MBA642 Financial Derivatives

for U1P 2012

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MBA 642 Financial Derivatives


U1P 2012 MB


Adeinat, Iman M.


Adjunct Faculty


PhD, University of New Orleans
MS, University of New Orleans

Office Location

Kansas City, MO

Office Hours

9 am to 7 pm CST


Class Days


Class Time

5:30 - 9:50 PM


MBA 615 and MBA 640. (Formerly FI 642)

Credit Hours



Fundamentals of Futures and Options Markets (7th Edition)
Author: Hull, John
ISBN: 0136103227

Textbooks can be purchased through the MBS bookstore

Additional Resources:
A subscription to the Wall Street Journal is recommended, since many articles appearing in Wall Street Journal are strongly related to the course material.

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Course Description:
MBA 642 Financial Derivatives: This course provides the student with the necessary skills to value and to use options, futures, and related financial contracts. The financial derivatives are one of the constantly chancing and widely used instruments in todays financial markets. This course will provide rigorous fundamental valuation and explore the strategic and tactical dimensions of derivatives. The topics that will be covered include the valuation of futures contracts on stock indices, on commodities and Treasury instruments; the valuation of options; empirical evidence; strategies with respect to these assets; dynamic asset allocation strategies, of which portfolio insurance is an example; swaps; and the use (and misuse) of derivatives in the context of corporate applications. Prerequisites: MBA 615 and MBA 640. (Formerly FI 642)

Educational Philosophy:

1. Create a desire in the students to continue learning after the course is completed.

2. Motivate the students to pursue their lifelong educational opportunities.

3. Provide an environment that enhances and supports the student’s learning skills.

Learning Outcomes:
  Core Learning Outcomes

  1. Analyze and differentiate the different types of derivatives such as forward contracts, futures contracts, swaps, and options.
  2. Identify the participants and basic mechanics of derivatives markets.
  3. Apply basic financial principles to compute the price or the price range of the derivatives.
  4. Evaluate key properties of the prices for these derivatives.
  5. Design optimal hedging strategies to manage investment risks using derivatives.

Core Assessment:

Class Assessment:

Each week students are required to complete an individual assignment. The assignment will consist of selected problem from your textbook. Students are required to show their work and to submit their assignment at the beginning of the next class meeting. Points will be deducted for late assignments.


There will be 2 projects; details to be announced. The projects involve collecting information from Internet, analyzing the information, and performing some computations using Excel. I assign these projects because familiarity with computers and internet is a must in today's financial environment. 

There will be a midterm exam and a final. All exams contain mainly short essay questions and short numerical problems. The exams will stress the most important material covered in class. Unless there is a reason beyond your control, e.g. automobile accident, medical excuse, you are expected to take the exam with the rest of the class. If you cannot attend an exam, you must notify me before the scheduled exam time if you wish to be eligible for a make-up and you must you present a documented proof (e.g. a doctor’s/hospital note) for your absence. If you are eligible for a make-up exam, it will be rescheduled.

Class Participation:
Your participation grade is based on the quality of your inputs into class discussions and your attendance. Participation is important to understanding the course material, so I will be monitoring your participation throughout the course.  If you miss a class you are responsible for the material that was covered, as well as any announcement that may have been made in the class.


Assignment          15%
Project 1             10%
Project 2             15%
Oral Presentation    5%
Midterm Exam       25%
Final Exam           25%
Participation          5%
Final Letter Grades
A : 90-100%
B : 80-89%
C : 70-79%
D : 60-69%
F : below 60%

Late Submission of Course Materials:

Points will be deducted for late assignments. Late assignment will be penalized at the rate of 10% per day, unless a plausible and documented excuse is presented.

Classroom Rules of Conduct:

You are expected to attend all class meetings and be there ON TIME. During classroom discussions please treat other students with courtesy, civility and respect. Please allocate sufficient time for this class during the semester. Keeping track of the course schedule and sticking to it are very important.

Course Topic/Dates/Assignments:
This Course outlines a general guideline. Deviation may be necessary. Students are responsible for all announcements made in class or posted on eCompanion Course site.






1: June 5

Mechanics of futures market

1, 2

2: June 12

Determination of Forward and Futures Prices

5, 7

Assignment 1

3: June 19

Mechanics of Options Markets
Properties of Stock Options 

9, 10

Assignment 2

4: June 26

Trading Strategies Involving Options


Assignment 3
Midterm -Ch. 1, 2, 5, 7,9, 10

5: July 3

Introduction to Binomial Trees
Valuing Stock Options: The Black-Scholes Model

12, 13

Project 1: Submission

6: July 10

Volatility Smile
Value at Risk

19, 20

Assignment 4

7: July 17

Employee Stock Options
Weather, Energy, and Insurance Derivatives
14, 24

Project 2: Submission

8: July 24

Oral Presentation
inal Exam- Ch. 11, 12, 13, 15, 17, 20, 24

Academic Honesty:
As a learning community, the University upholds the highest standards of academic integrity in all its academic activities, by faculty, staff, administrators and students. Academic integrity involves much more than respecting intellectual property rights. It lies at the heart of learning, creativity, and the core values of the University. Those who learn, teach, write, publish, present, or exhibit creative works are advised to familiarize themselves with the requirements of academic integrity and make every effort to avoid possible offenses against it, knowingly or unknowingly. Park University 2011-2012 Graduate Catalog Page 21


Plagiarism is the appropriation of another person's ideas, interpretation, words (even a few), data, statements, illustration or creative work and their presentation as one's own. An offense against plagiarism constitutes a serious academic misconduct.  Although offenses against academic integrity can manifest themselves in various ways, the most common forms of offenses are plagiarism and cheating. Plagiarism goes beyond the copying of an entire article. It may include, but is not limited to: copying a section of an article or a chapter from a book, reproduction of an art work, illustration, cartoon, photograph and the like and passing them off as one's own. Copying from the Internet is no less serious an offense than copying from a book or printed article, even when the material is not copyrighted.

Plagiarism also includes borrowing ideas and phrases from, or paraphrasing, someone else's work, published or unpublished, without acknowledging and documenting the source. Acknowledging and documenting the source of an idea or phrase, at the point where it is utilized, is necessary even when the idea or phrase is taken from a speech or conversation with another person.

Park University 2011-2012 Graduate Catalog Page 21

Attendance Policy:

Students must participate in an academically related activity on a weekly basis in order to be marked present in an online class. Examples of academically-related activities include but are not limited to: contributing to an online discussion, completing a quiz or exam, completing an assignment, initiating contact with a faculty member to ask a course related question, or using any of the learning management system tools. Park University 2011-2012 Graduate Catalog Page 25

Disability Guidelines:
Park University is committed to meeting the needs of all students that meet the criteria for special assistance. These guidelines are designed to supply directions to students concerning the information necessary to accomplish this goal. It is Park University's policy to comply fully with federal and state law, including Section 504 of the Rehabilitation Act of 1973 and the Americans with Disabilities Act of 1990, regarding students with disabilities. In the case of any inconsistency between these guidelines and federal and/or state law, the provisions of the law will apply. Additional information concerning Park University's policies and procedures related to disability can be found on the Park University web page: .


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Last Updated:5/21/2012 9:47:29 PM