Please note! Course description is confirmed for two academic years (1.8.2018-31.7.2020), which means that in general, e.g. Learning outcomes, assessment methods and key content stays unchanged. However, via course syllabus, it is possible to specify or change the course execution in each realization of the course, such as how the contact sessions are organized, assessment methods weighted or materials used.


By the end of the course students will be able to show detailed understanding of the derivatives markets, the instruments and the principles of risk management. The course reflects both theory and practice and it covers diverse areas such as equity, index, foreign currency, commodity and fixed income derivatives.

Credits: 6

Schedule: 27.02.2019 - 10.04.2019

Teacher in charge (valid 01.08.2020-31.07.2022): Sean Shin, Matti Suominen

Teacher in charge (applies in this implementation): Sean Shin, Theresa Spickers

Contact information for the course (valid 04.02.2019-21.12.2112):

Instructor: Sean Seunghun Shin (Fixed Income Part); Theresa Spickers
(Derivatives Part)


Phone: +358-50-304-3004

Office hours: by

Lectures: Monday,
10:15 - 12:00, U4 (U142, Otakaari 1)

  Wednesday, 16:15 - 18:00, D-hall(Y122, Otakaari 1)

Exercises: Thursday, 16:15 – 18:00, U7 (U135a, Otakaari 1)

CEFR level (applies in this implementation):

Language of instruction and studies (valid 01.08.2020-31.07.2022):

Teaching language: English

Languages of study attainment: English


  • Valid 01.08.2020-31.07.2022:

    Main topics are arbitrage, binomial models, Black & Scholes model, extensions to Black & Scholes model, interest rate derivatives, exotic options, and issues in risk management.

  • Applies in this implementation:

    This course covers key concepts in understanding derivatives and fixed income securities. During the first half, this course explores important features of fixed income markets, covers fundamental concepts about bonds and terms structure, and develops tools for the valuation and risk management of the fixed income securities. The second part of the course provides an introduction into the basic concepts of derivatives. The course introduces three types of derivatives - Options, Futures and Swap - and outlines hedging and pricing techniques.

Assessment Methods and Criteria
  • Valid 01.08.2020-31.07.2022:

    1. Lectures
    2. Exercises and cases (50%)
    3. Written examination (50%). The examination will be based on the lectures, handouts and the course literature.

  • Applies in this implementation:

    Grading Policy

    The final grade (0
    – 5 scale) is based on total points (max 100 points); combining assignments (30
    %) and exam (70 %) points. To pass the course, you have to get at least 40% of
    exam points, i.e. 20 points. Conditional on that, your final grade is based on
    the following scale:  


    Final grade = 5


    Final grade = 4


    Final grade = 3


    Final grade = 2


    Final grade = 1

    0≤ x<50:

    Final grade = 0, Fail


    In this course, cheating
    and/or plagiarism (such as copying assignments and/or case studies used in other
    course and/or from other students) will result in a score of zero on the
    assignments. For example, if two individuals’ assignments are identical, BOTH
    will get a zero score on the assignments. Any
    types of cheating activities during the exams will result in, at a minimum, a
    grade of “0”.


  • Valid 01.08.2020-31.07.2022:

    Classroom hours 24 h
    Exercise hours 12 h
    Class preparation 34 h
    Exercise preparation 50 h
    Exam preparation 36 h
    Exam 3 h

  • Applies in this implementation:

    Exam (70%)

    Assignment (30%)

    There will be assignments
    including exercises and/or cases. Detailed instructions will be announced later
    through MyCourses.

    Assignment 1: upload 06.03;
    due date 12.03

    Assignment 2: upload
    28.03; due date 04.04 

    You have an option to make a group (max 4 people
    per a group) to do the assignments
    . One assignment per a group can be submitted and all the group
    members will get the same grade for assignments. Once you form a group and
    submit an assignment together, you have to maintain the group throughout the

    The deadline is strict. Late
    submission will be NOT allowed.


Study Material
  • Valid 01.08.2020-31.07.2022:

    Recommended text for fixed income part: Handbook of Fixed Income Securities by Pietro Veronesi
    Recommended text for the derivatives part: Options, Futures, and Other Derivatives by John C. Hull

    Other material distributed by the lecturer.

  • Applies in this implementation:

    Course Material

    The main reference for this course will be the class slides, which will be posted on MyCourses. The readings and other materials will also be provided through MyCourses. The exam will cover all materials and papers that appeared in the lecture notes.

    Recommended text for fixed income part: “The Handbook of Fixed Income Securities” by Frank
    J. Fabozzi and Steven V. Mann, 8th Edition

    Recommended text for the derivatives part: “Options, Futures, and Other Derivatives” by John C. Hull

Substitutes for Courses
  • Valid 01.08.2020-31.07.2022:

    Substitutes a course 28C00400 Derivatives and Risk Management. It is possible to include only one of these courses into the degree.

  • Valid 01.08.2020-31.07.2022:

    Rahoituksen perusteet or Principles of Corporate Financial Management

SDG: Sustainable Development Goals

    1 No Poverty

    8 Decent Work and Economic Growth


Details on the schedule
  • Applies in this implementation:

    Schedule and Contents

    Contents are tentative and are subject to change.


    Course Orientation and Introduction to Fixed Income Markets

    27.2, Wed

    Bond Pricing: Basic concepts

    4.3, Mon

    Bond Pricing: Duration and convexity

    #4.Yield Curve and Term Structure
    11.3, Mon  

    Fixed Income Investment Strategies

    13.3, Wed

    General Introduction to Derivatives, Introduction to Futures and Futures

    Options and Option Strategies

    20.3, Wed

    Exercise Session 1

    Options and Option Strategies – continued

    25.3, Mon

    Option Pricing – Binomial Trees

    27.3, Wed

    Exercise Session 2

    Option Pricing – Black-Scholes and Greeks

    1.4, Mon

    Securitization and the Credit Crisis of 2007

    3.4, Wed



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