Dakota State University
BUS 418 Financial Futures & Options
Spring 2001

Additional Comments

Futures and Options

Futures and options markets exist in order to redistribute risk. But hedgers could not reduce their risk if there were not some speculators willing to take the other side of the transaction.

The Management Information System in the Course

Management information systems are sweeping the business world. We will use a very small MIS to manage this course, a one-course-only intranet using Web technology. This site is at 

http://www.courses.dsu.edu/finance/bus418/bus418.htm

The intranet makes possible the fast, efficient, and timely distribution of announcements, course information, document files, student grade spreadsheets, and other material and also provides pertinent links to other Web sites both on- and off-campus. The Announcements page especially should be consulted daily. It not only allows you to receive information quicker than waiting for class, it also archives all announcements as well as assures you that you have not missed any announcements.

Class 

Much of the material presented in class is found in your textbook, and the transparencies should serve as notes to supplement the textbook. Both of these materials are things you can read on your own. However, futures and options tend to be challenging topics to study. Class time is best spent on the more difficult material and in relating current events in the markets and/or in the financial and economic worlds to the material being studied at the moment. Therefore do not hesitate to ask questions in class, either about the material being studied at the moment or about futures and options or finance or investments in general. 

Much of the class period will be given to discussion, particularly discussion of the current markets as well as the futures contracts that members of the class are following as part of their futures contract study projects. The futures markets will be open during the class so we can use the Web to get current delayed quotes.

The course is a course on financial futures and options. Hence, the exams and projects will involve financial futures and options. However, it is often easier to understand financial futures by starting with those based on physical commodities, like corn. (Your textbook takes this approach.) Class discussion can involve any kind of contract- pork bellies, live cattle, corn, Eurodollars, T-bonds, etc. - especially as the contracts demonstrate characteristics of futures markets and trading.

While the Futures Market Contest is running, the daily standings and performance of contestants will be discussed in class. (Standings are determined daily because of marking to market.)
 

Handouts/Downloads

There will be a significant number of handouts/downloads during the semester. These handouts and downloads will reflect current events or will supplement the textbook, e.g., technical analysis, up-to-date contract specifications and margins.

Communication Skills

English is a rich, powerful language with a huge vocabulary capable of exquisite precision. English has become the de facto international language. Individual disciplines like finance and any other field also have languages of their own. It is just as important to master these specialized vocabularies and usages as it is to use Standard English. You should strive to sound like you know what you are talking about. 

Class Presentations

During the semester each student in the class will give two presentations on the futures contract that he or she is studying for the semester. These reports should be no longer than about three minutes, but class discussion of the reports may extend beyond that. 

The reports will generally take the following format:
1. A transparency showing the updated chart of the contract being followed.
2. A report of gain or loss (in ticks and dollars) per contract. 
3. A report on the latest news involving the asset or index upon which the contract is based.
4. A projection for the price behavior of the futures contract until the next class presentation.
5. And news about the contract itself, e.g., change in specifications, scandals, new trading techniques, etc.

A schedule for the reports will be published later.

Futures Contract Study Project

More detailed information about the format and contents of the futures contract study project will be given later in the semester. However, you will be working on the project throughout the semester. Computer assignments and class presentations are part of the project. You should start collecting price data immediately. Also, collect news stories about the underlying asset or index throughout the semester. We will discuss this in class at the beginning of the semester.
 

Allowable Contracts to Study

Precious Metals

	Gold					Silver			    	 	
	Platinum				Palladium

Interest Rate

	Treasury Bonds				Treasury Bills
	Treasury Notes				Eurodollars
	5-yr Treasury Notes			
	2-yr Treasury Notes			
				

Currencies

	Yen					British Pound
	Deutschemark				Mexican Peso
	Canadian dollar				Swiss franc
        Australian dollar			Euro FX
	Brazilian real				French franc

Index

	DJIA					Nikkei 225 Stock Average
	S&P 500					NASDAQ 100
	S&P Midcap 400				Russell 2000
	CAC-40 Stock				FT-SE 100
	DAX-30 German Stock			U.S. Dollar
	NYSE Composite

Each student must choose a different contract to study. Some contracts obviously will be highly correlated with each other, being influenced by the same fundamental and technical factors.

Class Notes

I will use a set of class notes that will help you digest the material in the course's textbook as well as include other material. I convert these notes into transparencies for class use. You can download the notes from the Web site. You could print the notes as they are but the big advantage of getting the files is that you can tailor the notes to suit your own purposes, as well as greatly reduce the size of the printouts.

Download and modify these notes before class and bring them with you. Then you can listen to the lectures and discussions and make additional marginal notes instead of spending all your time frantically trying to copy down what is on the screen. 
 

Study Guides

A study guide will be produced for each unit. The guide will include reading assignments and problem assignments from the textbook. They will also include a detailed set of objectives that will guide your studying for exams. Hardcopies of these study guides will be given out in class. Asterisks on the list indicate objectives that will definitely be on an exam. A binder in the library will contain solutions to assigned problems.

The study guides will also be available on the Web. You can view them directly, print them directly from a browser, or download the files. Again, the big advantage of getting the files rather than simply the documents is that you can tailor the files to your specific purpose. A good way to use the objectives is to insert a large blank between the objectives and then to write the appropriate answer in the blank space. The process of writing the answer helps you learn the material and once you have the filled in objectives, studying for exams becomes much easier. For some objectives, of course, you will not be able to write in the answer because it will be about a calculation to perform, etc.

Getting Extra Help

When coming in for extra help bring
a) your textbook c) the problem assignments you've attempted and
b) a calculator      d) an open and eager mind
You can also contact me easily by e-mail. See the BUS 418 Web site. 

ADA Statement

If there is any student in this class who, due to a disability, has need for non-standard note taking, test taking, or other course modification, please feel free to come and discuss this with me privately, as soon as possible. Also, please contact the DSU ADA Coordinator, Nancy Moose, 256-5146, located in the Student Services Center.

Attendance 

It is expected that you will attend class regularly and complete assignments on time. Late reports are penalized points. 

Academic Dishonesty

Academic dishonesty includes, but is not limited to, plagiarism, copying answers or work done by another student either on an exam or on an out-of-class assignment, allowing another student to copy from you, and using unauthorized materials during an exam. I will determine the appropriate penalty for academic dishonesty. Such penalty may include, but is not limited to, failure on an exam or assignment or failure in the course.