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