Financial Economics - Valuation and Derivatives  Draft Course Outline and Calendar  June 25, 2001  [Note:Homework assignments will be given out nearly every day].
Day	Lecture and discussion topics	Reading and Homework Assignments	Quiz
1,2	Module 1 - Introduction to class, basics of present value, compounding and discounting formulas (discrete and continuous), measures of risk (variances, betas, etc.)	Hull: Ch 1	N
3	Module 2 - Options basics: puts and calls, index options, hedging strategies, writing covered calls, finding options to track.	Hull: Ch 7, 8	N
4,5	Module 3 - Futures and Forwards market basics: Contracts, settlements, delivery, the markets, differences between commodities, metals, fuels, indexes and financials. Arbitrage and the effect upon price, hedging and hedging strategies, basis risk.	Hull: Ch 2,3,4	D4
6	Module 4 - Review of valuation, including discounting free cashflow, traditional valuation methods, new internet valuations		Y
7	Module 5 - Financial Futures and Interest Rate Hedges, including review of yield-bearing asset valuation, bond futures contracts, CBOT tables, bill and note futures, the relationship between interest rates and futures, using futures to hedge rates.	Hull: Ch 5	N
8	Module 6 - Currency Futures, including discussion of linkage to relative real interest rates, performance and hedging options, real-world case studies.	Hull: Ch 12	Y
9	Module 7 - Options on Futures. Definition, description of contracts, links to futures, examples of applications, hedging examples.	Hull: Ch 13	N
10	Module 9 - Options and Futures Pricing Models. Advanced volatility calculations, Black-Scholes Model, review of material for exam.	Hull:Ch 11	N