STAT30320

The purpose of this module is to provide students with a comprehensive understanding of modern financial markets and the instruments traded within them. The module introduces the structure and functioning of key markets including money, bond, mortgage, stock, foreign exchange, and derivative markets with a few towards trading strategies.

Students will develop both theoretical and practical insights into pricing, hedging, and trading across a wide range of financial instruments, including futures, forwards, swaps, options, exotic derivatives, credit derivatives, and energy/commodity products. Emphasis is placed on the application of financial mathematics (e.g., Black–Scholes, binomial models, Greeks, volatility smiles) and the use of trading simulations to reinforce learning through experiential practice.

This does not cover the mathmatical models for the pricing of fincial instruments that is covered in ACM30110 and STAT40930. Students are expected to have prior knowledge of:
Probability and Statistics – including distributions, expectations, variance, and regression.
Calculus and Linear Algebra – differentiation, integration, and matrix methods relevant to financial modelling.
Financial Mathematics – time value of money, interest rate calculations, and familiarity with basic asset pricing.
Stochastic Processes – an understanding of random walks and Brownian motion at an introductory level.
Derivative Basics – awareness of forwards, futures, and simple options (e.g. payoff structures).
A working knowledge of the Black–Scholes model, binomial option pricing, and hedging strategies is particularly important, as the module builds directly on these concepts. This is not an introductory finance module and is therefore not suitable for students without a solid mathematical background.