This course provides the concepts and tools necessary to understand and evaluate fincancial derivatives as well as their applications in corporations. More specifically, it presents and analyzes derivatives, such as forwards, futures, and options. The course defines the main kind of derivatives, shows how they are used to achieve various hedging and speculating objectives, introduces a framework for pricing derivatives, and studies several applications of derivative-pricing techniques outside derivative markets.

After completing this course the students should:

• Be aware of the principles behind financial derivatives (forwards, futures, swaps and options) and their role in corporate finance;
• Evaluate derivatives in a discrete time framework
• Be able to hedge equity risk, commodity risk and interest rate risk
• Provide tools to implement risk management policy.