BUFN660

Derivative Securities

Prerequisite: BUFN610. Restriction: Must be in one of the following programs (Business and Management (Master's); Business and Management (Master's)) ; or permission of BMGT-Robert H. Smith School of Business. Credit only granted for: BUFN660, BUFN726, BUFN761 or BUFN773. Formerly: BUFN761. Standard types of derivatives contracts are presented, and illustrated as to how they are used in practice. The theory of pricing these contracts is then presented in detail. The use of static and dynamic replication strategies, and the concept of no-arbitrage strategies is illustrated in numerous ways. Standard valuation techniques are covered, and standard formulas are presented. The theory is then applied to develop specific pricing and hedging strategies for various types of derivatives on different underlying assets. The management of the exposure of various risks is covered in detail as well.