MN-3506 DERIVATIVES AND RISK MANAGEMENT

This module aims to provide an understanding of how companies and financial institutions can manage risk through the use of financial derivatives and covers the role of hedging and risk management in business organisations. Different types of financial derivative will be introduced and their roles in financial markets in terms of trading and hedging will be covered. Basic pricing theories and techniques will also be covered in this module.

This booklet contains:

· an introduction to the module

· details of all learning interactions

· details of the core textbooks via the reading list

· information on assessment and feedback, including the coursework brief

· an overview of the entire module

Module Delivery

Lectures will be delivered face to face on campus. A recording will be posted on Canvas following the lecture. The lecture and seminar for this module will be delivered in a combined session on

Friday/10-1pm/ Great Hall 001 (Bay)

Seminar times may change in the first two weeks of term.  Please check Canvas announcements and the timetable data displayed on the Intranet for regular updates.

Communication

All information related to the module will be conveyed to students via Canvas through the Announcements feature which will also send an e-mail notification to student accounts.

Learning Outcomes

On completion of this module students should be able to:

· Demonstrate an in-depth understanding of how derivative instruments are priced;

· Explain and apply hedging/risk management strategies using derivatives; and

· Critically evaluate the effectiveness of different risk management strategies

Transferable Skills

On completion of this module students should be able to:-

· Problem solving skills with respect to financial derivatives

· Critical thinking;

· Personal and career development;

· Business research skills

Reading Material

Every effort has been made to provide the books and journals featured in the reading list for this module in digital and hard copy format via the library.  For more details of the resources available to support your studies please consult the library services guide or watch this short recording by Subject Librarian, Naomi Prady.

https://libguides.swansea.ac.uk/management

The full reading list for this module is available via Canvas

The core textbook for the module are:

· Fundamentals of Futures and Options Markets by John C. Hull, 8th Edition. Published: Pearson 2016. This is available as an e-book through the library.

A core textbook is only a starting point and provides introductory and background information only. Supplemental reading will be identified at each lecture. To achieve high marks in this module students will need to do the background and supplemental reading as well as conduct their own independent research for instance through the reading of academic journals, into the topics identified.

Assessment

The assessment for the module is structured as follows:

· 40% Individual coursework – 2000 words

Please, check the Coursework Guidelines document for the details, assessment criteria and submission deadline.

· 60% Open Book Examination taken online – students will have a limited time window in which to complete the exam.

Past papers will be worked through in the final session of the module. The exam paper will consist of FIVE questions of which students will be asked to answer any FOUR questions worth 25 marks each.

If you fail this module you will be required to take an examination during the supplementary assessment period. The resit examination will be weighted as 100% of the overall module mark – the initial assessment weightings do not apply for resits.

Submission in Welsh

Any written work submitted as part of any assessment or examination may be submitted in Welsh, and that work submitted in Welsh will be treated no less favourably than written work submitted by you in English as part of an assessment or examination.

Canvas – Digital Learning Platform

To ensure that students have everything they need to get the most out of Canvas the University has produced a comprehensive guide called “Passport to Canvas”, which can be accessed on the following link: https://canvas.swansea.ac.uk/courses/19536

“Passport to Canvas” will always be available to students, meaning that they can go through the material in one go, or dip in and out of it as you wish. Students can access the platform via this link Passport to Canvas or from within the university apps and the MyUni webpages.

Canvas Support is available 24/7 365 days a year in the following ways:

· Canvas Support Hotline

· Canvas Chat

· Report a problem

Students can also access these avenues of support via the Canvas Help icon in the navigation menu on the Canvas Platform.  The Canvas Student Guides and Canvas Online Community may also be helpful.

Note on Terminology

For the purpose of all information, regulations and policies associated with Swansea University we use the terms ‘Module’ and ‘Programme’ when making reference to students’ studies.  Modules are discrete educational components of a programme which, when considered collectively, make up the required credit for students to complete each level of a programme.

However, in Canvas, your Digital Learning Platform, the term ‘Modules’ has a different meaning - it is used to describe where all of the learning resources are stored.  For this reason students will see the term ‘Course’ used in Canvas instead but it means the same as Module (above).

The coursework assignment for this module is an individual assignment worth 40% of the overall module mark.

Coursework Brief

Using examples of companies and financial institutions use of derivatives (both good and bad), critically assess the benefits and limitations of derivatives as a risk management tool.

References

Use the following reference as a starting point, then follow up the cases mentioned in the chapter from internet resources:

Hull, Fundamentals of Futures and Options Markets, chapter 25.

Submission

The main assignment must be submitted by 2pm on 26^th April 2024 via Turnitin. Students can expect to receive individual feedback on their work via Canvas on 18^nd May 2024

Key marking criteria are outlined in the assignment rubric below.

1. Understanding (30%): This criterion assesses the depth of understanding of the subject area, including relevant theories and concepts. It evaluates how well the student has grasped the core principles of risk management and their ability to demonstrate this understanding through evidence of reading and research.

2. Literature (20%): The focus here is on the use of suitable sources that are directly relevant to the key research aims of the assignment. This criterion examines the student's capacity to select appropriate material that supports their arguments and analysis effectively.

3. Identification of the Risk (20%): This aspect evaluates the student's ability to accurately identify the main risks at the financial, operational, and strategic levels. It involves a thorough analysis of various risk factors that the chosen company may face.

4. Insightfulness of Analysis (20%): This criterion measures the interest and usefulness of the findings and conclusions drawn from the analysis. It includes the use of appropriate financial ratios and statistics to support the analysis, reflecting the student's ability to apply theoretical knowledge to practical scenarios.

5. Presentation (10%): This criterion assesses the overall structure of the essay, the clarity of the points made, and the correct use of APA style referencing. It reflects the student's ability to communicate their ideas effectively and to adhere to academic standards of presentation.

Marking Rubric:

Criteria	First Class (70+)	2:1 (60-69)	2:2 (50-59)	3rd (40-49)	Fail (<40)
Understanding (30%)	Demonstrates exceptional understanding with in-depth analysis and extensive research.	Demonstrates strong understanding with clear evidence of research.	Demonstrates adequate understanding with some evidence of research.	Demonstrates basic understanding with limited research.	Lacks understanding; insufficient or no evidence of research.
Literature (20%)	Uses a wide range of highly suitable sources, excellently focused on research aims.	Uses suitable sources effectively focused on research aims.	Uses a mix of suitable and less relevant sources.	Uses limited or partially relevant sources.	Fails to use appropriate sources; lacks relevance and focus.
Identification of the Risk (20%)	Accurately identifies and thoroughly analyses risks at all levels.	Accurately identifies most risks with good analysis.	Identifies some risks with basic analysis.	Identifies few risks with limited analysis.	Fails to accurately identify or analyse risks.
Insightfulness of Analysis (20%)	Analysis is highly insightful, with findings and conclusions that are extremely interesting and useful. Includes comprehensive use of financial ratios and statistics from the most recent 3 years (2021-2023) to support the analysis.	Analysis is insightful, with useful findings and conclusions. Includes good use of financial ratios and statistics from the most recent 3 years.	Analysis shows some insight, with moderately useful findings. Includes basic use of financial ratios and statistics from the recent years.	Analysis shows limited insight, with minimal usefulness. Limited or incorrect use of financial ratios and statistics.	Analysis lacks insight; findings and conclusions are not useful. Fails to use or incorrectly uses financial ratios and statistics.
Presentations (10%)	Excellently structured, clear, and perfectly adheres to APA style.	Mostly well-structured and clear with minor APA style errors.	Lacks some structure and clarity with several APA style errors.	Poorly structured, unclear, with multiple APA style errors.	Disorganized, unclear, and fails to adhere to APA style.

Please note:

· The maximum file size that can be uploaded is 20mb. If the file is larger than this it is usually because it includes a lot of images – these should either be removed, if possible, or converted to a more efficient format to reduce the file size (e.g. .png or .gif).

· Students should ensure that their student number is part of the title of the filename for the work submitted/uploaded.

· IMPORTANT: Any student submitting an assessment past the published deadline without submitting a request for Extenuating Circumstances (in line with the Extenuating Circumstances Policy) will be deemed to have not submitted and receive a mark of 0% for the assessment.

Students who are likely to be prevented from meeting the assessment deadline due to extenuating circumstances should notify the School by emailing [email protected] as soon as possible before the assessment deadline. Please refer to the Extenuating Circumstances Policy for further information.

Digital Submission of Coursework Instructions

· Logon to Canvas

· Access the appropriate Course site from your dashboard.

· Click the Assignments menu button which appears on the left of the screen.

· Click on the relevant assignment for submission.

· In this page students will see a file entitled ‘Submission coversheet’.  Students need to complete this form and incorporate it as the first page of their coursework (not two separate files).

· Students should read the statement of originality before clicking By submitting work they are agreeing to this statement and confirming it to be true.

· Click to select your assignment file.

· Click  to upload an assignment.

· Click to finalise the submission

· A message saying “Submission Complete” will then appear.

· Students can then download a submission receipt by clicking on this icon  on the Assignment Dashboard.  Students should download and keep this receipt safe as evidence of their submission.

Please direct any assessment related queries to [email protected]

Notes on Style and Word Count

Assignments are a critical part of the learning experience and development for scholars at Swansea University.  Practice will pay dividends when it comes to honing your skills in report and essay writing. Students are therefore encouraged to submit the highest quality work they can to reach their maximum potential. Students with concerns about how to present their work can consult with the Module Co-ordinator for guidance in addition to the notes listed below:

The maximum word limit for the main assignment (excluding tables, contents page, footnotes, charts, graphs, figures, reference lists but including in-text references) is 2000 words. The word count must be stated in the assignment cover sheet.

Students are required to adhere to the maximum word limits and should note their final assignment/examination word count in the space provided on the accompanying cover sheet. Students will incur a 5-mark penalty for exceeding the word limit. Please note that word counts should not include cover sheets, bibliographical footnotes, or bibliographies.

Students who submit work that is below the word limit will not be penalised. This is because students will not have taken full advantage of the word limit available to them, which in itself may constitute a penalty.

The assignment should be in extended essay format (i.e. use headings/sub-headings). Full academic referencing using the Harvard APA (7^th Edition) referencing style should be used throughout the assignment. The APA Referencing Guide provides guidance on how to reference using the APA style and this short recording by Subject Librarian, Philippa Price.

To gain higher marks students are required to show analysis and reflection rather than simple description. They should use multiple sources of academic literature to frame and justify their analysis. All sources should be correctly identified - students are reminded the University enforces strict penalties for plagiarism (up to and including withdrawal from the University).

Correct English spelling and grammar should be used at all times. Students who have been formally diagnosed with specific learning difficulties (SpLD) will be contacted by the disability office and will be supplied with a specific cover sheet.

Video, Audio or other Assessment Types

For some assessments students may be required to submit a video, audio or other digital media item. The University’s overarching privacy policy advises students that the University will collect photographs and video recordings for the purpose of recording lectures, student assessment and examinations. This processing and storage of this information is lawful as it is necessary for the performance of a contract with the student and will apply to any personal data that we process for the purposes of administering and delivering their course of study.

Student Privacy Notice - Swansea University

Proof Reading

Please be aware of the university’s Proof Reading policy which sets outs what the university considers to be good academic practice in relation to proof reading. Further information can be found by accessing the proof reading policy

Good Academic Practice

Academic integrity is fundamental to the values promoted by Swansea University. It is important that all students are judged on their ability, and that no student is allowed unfairly to take an advantage over others, to affect the security and integrity of the assessment process, or to diminish the reliability and quality of the qualification awarded.

Academic misconduct is to commit any act whereby a student may attempt to obtain for themselves, or for another student, an unpermitted advantage.  This shall apply whether students act alone or in conjunction with another/others.  This can relate to any form of assessed work.  There are different types of academic misconduct including plagiarism, collusion and commissioning.

The University takes academic misconduct very seriously and it can have a detrimental effect on your results as where academic misconduct is found to have taken place penalties will be applied.

Students should note that a claim of ignorance of the University’s expectations on good academic practice is not an acceptable defence to an allegation of academic misconduct.

Self-plagiarism is the copying of work that was originally completed and submitted by the student and resubmitted for another purpose, without acknowledgement.  While self-plagiarism is not considered as academic misconduct by the University it is treated as poor academic practice by the School and this is reflected in the marks awarded.

How can students learn about good academic practice?

Help with correct referencing is available from the School’s Library Subject Team – you can make an appointment with a subject librarians for help with referencing.  Access The library online referencing guide for the School of Management. At the start of term the library offers induction sessions for new and continuing students and targeted sessions throughout the academic year. You can also access information on good academic practice through the Swansea Academy of Academic Success More information on their services can be found on their web pages.

The Centre for Academic Success also provides a short online course on good academic practice which can be access through the Academic Success pages.

See these useful guides on academic integrity and academic misconduct and understanding plagiarism.

Full information on Academic Misconduct can be found in the Academic Misconduct Procedure.