Publication in the Diário da República: Despacho nº 13772/2014 - 12/11/2014
4 ECTS; 3º Ano, 1º Semestre, 60,0 TP , Cód. 905627.
Lecturer
- Renato Heitor Correia Domingues (1)(2)
(1) Docente Responsável
(2) Docente que lecciona
Prerequisites
Not applicable.
Objectives
By the end of the course, students should have an understanding of how the primary and secondary markets work, organised and unorganised markets, and know the history of European stock exchanges. As a second objective, they should be able to understand the derivatives market and its emergence, and distinguish between derivatives products that operate on organised and unorganised markets. They should also be able to distinguish the differences between futures derivatives and options. As a third and fourth objective, students should distinguish between forward and foward contracts and know how to calculate the expected value at any given time. Know how to calculate margin and the functions of the clearing house in futures contracts. Students should be able to develop risk management, speculation, arbitrage and investment strategies using futures contracts. The fifth and sixth objectives aim to ensure that students know how European and American options work, that they know how to determine the theoretical value of options using the Black and Sholes model, that they know how to develop investment, speculation and arbitrage strategies, and that they know how to develop risk management strategies. In objective seven, the aim is to learn what swaps are, to develop investment and risk management strategies and to understand opportunities for arbitrage and speculation.
Program
1. CAPITAL MARKETS
1.1 Primary market
1.2 Secondary market
1.3 Organised market
1.4. Unorganised market
1.5.PSI and international stock exchanges
2. DERIVATIVES MARKET INSTRUMENTS.
2.1 History and introduction to the derivatives market.
2.2 Organised and unorganised derivatives markets
2.3 Futures and options market.
3. FORWARDS OR FORWARD CONTRACTS.
3.1 Distinguishing between forwards and forward contracts.
3.2 Hedging risk with forward contracts
3.3 Determining the market value of forward contracts.
4. FUTURES MARKETS AND CONTRACTS.
4.1 Price formation.
4.2 Differentiating futures from forwards
4.3 Knowing what the clearing house is and its function.
5. OPTIONS.
5.1 Differentiating between European and American calls and puts
5.2 Charting the purchase and sale of calls and puts
5.3 Determining the value of options according to the Black and Sholes model
6. STRATEGIES WITH OPTIONS IN INVESTMENT DECISIONS AND SPECULATION.
6.1 Risk hedging strategies using options
6.2. arbritage strategies
6.3 Speculation strategies
7. SWAPS
7.1 Hedging strategies using swaps
7.2 Investment strategies using swaps with other financial assets.
Evaluation Methodology
Individual written works. Exam for those students who didn't reach the minimum mark of 10/20.Work with an oral test in class (30 per cent) and a written test (70 per cent).
Bibliography
- Brealey, R. e Myers, S. (2011). Principles of Corporate Finance. : McGraw-Hill
- Haugen, R. (2000). Modern Investment Theory. : Prentice Hall
- Pires, C. (2011). Mercados e Investimentos Financeiros. : Escolar Editora
Teaching Method
Theorical and pratical classes
Software used in class
