FACULTY OF BUSINESS& ACCOUNTANCY

UNIVERSITI SELANGOR

SESSION 1/20/34
SEMESTER APRIL 2020

SUBJECT FINANCIAL DERIVATIVES

CODE PFS 3363

LEVEL ELECTIVE (Degree: Year 3, Semester 3)

CREDIT HOUR 3

PRE-REQUISITE Investment Analysis

Assessment
 Test 1 : 15%
 Test 2 : 15%
ASSESSMENT  Assignment : 20%
 Quiz : 10%
 Final Examination : 40%
 Total 100%

SURIA ABU BASAR

MBA, BBA(FINANCE)
LECTURER H/P : 012-2132491
Email: suria@unisel.edu.my
 Analyse each of the derivatives instruments
COURSE  Evaluate the derivative instruments and assess their uses in
OBJECTIVE the contexts of investment portfolios and the firm
 Describe the Malaysian derivatives markets.
This course examines the nature and functions of derivative
instruments and the markets in which they are traded with particular
SUBJECT emphasis on Malaysian derivative markets. The subject will
SYNOPSIS demonstrate and explain how the derivatives such as options,
forward, and futures are evaluated and how these instruments are
used from both from the perspectives of investment and the firm.
REFERENCES 1) Rosalan Noryati Ho Soke Fun (2010) Introduction to Malaysian
Derivatives, UPENA.
2) Obiyathulla I. Bacha (2010), Financial Derivatives: Markets and
Applications in Malaysia (2nd Edition), McGraw-Hill.
3) John C. Hull (2018), Options, Futures and Other Derivatives (9 th
Edition), Pearson Prentice Hall.
4) Arthur J. Keown (2014), Foundations of Finance (8 th Edition),
Pearson Prentice Hall.

1
 FACULTY OF BUSINESS& ACCOUNTANCY
UNIVERSITI SELANGOR

TEACHING
WEEK CONTENT REMARK
STRATEGY
Introduction
Derivative Markets and Instruments
 Options
 Forward contracts
 Futures contracts
1  Swaps and other derivatives Lecture
The underlying asset
Important concepts in financial and derivative
markets
The role of derivative markets
The structure and development of derivative
markets in Malaysia
Principles of options
 History and development
 Definition and concepts
 Exchange traded options
2 Lecture
 Features of option contract
 Value of options
 Basic properties of option prices
 Factors affecting option prices
Basic strategies of options
 Specifications of stock and index options
 Strategies
- Long call Lecture &
3
- Short call Tutorial
- Long put
- Short put
Uses and implications of basic strategies
Synthetic Strategies of options
 Strategic requirements
Lecturer &
4  Straddle strategy
Tutorial
 Strangle strategy
 Spread strategy
Theoretical Value of an Option
 Put-Call Parity Theorem Lecture &
5
 Binomial Option Pricing Model Tutorial
 Black Scholes Option Pricing Model
Forward Contracts
 Forward Contracts Lecture &
6 TEST 1
 Pricing Forward Tutorial
 Forward Contract on Stocks
7 Principles of futures Lecture &
2
 FACULTY OF BUSINESS& ACCOUNTANCY
UNIVERSITI SELANGOR
 Introduction
 Evolution of futures trading
Tutorial
 Contract specifications
 Market participants
Commodity Futures
 Introduction
Lecture &
8  The underlying instrument
Tutorial
 Overview of the Palm oil industry
 Crude palm oil futures
Equity Futures
 Introduction Lecture &
9
 The underlying instrument Tutorial
 KLCI futures contract
Interest rate futures
 Yield curve Lecture &
10 TEST 2
 The underlying instrument Tutorial
 KLIBOR futures contract
Single stock futures
 Introduction
 Contract specifications Lecture &
11
 Main advantage of SSFs trading Tutorial
 Trading and pricing
 Growth and prospects
Regulatory framework of derivative trading
Aims of regulation
Structure of regulatory agencies
12 Lecture
Futures industries act
BMDB
BMDC
Understanding Swaps
13 Lecture
Understanding Warrants and unit trusts
14 Revision