BFC2751 Derivatives 1

Unit introduction and overview

Moodle site:
https://learning.monash.edu/course/view.php?id=17840&section=4
Teaching staff
 A/Professor Thanh Huynh: Chief Examiner
– [email protected]
 Alpana Trivedi (Lead Tutor)
– [email protected]
 Himali Palpita
– [email protected]
 George Wang
– [email protected]
 Harry Pham
– [email protected]

First question for Week 1: Who is your tutor?

Email correspondence

 All email correspondence between students and staff must be

polite and courteous.
– When you email me, you must start your email by addressing me by name.
For example: I would prefer Dear Thanh or Hi Thanh. But if some students
want it to be more formal, Dear Professor Huynh or Hi Professor Huynh will
also work.
– And you must sign off your email with your name.

 Students who do not adhere to these basic courtesies may not

receive a reply.
 I suggest that you afford the same courtesies when
corresponding with your tutors.
 Teaching staff will apply the same courtesies when
corresponding with students.
Lectures and tutorials
 Tutorials and lecture start in Week 1.
 Lecture slides will be available on Moodle one day before the
scheduled lecture.
 Our lecture is scheduled every Wednesday at 10 am. You’re
welcome to attend the lecture in person (attendance is optional).
Lecture recordings should be automatically uploaded on Moodle
after each lecture has finished.
 Our unit follows the policy of making tutorial solutions available
after the last tutorial of the week has concluded.
 This practice has been established for many years and has
consistently enhanced the learning experience for students and
the teaching experience for tutors. This approach is particularly
beneficial for students with tutorials later in the week.
Learning material at your disposal
 There will be a wealth of material at your disposal to assist your
learning in BFC2751:
– Lectures notes (powerpoint slides)
– Extensive Q&As for each tutorial
– Additional supplementary Q&As leading into each exam
– Textbook: Hull, J.C., 2023, Options, Futures and Other Derivatives (11th
edition).
– But any of the other editions of Hull would also suffice.
About this unit

 Derivatives is a very interesting, contemporary and

challenging area to study.
 The growth in derivatives products offered and volume of
trading has exploded and continues to grow exponentially.
 No matter which direction your career takes, it is very likely
that your role/job will involve derivatives:
– Funds management, hedge funds, professional trader
– For you own private investment/hobby
– Risk management (forex, interest rates, equities, commodities,
energy)
 Arguably, there is something relevant here for each and
every one of you.
About this unit

 Your goals in BFC2751 are:

1. to become aware of the derivative instruments that are
available in the marketplace and how they work,
2. to know how to use derivatives to manage risk (and speculate)
in a variety of circumstances, and
3. to become proficient in pricing/valuing a variety of derivative
securities.
About this unit

 Let’s start with a fact:

Derivatives is not your regular unit. It’s one of the most
technical units in finance
 I intend to make this unit interesting and fun for you. But I
also intend to challenge you.
 From the outset in Week 1, I urge you to work hard and get
the most out of this unit.
 There is a lot of very good learning material at your disposal
in this unit, but ultimately it is your choice:
– how seriously you take your study
– how hard you work
 How much you enjoy this unit and how well you do is
completely in your hands.
Tips for success

 You must start working hard from Week 1:

 The concepts throughout this unit build upon each other.
 Cannot afford to go a few weeks without doing the work, then
expect you will be able to catch up.
 So work hard right from Week 1 and work consistently
throughout the semester.

 Rule of thumb: for an average student to get an average

grade, they need to spend about 10 hours a week working
on the unit.
Pass or fail???
Pass or fail???
Pass or fail???
Tips for success
 Review the lecture notes/recording and read the prescribed
sections in the textbook before attempting the tutorial
question.
 Make a serious attempt at the assigned tutorial questions
before the tutorial and certainly before the next lecture.
 Get your money’s worth from the tutorials:
– Attend your tutorial every week.
– It is imperative that you have attempted the questions and
therefore knowing where you are struggling.
– Ask the tutors questions to resolve your problems.
 Utilise the consultation times of staff to resolve your
problems.
 And, most of all, practice makes perfect:
– Diligently work through all tutorial questions and answers.
Utilise the supplementary Q&As as part of your exam
preparation.
The most important tip for success

 The best way to learn (and get very good grades) is to make
sure that you focus on:
– learning and understanding the content of the unit,
– NOT on what I need to know for the exam.

 So many students are “exam focused”:

– Trying to guess what might or might not be on the exam.
– Memorising tute questions (but not understanding it) and hoping the
exam is similar.
– Memorising last year’s exam (but not understanding it) and hoping
that this year’s exam is similar.
– This is a foolish strategy!
Focus on understanding
 You should NOT expect that the exam questions will be:
– exactly the same as questions you have already seen in tutes
– just like tute questions, with a few numbers changed
– exactly the same as prior year exams
– just like prior year exams with a few numbers changed.
– similar to quiz questions. The purpose of the quizzes are simply
post-lecture exercises and to encourage you to keep up-to-date
with the course pace. Their difficulty level is not meant to mimic the
Mid-semester test or the Final Exam.

 The exams will test whether you understand the content taught
throughout the semester:
– Can you demonstrate that you understand the content taught?
– Are you able to take your knowledge of the topics and apply it to
variations of what you have seen and new scenarios/problems?
– If you have a good understanding of the topics and content, then
you are well placed to tackle whatever is thrown at you on an exam.
Heads up!

 First Online Moodle quiz

– Due Monday, 12 August 2024

– Will cover Lectures1+2 and Tutorial 1+Tutorial 2+First week tutorial

– Moodle temporary crash is not an acceptable reason for extension.
– In general, NO extensions will be given, as you are given
multiple days to complete the quiz, unless you have very
special circumstances.
– Please contact our Lead tutor Alpana Trivedi
[email protected], if you have any queries related
to the quizzes.
Assessment

 Online Moodle quizzes (20%):

– quizzes run progressively throughout the semester

 Mid semester exam (30%)

– Will be centrally timetabled and organized

 Final examination (50%):

– during official exam period