Financial Derivatives -FIN 371
Second Semester-2021
Submission -Week 14- 19th April 2021
Project Analysis
The learning objective:
Derivative Instruments
The hedging strategies
Pricing of futures and options
The evaluation criteria for the project report:-
Project Guidelines:-
6 marks
1. Step 1: The derivatives trading is an important economic activity globally. Substantiate
with the help of qualitative and quantitative data and their analysis from Bloomberg
Terminal.
2. Statistical data showing and explaining the nature of derivative trading across the globe.
3. The impact of derivative trading on the financial development of the world.
Step 2: Prepare a report on the following sub-headings:
1. When was derivative trading introduced in KSA.
2. What were the objectives of this great initiative?
3. What impact it could create on to the MENA region.
4 mark
Step 3: Elaborate on the various initiatives, policies and developments taken place in Saudi
Derivative Markets since Aug 2020. The information and its analysis can be presented by the
teams in a creative and innovative manner. 5 marks
Step 4: Bloomberg Saudi Arabia March Economic Survey- analysis 5 marks
Step 5: Pricing of futures- historical data analysis 10 marks
Theoretical
Future Price
Actual
Future
Price
Spot
Price
Arbitrage
Opportunities
in the market
Step 6: Pricing of Options- Strike price, Market Price, Intrinsic Value, Time value, Option
Premium analysis. In the money, At the money, Out of the money 10 marks
Call
Option
Strike
Price
Market
Price
Intrinsic
Value
Time
Value
Option
Premium
Put
Option
Step 7: Application of Bloomberg tools: OVME, OVML, FXFA – futures and options trading
( eurusd currency, GCI gold futures) 10 marks
Criteria
Excellent
( 1 )
Very Good
( 0.75)
Good
( 0.5)
Poor
(0.25)
No Evidence (0)
1. The
derivatives trading
is an important
economic activity
globally.
Substantiate with
the help of
qualitative and
quantitative data
and their analysis
from Bloomberg
Terminal.
2. Statistical
data showing and
explaining the
nature of
derivative trading
across the globe.
3. The
impact of
derivative trading
on the financial
development of the
world.
The student
shows (100%)
ability of
acquiring
information
using Bloomberg
Terminal related
to derivative
trading at global
level)
The student
shows (75%)
ability of
acquiring
information
using
Bloomberg
Terminal
related to
derivative
trading at global
level)
The student
shows (50%)
ability of
acquiring
information
using
Bloomberg
Terminal
related to
derivative
trading at
global level)
The student
shows (25%)
ability of
acquiring
information
using
Bloomberg
Terminal
related to
derivative
trading at
global level)
The student lacks
ability of
acquiring
information using
Bloomberg
Terminal related
to derivative
trading at global
level)
Score 6 marks 3 2.25 1.50 0.75 0
1. When was
derivative trading
introduced in
KSA.
2. What
were the objectives
of this great
initiative?
3. What
impact it could
create on to the
MENA region.
The student
shows (100%)
skills to diagnose
the objectives
behind the
introduction of
derivative trading
in KSA and its
impact on
MENA region.
The student
shows (75%)
skills to
diagnose the
objectives
behind the
introduction of
derivative
trading in KSA
and its impact
on MENA
region.
The student
shows (50%)
skills to
diagnose the
objectives
behind the
introduction of
derivative
trading in KSA
and its impact
on MENA
region.
The student
shows (25%)
skills to
diagnose the
objectives
behind the
introduction
of derivative
trading in
KSA and its
impact on
MENA
region.
The student
shows poor/no
analytical skills
skills to diagnose
the objectives
behind the
introduction of
derivative trading
in KSA and its
impact on
MENA region.
Score
4 mark 4.00 3.00 2.00 1.00 0.00
Quality of
information are
accurate and
updated
The student
demonstrates
well the ability
(100%) to
understand and
complete the
information
required
The student
demonstrates
the ability
(75%) to
understand and
complete the
information
required
The student
demonstrates
the ability (50
%) to
understand and
complete the
information
required
The student
demonstrates
the ability (25
%) to
understand
and complete
the
information
required
Does not
understand and
complete the
information
required
Score
5 marks 5.00 3.75 2.5 1.25 0
Step 5,6,7
The student
shows (100%)
ability to explain
in her own
words, analyse
and interpret the
option pricing
analysis, future
pricing analysis.
The student
shows (75%)
ability to
explain in her
own words,
analyse and
interpret the
option pricing
analysis, future
pricing analysis.
The student
shows (50%)
ability to
explain in her
own words,
analyse and
interpret the
option pricing
analysis, future
pricing
analysis.
The student
shows (25%)
ability to
explain in her
own words,
analyse and
interpret the
option pricing
analysis,
future pricing
analysis.
The student lacks
the ability to
explain in her
own words,
analyse and
interpret the
option pricing
analysis, future
pricing analysis.
10 marks 10 7.5 5.0 2.50 0
Criteria
Excellent
( 1 )
Very Good
(0.75)
Good
(0.5)
Poor
(0.25)
No Evidence
(0)
Organization and Style (10 marks)
References
(APA)-
Prior work is
100%
acknowledged
by referring to
sources for
theories,
assumptions,
quotations, and
findings.
All references and citations are
correctly written
and present.
With an
occasional
oversight,
prior work is
75%
acknowledge
d by
referring to
sources for
theories,
assumptions,
quotations, and
findings.
One or two reference or
citations
missing or
incorrectly
written
On 50%
several
instances,
references are
not stated
when
appropriate.
Three or
more reference or
citations
missing or
incorrectly
written
Little 25%
attempt is
made to
acknowled
ge the work
of others.
Most
references
that are
included are
inaccurate or
unclear.
Several references or
citations
missing or
incorrectly
written.
No evidence
0% that
acknowledge
the work of
others. All
references that
are included are
inaccurate or
unclear.
Reference
and citation
errors detract
Significantly
from paper.
Score 1 mark 1 0.75 0.50 0.25 0
Cover Page
Font type: Times
New Roman, Size
12,
Spacing 1.5
University logo
College Name
Department Name
Section No
Name of Instructor
Students name and
IDs
Case has 6 or
more errors.
No formatting
applied
No structure,
Unorganized
format
Case has 5- 6
errors.
Only Few
formatting rules
applied.
Somewhat
Structured but
lacking coherent
sequence of
information
details
Case has 3-4
errors.
Only some
formatting rules
applied.
Structured with
partially flow of
information
details
Case has 1-2
errors.
Most of the
formatting
rules applied.
One -Two
aspect missing
Structured with
good flow of
information
details
Case is free of
errors.
All formatting rules
applied
Well-arranged
structured and
coherent
information details
Appropriate
formatting rules &
Front Page
Font type: Times
New Roman, Size
12,
Spacing 1.5
University logo
College Name Department Name
Section No
Name of Instructor
Students name and
IDs.
All formatting
rules applied.
Well-arranged
structured with
coherent
information
details
Most of the
formatting
rules applied.
One or two
aspect missing.
Structured
front page with
good flow of
information
details
Only some
formatting
rules applied.
Somewhat
structured
Front page
with partially
flow of
information
details
Only few
formatting
rules applied.
Somewhat
structured
Front page
but lacking
coherent
sequence of
information
details
No formatting
applied, No
Front page, No
information
details
Score 1 mark 1 0.75 0.50 0.25 0
Table of Content
Serial no
Heading
Page no
Table of figures
Serial no
Page no
The student
demonstrates
well the ability
(100%) to
understand and
complete the
information
required
The student
demonstrates
the ability
(75%) to
understand and
complete the
information
required
The student
demonstrates
the ability (50
%) to
understand and
complete the
information
required
The student
demonstrates
the ability (25
%) to
understand
and complete
the
information
required
The student does
not understand
and complete the
information
required
Score 1 mark 1.00 0.75 0.50 0.25 0
Quality of
information are
accurate and
updated
The student
demonstrates
well the ability
(100%) to
understand and
complete the
information
required
The student
demonstrates
the ability
(75%) to
understand and
complete the
information
required
The student
demonstrates
the ability (50
%) to
understand and
complete the
information
required
The student
demonstrates
the ability (25
%) to
understand
and complete
the
information
required
Does not
understand and
complete the
information
required
Score 3 marks 3.00 2.25 1.50 0.75 0
Originality of
ideas/approach and
level of
innovativeness
The student
demonstrates
(100%)
originality of
ideas/approach
and level of
innovativeness.
The student
demonstrates
(75%)
originality of
ideas/approach
and level of
innovativeness.
The student
demonstrates
(50%)
originality of
ideas/approach
and level of
innovativeness
.
The student
demonstrates
(25%)
originality of
ideas/approac
h and level of
innovativenes
s
Does not
understand and
complete the
information
required
Score 2 marks 2.00 1.50 1.00 0.50 0
Creativity and
innovation, key
contributions of the
topic.
The student
demonstrates
(100%)
creativity,
innovation, and
key contributions
of the topic.
The student
demonstrates
(75%)
creativity,
innovation, and
key
contributions of
the topic.
The student
demonstrates
(50%)
creativity,
innovation,
and key
contributions
of the topic.
The student
demonstrates
(25%)
creativity,
innovation,
and key
contributions
of the topic.
Does not
understand and
complete the
information
required
Score 2 marks 2.00 1.50 1.00 0.50 0
Presentation (10 marks)
Well patterned
Logical sequence
Coherence. (2)
The student
demonstrates
(100%) well
patterned logical
sequence and
coherence in
their presentation
style.
The student
demonstrates
(75%) well
patterned
logical
sequence and
coherence in
their
presentation
style.
The student
demonstrates
(50%) well
patterned
logical
sequence and
coherence in
their
presentation
style.
The student
demonstrates
(25%) well
patterned
logical
sequence and
coherence in
their
presentation
style.
Does not
understand and
complete the
information
required
Tables/Graphs/Chart
s/Diagrams (2)
The student
demonstrates
(100%) in the
presentation with
the inclusion of
tables, graphs,
charts and
diagrams
respectively.
The student
demonstrates
(75%) in the
presentation
with the
inclusion of
tables, graphs,
charts and
diagrams
respectively
The student
demonstrates
(50%) in the
presentation
with the
inclusion of
tables, graphs,
charts and
diagrams
respectively
The student
demonstrates
(25%) in the
presentation
with the
inclusion of
tables,
graphs, charts
and diagrams
respectively
The students
were not able to
include any of
them in their
presentation
slides.
Speaker maintains
good rapport with
audience in the form
of questions to
ensure active
participation. (1)
The student
demonstrates well
the ability (100%)
to understand and
complete the
information
required
The student
demonstrates the
ability (75%) to
understand and
complete the
information
required
The student
demonstrates the
ability (50 %) to
understand and
complete the
information
required
The student
demonstrates
the ability (25
%) to
understand and
complete the
information
required
The student does
not (0%) understand and
complete the
information
required
Speaker uses a clear,
audible voice. (1)
The student
demonstrates well
the ability (100%)
to understand and
complete the
information
required
The student
demonstrates the
ability (75%) to
understand and
complete the
information
required
The student
demonstrates the
ability (50 %) to
understand and
complete the
information
required
The student
demonstrates
the ability (25
%) to
understand and
complete the
information
required
The student does
not (0%) understand and
complete the
information
required
Delivery is poised,
controlled, and
smooth and without
reading. (0.50)
The student
demonstrates well
the ability (100%)
to understand and
complete the
information
required
The student
demonstrates the
ability (75%) to
understand and
complete the
information
required
The student
demonstrates the
ability (50 %) to
understand and
complete the
information
required
The student
demonstrates
the ability (25
%) to
understand and
complete the
information
required
The student does
not (0%) understand and
complete the
information
required
Good language
skills and
pronunciation are
used. (0.50)
The student
demonstrates well
the ability (100%)
to understand and
complete the
information
required
The student
demonstrates the
ability (75%) to
understand and
complete the
information
required
The student
demonstrates the
ability (50 %) to
understand and
complete the
information
required
The student
demonstrates
the ability (25
%) to
understand and
complete the
information
required
The student does
not (0%) understand and
complete the
information
required
Group Coordination
while handling
queries/presentation.
(1)
The student
demonstrates well
the ability (100%)
to understand and
complete the
information
required
The student
demonstrates the
ability (75%) to
understand and
complete the
information
required
The student
demonstrates the
ability (50 %) to
understand and
complete the
information
required
The student
demonstrates
the ability (25
%) to
understand and
complete the
information
required
The student does
not (0%) understand and
complete the
information
required
Length of
presentation is
within the assigned
time limits. (0.50)
The student
demonstrates well
the ability (100%)
to understand and
complete the
information
required
The student
demonstrates the
ability (75%) to
understand and
complete the
information
required
The student
demonstrates the
ability (50 %) to
understand and
complete the
information
required
The student
demonstrates
the ability (25
%) to
understand and
complete the
information
required
The student does
not (0%) understand and
complete the
information
required
Information is well
communicated.
(0.50)
The student
demonstrates well
the ability (100%)
to understand and
complete the
information
required
The student
demonstrates the
ability (75%) to
understand and
complete the
information
required
The student
demonstrates the
ability (50 %) to
understand and
complete the
information
required
The student
demonstrates
the ability (25
%) to
understand and
complete the
information
required
The student does
not (0%) understand and
complete the
information
required
Overall quality and
integrity of
presentation content
and quality of slides
(1)
The student
demonstrates well
the ability (100%)
to understand and
complete the
information
required
The student
demonstrates the
ability (75%) to
understand and
complete the
information
required
The student
demonstrates the
ability (50 %) to
understand and
complete the
information
required
The student
demonstrates
the ability (25
%) to
understand and
complete the
information
required
The student does
not (0%) understand and
complete the
information
required
Score 10 marks 10 7.5 5.00 2.50 0
Course Outline:
No List of Topics Contact Hours
1 Topic 1: Introduction 3
2
Topic 2: Mechanics of Futures Markets (To finance the expanding business environment, banks and other institutions KSA government is adapting their financial products and services to the needs of each sector, from large project funding to short-term working capital for small businesses. Knowledge in Financial Markets and Institutions)
3
3 Topic 3: Hedging Strategies Using Futures 4
4 Topic 4: Interest Rates 3
5 Topic 5: Determination of Forwards and Futures Prices 4
6 Topic 6: Mechanics of Options Markets 4
7 Topic 7: Properties of Stock Options 4
8 Topic 8: Introduction to Binomial Trees 3
9 Topic 9: Swaps 3
Quizzes 2
Mid term 2
Presentation 4
Revision 3
Final Exam 3
Total 45
Course Coordinator: Dr Nisa Vinod Kumar
2.504.50