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FNCE 217 Financial Derivatives

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This FNCE 217 Financial Derivatives course covers one of the most exciting and basic areas of finance. Derivatives can be used as a cornerstone for understanding a variety of financial issues such as complex asset portfolios, strategic corporate decision making, and the stages of venture capital investment. We apply the principle of non-arbitrage and the law of one price to dynamic models using three different methods: a binary tree model, a Black-Scholes-Merton option pricing model, and model-based risk-free pricing. This course covers a wide range of applications, including the use of derivatives in asset management, the valuation of corporate securities (such as stocks and corporate bonds with embedded options), interest and credit derivatives, and crude oil derivatives. We emphasize the practicalities of using derivatives as tools to implement strategies, especially when arbitrage conditions are not set.

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