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2017/2018  KAN-CCMVI2067U  Investments: Financial Markets, Options and Derivatives

English Title
Investments: Financial Markets, Options and Derivatives

Course information

Language English
Course ECTS 7.5 ECTS
Type Elective
Level Full Degree Master
Duration Summer
Start time of the course Summer
Timetable Course schedule will be posted at calendar.cbs.dk
Max. participants 60
Study board
Study Board for MSc in Economics and Business Administration
Course coordinator
  • Course instructor - Mr. Shlomi Ben Yehuda, Tel Aviv University, sby.acc@cbs.dk
    Sven Bislev - Department of Management, Society and Communication (MSC)
In case of any academic questions related to the course, please contact the course instructor or the academic director, Sven Bislev at sb.msc@cbs.dk
Main academic disciplines
  • Finance
Last updated on 25/04/2018

Relevant links

Learning objectives
To achieve the grade 12, students should meet the following learning objectives with no or only minor mistakes or errors:
  • Learn the aspects of bonds, what influence the price and the effect of bankruptcy risk on the yield to maturity of the bond
  • Understand the effect of leverage on risk
  • Learn the basic characteristics of derivatives and the leverage hidden in that investment tool
  • Understand the process of financial markets movements and the roll derivatives play in stability and instability of financial markets
  • Understand how to recognize hidden derivatives in real "simple life" agreements and deals
  • Most important: understand how investments are characterized so better choose investments for private/firm portfolio
Course prerequisites
Completed social science Bachelor. Fundamentals in economics and finance
Investments: Financial Markets, Options and Derivatives:
Exam ECTS 7.5
Examination form Written sit-in exam on CBS' computers
Individual or group exam Individual exam
Assignment type Written assignment
Duration 4 hours
Grading scale 7-step scale
Examiner(s) One internal examiner
Exam period Summer, Ordinary exam: 31 July - 3 August 2018

Retake exam: September - October 2018

3rd attempt (2nd retake) exam: November - December 2018

Exam schedule is available on https:/​/​www.cbs.dk/​uddannelse/​international-summer-university-programme-isup/​courses-and-exams.
Aids Closed book: no aids
However, at all written sit-in exams the student has access to the basic IT application package (Microsoft Office (minus Excel), digital pen and paper, 7-zip file manager, Adobe Acrobat, Texlive, VLC player, Windows Media Player), and the student is allowed to bring simple writing and drawing utensils (non-digital). PLEASE NOTE: Students are not allowed to communicate with others during the exam.
Make-up exam/re-exam
Same examination form as the ordinary exam
If the number of registered candidates for the make-up examination/re-take examination warrants that it may most appropriately be held as an oral examination, the programme office will inform the students that the make-up examination/re-take examination will be held as an oral examination instead.
4 hour written sit-in exam, new exam question
Exam form for 3rd attempt (2nd retake): home project assignment, max. 15 pages.
Course content and structure

This course will cover the different investment assets and investment tools including debt (bonds), equity, derivatives and the cross relation between them. This will give the students a broad view on recent financial markets and the macro economy, markets that have developed and adjusted to the recent technology available for trading. 
 The course will cover recent and previous crisis, the correlation (or not?) of  financial markets to real economies, effects on savings, pension, risk taking etc.
 The roll of big investor (hedge funds, saving funds and others) will be examined, and a question mark on them supporting/damaging financial markets will be raised.

 The first part of the course will cover the debt market, including the recent developments in the interest rates and central banks.
 In the second part it will focus on options (and other derivatives) and emphasize the relation between risk and return.
 The third part will combine bonds and options, add equity (stocks) and show the link between the three, discussing Arbitrage and leverage.
 The forth part will use the previous material to explain the 2008 crisis, the hedge-fund industry, commodities prices, employee options and hedging, etc.


Preliminary assignment:

"Low interest rate:  the impact on investments and long term savings"

Please read the following short articles:
1. "The long-term impact of low rates" , September 9 2012, Financial Times 
2. "Why low interest rates are now doing more harm than good" , September 2 2016, The Telegraph 

Class 1&2. Bonds: structure, YTM (yield to maturity), duration, risk, yield curve and spreads; discussion in class.
Class 3. Options, basics, definition, graphical demonstration and Arbitrage; Hull chapter 9.
Class 4&5. Strategies, Put Call Parity (PCP), the Binomial model. Hedging and arbitrage, contingent claims. Demonstration: the option value of stocks, the effect on the debt ytm; Hull chapter 9,10,11.
Class 6&7. B&S model, the Greeks, evaluating employee options, volatility and the volatility index (VIX, the fear factor); Hull chapter 13,17.

Feedback activity: an optional "take home exam"


Class 8. Debt, leverage, derivatives and recent crisis; Hull 14,22,23.
Class 9. Futures, Commodity markets, Forex markets; Hull chapter 5
Class 10 The Macro Economy and current investments shift towards risk; discussion in class.
Class 11. The roll of big investor: hedge funds, mutual funds, algorithmic trading and stability/instability; discussion in class.

Teaching methods
Tests, lecture notes, case studies, in class examples, worksheets, excel spreadsheets, and articles from financial press, which will form the basis for of the class discussions.
Feedback during the teaching period
An optional "take home exam" based on the material covered so far.
Student workload
Preliminary assignment 20 hours
Classroom attendance 33 hours
Preparation 126 hours
Feedback activity 7 hours
Examination 20 hours
Further Information

Preliminary Assignment: To help students get maximum value from ISUP courses, instructors provide a reading or a small number of readings or video clips to be read or viewed before the start of classes with a related task scheduled for class 1 in order to 'jump-start' the learning process.


Course timetable is available on https://www.cbs.dk/uddannelse/international-summer-university-programme-isup/courses-and-exams.


We reserve the right to cancel the course if we do not get enough applications. This will be communicated on https://www.cbs.dk/uddannelse/international-summer-university-programme-isup/courses-and-exams end February 2018 at the latest.


Expected literature

Mandatory readings:


John C. Hull, "Options futures and other derivatives "
7th-10th edition

"The long-term impact of low rates" , September 9 2012, Financial Times 

"Why low interest rates are now doing more harm than good" , September 2 2016, The Telegraph 


Additional relevant readings:

"Pound's flash crash 'was amplified by inexperienced traders'", January 13 2017, the Guardian

"Do Hedge Fund Managers Misreport Returns? Evidence from the Pooled Distribution", Boolen and Pool, 2009, the Journal of Finance

" Mutual fund performance", Sharp, 1966, the Journal of Business

" Mutual fund performance", Fama and French, 2008, the Journal of Finance

"Bonuses don't have that much to do with performance", June 3 2015, The Telegraph

"Here’s all the money in the world, in one chart", January 29, 2016, MarketWatch 

"Boys will be boys: gender, overconfidence and common stock investments", Barber ans Odean, 2001, the Quarterly Journal of Economics



Last updated on 25/04/2018