• Select a specific financial asset traded in a spot market (e.g., specific fixed income security, common stock,
foreign exchange, or commodity contract). The student will specify one or more derivatives (e.g., specific
forward contracts, futures or options) that will be combined in a portfolio as part of a specific trading strategy
(e.g., hedge or speculative strategy)students will be required to submit a written report that discusses the
rationale for the trading strategy that was selected. The report will include detailed metrics concerning the
weekly returns of the portfolio suitable for students to report annualized average returns and standard deviation
in returns. Students will be required to assess reasons for the performance of their portfolio.
For the purpose of assurance of learning, the Derivatives Project will be assigned nine scores that are based
on the student’s ability to:
a. Score 1: Identify the financial environment pertaining to selecting assets for their portfolio (FINC LO1A);
b. Score 2: Extract appropriate financial and accounting data from various sources to support the analysis
(FINC LO1B);
c. Score 3: Use and appraise the data collected in a meaningful way (FINC LO1C); (The date should from the
week of the beginning of the semester to the end of the semester which is 9/13/2020 - 12/13/2020)
d. Score 4: Estimate the role of derivatives in enterprise value creation (FINC LO2A);
e. Score 5: Evaluate financial asset performance using relevant and appropriate benchmarks (FINC LO2B);
f. Score 6: Demonstration of resulting business strategies that may be driven by secondary ramifications (FINC
LO2C);
g. Score 7: Assess risk (uncertainty) (FINC LO3A);
h. Score 8: Justify her/his recommendation(s) (FINC LO3B);
i. Score 9: Interpretation of the impact of the global environment on derivative securities (FINC LO3C)
Sample Solution