MONASH
BUSINESS
SCHOOL
BFC2751
Exam Matters
MONASH
BUSINESS
SCHOOL
Unit and Teaching Staff Evaluation
• Please evaluate via the online evaluation forms.
• Accessed through the Moodle block listed under the units
section in Moodle (http://moodle.vle.monash.edu/my/).
• Students will see “Fillout” tasks (surveys to complete)
within the block.
MONASH
BUSINESS
SCHOOL
Review of Financial Maths
Lectures 1‐2:
• Introduction.
• Derivative markets.
• Types of traders.
– Speculator, arbitrageur, and hedger.
• Characteristics of future.
– Margin, quotes, delivery, types of orders, et al.
• Perfect hedge: long and short hedge.
• Argument in favour and against hedging.
• Basis risk and cross hedge.
• Optimal hedge ratio.
MONASH
BUSINESS
SCHOOL
Lecture 3:
• Short selling and arbitrage.
• Forward pricing.
• Valuing forward.
• Future on consumption assets.
Lectures 4,5,7:
• Basic option characteristics.
• Naked options.
• Put‐call parity.
• Option trading strategies.
MONASH
BUSINESS
SCHOOL
Lectures 8,9,10:
• Binomial trees.
– No‐arbitrage approach.
– Risk‐neutral approach.
• Two‐step binomial model.
• Valuing call and put.
• BSM model.
– Assumptions.
– Calculation.
– Interpretation.
• Historical and implied volatility.
• BSM with dividends.
• Early exercise of American option.
MONASH
BUSINESS
SCHOOL
Lecture 11:
• Delta and Delta hedging.
• Gamma and Gamma hedging.
• Vega and Vega hedging.
• Theta and Rho (definition only).
MONASH
BUSINESS
SCHOOL
Before Exam: How to Revise
• Lecture notes
– For each topic, read, summarise, and practice.
• Theory questions
– Understand the concept, and describe it by using your
own words.
– Real‐world examples.
• Calculation questions
– Be familiar with formulas.
– Practice! Practice! Practice!
MONASH
BUSINESS
SCHOOL
Before Exam: How to Revise
• Tutorial questions
– Both theory and calculation questions.
– Check textbook for detail explanation.
• Questions on Moodle
– Some posted questions are really good.
• Practice exam will be available on Moodle
– Do no over rely on these practice questions.
• Tips
– Understanding.
– Pay attention to detail.
– Practice (step by step).
– Time management.
MONASH
BUSINESS
SCHOOL
Before Exam: Looking for Help
• Attend consultations.
– Information will be posted on Moodle.
– Individual feedback for assignment.
• Work in a study group.
• Post questions in Moodle discussion forum.
• Avoid last minute question.
• Special consideration by application.
– https://www.monash.edu/exams/changes/special‐
consideration
– Centralized.
MONASH
BUSINESS
SCHOOL
After Exam
• All failed papers will be second marked.
• The grade you receive is the final one.
• Teaching staff can not do anything and no one can.
• Exam feedback on Moodle.
MONASH
BUSINESS
SCHOOL
Final Exam
• 50 marks (weight 50%)
• Hurdle requirement
– To pass this unit a student must achieve at least 45% in
the final examination.
• Open book via Moodle.
– 2 hrs 10 mins reading time inclusive.
• Any model calculators are permitted.
• Formula sheet
– Download from Moodle.
– May not include all formulas you need.
MONASH
BUSINESS
SCHOOL
Final Exam
• What is examinable?
– Review of Financial Maths
– All materials covered in lectures and the corresponding
tutorials.
– "Securitization and the Credit Crisis of 2007" is not
examinable.
MONASH
BUSINESS
SCHOOL
Final Exam
• 6 short answer questions (50 marks)
– The marks of each question are different.
– Each question may has sub‐questions.
– Both theory and calculation.
• Q1: Weeks 1‐4
• Q2: All topics
• Q3: All topics
• Q4: Options trading strategies
• Q5: Options pricing
• Q6: Greek letters
MONASH
BUSINESS
SCHOOL
Final Exam
• Regarding mathematical symbols, enter
• “=” for equal,
• “>” for greater than,
• “<” for less than,
• “+” for plus,
• “‐” for minus,
• “/” for division,
• “*” for multiplication,
• “^” for exponent power (e.g., 2^2=8),
• “e^” for exponential function,
• “sq” for square root function,
• “( )” for bracket.
MONASH
BUSINESS
SCHOOL
Final Exam
• For calculation question, show your work step by step.
• You do not need to copy the formula; however, you must show
how you substitute the numbers into formula.
• For example, to calculate future value
– Appropriate answer is: Face value = 100*e^(0.1*1) = 110.52.
– Inappropriate answer is: Face value = 110.52.
• Marks will be deducted if you do not show your work step by
step as required.
• Keep 4 decimal points.
MONASH
BUSINESS
SCHOOL
Final words
• Hope you enjoyed the unit. 
• Good luck with your final exam and future career.

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