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Unit of study_

FINC6010: Derivative Securities

Semester 2, 2022 [Normal day] - Remote

This unit provides an introduction to derivative securities like options, futures and swaps. These securities are derived from fundamental securities such as equities and bonds. The unit examines the nature of each type of derivative security before a thorough treatment of the pricing and use of these securities for investment management and risk management purposes.

Unit details and rules

Unit code FINC6010
Academic unit Finance
Credit points 6
Assumed knowledge


Available to study abroad and exchange students


Teaching staff

Coordinator Quan Gan,
Type Description Weight Due Length
Final exam (Record+) Type B final exam Final exam
Short answer questions
50% Formal exam period 2 hours
Outcomes assessed: LO1 LO2 LO3 LO4 LO5
In-semester test (Record+) Type B in-semester exam Mid-semester exam
Multiple-Choice Questions
25% Week 08
Due date: 21 Sep 2022 at 14:00
50 minutes
Outcomes assessed: LO1 LO2 LO4 LO5
Assignment group assignment Assignment
Written report
25% Week 11 10 pages
Outcomes assessed: LO1 LO2 LO3 LO4 LO5
group assignment = group assignment ?
Type B final exam = Type B final exam ?
Type B in-semester exam = Type B in-semester exam ?

Assessment summary

  • Mid-semester exam: This is a closed-book exam covering the material for weeks 1-5.
  • Assignment: This is a group assignment and will involve solving a practical problem using derivative pricing and risk-management techniques. Each group may have up to 6 students, and members of a group may come from different lecture streams and/or tutorial groups.
  • Final exam: This is a closed-book exam and will assess all the material covered in this unit.

Detailed information for each assessment will be released on Canvas.

Assessment criteria

The University awards common result grades, set out in the Coursework Policy 2014 (Schedule 1).

As a general guide, a high distinction indicates work of an exceptional standard, a distinction a very high standard, a credit a good standard, and a pass an acceptable standard.

Result name

Mark range


High distinction

85 - 100

Awarded when you demonstrate the learning outcomes for the unit at an exceptional standard, as defined by grade descriptors or exemplars outlined by your faculty or school. 


75 - 84

Awarded when you demonstrate the learning outcomes for the unit at a very high standard, as defined by grade descriptors or exemplars outlined by your faculty or school.


65 - 74

Awarded when you demonstrate the learning outcomes for the unit at a good standard, as defined by grade descriptors or exemplars outlined by your faculty or school.


50 - 64

Awarded when you demonstrate the learning outcomes for the unit at an acceptable standard, as defined by grade descriptors or exemplars outlined by your faculty or school. 


0 - 49

When you don’t meet the learning outcomes of the unit to a satisfactory standard.

For more information see

For more information see guide to grades.

Late submission

In accordance with University policy, these penalties apply when written work is submitted after 11:59pm on the due date:

  • Deduction of 5% of the maximum mark for each calendar day after the due date.
  • After ten calendar days late, a mark of zero will be awarded.

Academic integrity

The Current Student website  provides information on academic integrity and the resources available to all students. The University expects students and staff to act ethically and honestly and will treat all allegations of academic integrity breaches seriously.  

We use similarity detection software to detect potential instances of plagiarism or other forms of academic integrity breach. If such matches indicate evidence of plagiarism or other forms of academic integrity breaches, your teacher is required to report your work for further investigation.

You may only use artificial intelligence and writing assistance tools in assessment tasks if you are permitted to by your unit coordinator, and if you do use them, you must also acknowledge this in your work, either in a footnote or an acknowledgement section.

Studiosity is permitted for postgraduate units unless otherwise indicated by the unit coordinator. The use of this service must be acknowledged in your submission.

Simple extensions

If you encounter a problem submitting your work on time, you may be able to apply for an extension of five calendar days through a simple extension.  The application process will be different depending on the type of assessment and extensions cannot be granted for some assessment types like exams.

Special consideration

If exceptional circumstances mean you can’t complete an assessment, you need consideration for a longer period of time, or if you have essential commitments which impact your performance in an assessment, you may be eligible for special consideration or special arrangements.

Special consideration applications will not be affected by a simple extension application.

Using AI responsibly

Co-created with students, AI in Education includes lots of helpful examples of how students use generative AI tools to support their learning. It explains how generative AI works, the different tools available and how to use them responsibly and productively.

WK Topic Learning activity Learning outcomes
Week 01 Derivatives securities: introduction and examples Lecture and tutorial (3 hr) LO1
Week 02 Futures markets and central counterparties Lecture and tutorial (3 hr) LO1
Week 03 Hedging strategies using futures Lecture and tutorial (3 hr) LO2 LO5
Week 04 Determination of forward and futures prices Lecture and tutorial (3 hr) LO4
Week 05 Swaps Lecture and tutorial (3 hr) LO1 LO4
Week 06 Mechanics of options markets Lecture and tutorial (3 hr) LO1 LO4
Week 07 Properties of stock options Lecture and tutorial (3 hr) LO4
Week 08 In-semester exam Lecture and tutorial (2 hr) LO1 LO2 LO4 LO5
Week 09 Trading strategies involving options Lecture and tutorial (3 hr) LO3
Week 10 Option pricing using binomial trees Lecture and tutorial (3 hr) LO4
Week 11 Option pricing using Black–Scholes–Merton model Lecture and tutorial (3 hr) LO4
Week 12 The Greek letters Lecture and tutorial (3 hr) LO5
Week 13 Information and trading, and review Lecture and tutorial (3 hr) LO5

Study commitment

Typically, there is a minimum expectation of 1.5-2 hours of student effort per week per credit point for units of study offered over a full semester. For a 6 credit point unit, this equates to roughly 120-150 hours of student effort in total.

Required readings

Options, Futures, and Other Derivatives, Global Edition, 11th edition by John C. Hull, 

  • Publisher ‏ : ‎ Pearson; 11th edition (4 October 2021)
  • Language ‏ : ‎ English
  • Paperback ‏ : ‎ 880 pages
  • ISBN-10 ‏ : ‎ 1292410655
  • ISBN-13 ‏ : ‎ 978-1292410654


Learning outcomes are what students know, understand and are able to do on completion of a unit of study. They are aligned with the University's graduate qualities and are assessed as part of the curriculum.

At the completion of this unit, you should be able to:

  • LO1. identify and distinguish between the various forms of derivatives instruments
  • LO2. apply futures strategies for long and short hedge
  • LO3. apply option strategies such as covered calls, spreads and combinations
  • LO4. price options, futures and swaps
  • LO5. utilise options and futures contracts for portfolio management purposes.

Graduate qualities

The graduate qualities are the qualities and skills that all University of Sydney graduates must demonstrate on successful completion of an award course. As a future Sydney graduate, the set of qualities have been designed to equip you for the contemporary world.

GQ1 Depth of disciplinary expertise

Deep disciplinary expertise is the ability to integrate and rigorously apply knowledge, understanding and skills of a recognised discipline defined by scholarly activity, as well as familiarity with evolving practice of the discipline.

GQ2 Critical thinking and problem solving

Critical thinking and problem solving are the questioning of ideas, evidence and assumptions in order to propose and evaluate hypotheses or alternative arguments before formulating a conclusion or a solution to an identified problem.

GQ3 Oral and written communication

Effective communication, in both oral and written form, is the clear exchange of meaning in a manner that is appropriate to audience and context.

GQ4 Information and digital literacy

Information and digital literacy is the ability to locate, interpret, evaluate, manage, adapt, integrate, create and convey information using appropriate resources, tools and strategies.

GQ5 Inventiveness

Generating novel ideas and solutions.

GQ6 Cultural competence

Cultural Competence is the ability to actively, ethically, respectfully, and successfully engage across and between cultures. In the Australian context, this includes and celebrates Aboriginal and Torres Strait Islander cultures, knowledge systems, and a mature understanding of contemporary issues.

GQ7 Interdisciplinary effectiveness

Interdisciplinary effectiveness is the integration and synthesis of multiple viewpoints and practices, working effectively across disciplinary boundaries.

GQ8 Integrated professional, ethical, and personal identity

An integrated professional, ethical and personal identity is understanding the interaction between one’s personal and professional selves in an ethical context.

GQ9 Influence

Engaging others in a process, idea or vision.

Outcome map

Learning outcomes Graduate qualities

This section outlines changes made to this unit following staff and student reviews.

More background information and guidance will be offered with the assignment.


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