatives, derivatives markets in India UNIT-II

Future Market: Functions of Futures market, Speculation and Hedging, Price, Spread and Headging, Futures and Price Stabilization, Tests of Efficiency, Financial futures as a mechanism of risks transference, Spot and Futures Prices.

UNIT-III Financial Futures: Interest Rate futures, Currency Futures (Foreign Exchange) Stock index futures and Financial Futures in India. Risk Management with Futures, Cost of Carry Model, Index Arbitrage, Purchasing Power parity Theorem. UNIT-IV

Option: Terminology and Methodology of Trading, Types of Options, Option Pricing, Swaps, Types of Swaps, Swap Valuation and other Derivatives, Speculation with Options, Risk Management with Options & Futures.

UNIT-V

Regulatory Framework of Futures & Derivatives: Regulatory Bodies in major International Markets, Regulatory Framework in India, Regulatory Instruments and needs. Accounting for Derivative Transactions.