Financial Risk Management

Course Description

Derivative securities and markets; financial futures and options; commodity instrument; market institutions; trading practices; valuation models; hedging and risk management techniques; the applications of other derivatives securities. Mathematical and statistical methods used in quantitative financial analysis; the lto calculus; stochastic process; Monte Carlo simulation; numerical solutions of derivative pricing formulas; advanced time series analysis. In this course, the pricing and the use of derivative products is discussed. Especially the quantitative techniques used for pricing and risk management will be extensively covered. Using recent empirical literature also the pitfalls of established methods will be illustrated.

This course deals with the theoretical and practical approaches to effective financial management. Planning, analyzing and controlling investment, and short and long term financing are examined for decision-making purposes. Emphasis is placed on the application of Risk, the methods in today's business environment and related industries. Topics include: Capital budgeting, risk and diversification, asset liability management, financial derivatives and financial engineering, swaps, options and financial future.

Course Contents

After completing the course, you will be able to: 

• Demonstrate how interest rate risk management applies to the asset liability management tools.
• Explain why budgets are an essential component to the planning function of management.
• Utilize discounted cash flow techniques as a method of analysis for evaluating long-term investment.
• Identify and explain the effects of tax as a relevant factor in determining net cash flow.
• Demonstrate the ability to identify the potential cash flow of an investment for decision-making purposes.
• Discuss financial futures, future contracts, interest rates, and foreign current markets.
• Identify the basic concepts for security valuation with emphasis directed toward equity valuation models and the capital asset pricing model.
• Apply the various techniques of asset/liability in depository institutions, and discuss the impact of changes in interest rates.
• Explain the concepts, roles, applications, and problems of the financial market instruments and yields.
• Identify the situation and explain why certain items cost are treated differently for cash flow and net income determination.
• Assess the financial management of a company.