The aim of this module is to develop students' skills and knowledge in Derivative Markets to give students an awareness and understanding of the current concepts in, and instruments used in capital markets. This module provides learners with the latest concepts, knowledge, skills and theories in derivatives which will give students the opportunity to develop an understanding of the core economic principles underlying the pricing and uses of derivatives and applying that knowledge to Machine Learning.

This course aims to introduce students to the various forms of derivative instruments available in modem financial markets. The module commences with a look at simple derivative instruments and quickly progresses to exotic options and option trading strategies. The role of volatility in option pricing will be analysed. The module will also examine the use of derivative instruments in corporate applications and how they tie into risk management. The theoretical material in this module is fundamental in the understanding of modem trading dynamics, risk management and compliance roles.

At the end of this module students will be able to: 1) Demonstrate an understanding of the role derivatives instruments have in the efficient operation and risk control of the capital markets. 2) Explain the role played by equity and interest rate volatility in derivatives markets and how this variability may be exploited. 3) Compare and contrast the various types of derivative instruments and how they can be used to transform the balance sheet characteristics of an institution. 4) Demonstrate an understanding of how equity and bond derivatives are traded in the primary and secondary markets. 5) Describe the issuance and pricing of sovereign and corporate debenture instruments. 6) Describe and evaluate interest rate derivatives. 7) Compute and analyse financial derivative instrument prices using the Black-Scholes model, risk-neutral valuation, no-arbitrage pricing and the binomial pricing model. 8) Demonstrate an understanding of risk management in exchange-traded and over-the-counter derivative instruments.

At the end of this module students will be able to: 1) Develop an awareness on the prevailing issues that arise using complex derivative instruments from a regulatory perspective. 2) Develop an appreciation for the role of derivatives and how they can be used in risk management.

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The module will be delivered using online lectures, virtual labs and tutorials.