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IV. Derivatives
TThe globalization of business, paired with rapid technological changes and increased volatility in financial markets, has changed the risk profiles of many companies dramatically. Firms respond by embracing the concept of financial risk management through a panoply of derived products that aim to neutralize excessive financial risks. However, because of their speculative nature, most derivatives are, a priori, not compliant with Islamic financial principles. The objective of this fourth module, “Derivatives” , thus is to expose derived financial products and consider carefully how far they might be integrated into Islamic financial markets.
4.1 & 4.2.Derivatives I and II: Analysis and management of conventional derivatives
The goal of Derivatives I and II is to provide a thorough understanding of derivative instruments and advanced topics in risk analysis and management. Mathematical, statistical, and programming lessons will enable students to apply the theoretical concepts in the real, and imperfect, world.
Derivatives I provides an introduction to linear and non-linear derivatives, option pricing models, model input estimations, and hedging.
Derivatives II addresses the advanced topics such as risk analysis, value-at-risk concepts, parametric and non-parametric techniques for simulations, pricing of interest rate derivatives, and volatility in derivative positions.
4.3. Derivatives III (Islamic derivatives)
This course is devoted to the utilization of Islamic financial instruments to mitigate risks. One of the main topics that will be discussed will be the techniques that can be used to manage risk in Islamic finance without violating the teaching of the Sharia’. At the end of this module, participants will have a clear view of risk analysis and risk management in conventional and Islamic finance frameworks.
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