Course:FRE517/Syllabus

COURSE INFORMATION

Session and term: 2024W2 Class location: MCML154

Class times: M/W 3:30pm to 5pm Lab times: N/A

Course duration: Feb 26 2024 to Apr 10 2024 Credits: 1.5

COURSE DESCRIPTION

This course explores the use of risk management tools in the lumber commodity and foreign exchange markets. In the context of these two markets, students will get a practical understanding of using futures and options to hedge and to speculate. The course will begin with knowledge of the lumber cash market and how the various players use futures to hedge their cash positions. We will then follow the life of a futures trade to compare futures and cash pricings; this overview will subsequently form the foundation to understand basis in futures trading. In the next stage, we will incorporate foreign exchange risks in international trade and take a look at other derivative products. As the course progresses, students will integrate and build upon concepts and skills from this and different courses in order to manage practical problems at hand. Class participation will be encouraged to simulate a trading floor where ideas and information are openly discussed.

INSTRUCTOR

Instructor: Jacqueline Wong, MBA

Email: jac.wong@ubc.ca

Course Assistant: Vivek Jairam, MFRE

Email: vivekjb@mail.ubc.ca

LEARNING OUTCOMES

By the end of this course, students will be able to:

Describe macroeconomic factors that affect supply and demand in domestic and global markets and the subsequent effects on commodity pricings.
Understand how commodities are traded in cash markets, explain the risks involved and be able to apply options and futures to manage these exposures.
Identify basis opportunities and express the views through futures and options trades.
Analyze the pros & cons of various hedging strategies in the perspective of different market players along the supply chain as well as that of the investment community.
Evaluate and explain the dynamics of speculation vs hedging in the futures market that determine futures pricing.
Integrate data (such as spreads) & current market information with pricing analysis and forecasts to make informed hedging / speculative decisions.

ASSESSMENTS


Participation	Throughout the term	10%
Assignments 1, 2, 3	Best 2 of 3 assignment	30%
Trading Simulation	Weekly Log / Journal	20%
Midterm		25%
Final Report		15%
TOTAL		100%

READINGS

No assigned textbook.

PARTICIPATION

Collaboration by sharing information and ideas is an important part of a trading floor. The constant and open flow of information form the basis for market view and subsequent trading strategy.

In this context, participation is important; for the purpose of this course, participation will have both quantitative and qualitative components. I-Clicker will be used in classes to keep track of participation but only correct answers will receive points. Students will get the chance to contribute contents during classroom discussions to receive additional points.

Trading Simulation

The trading platform will be used to practice trading futures. Students must put on a minimum of 10 trades each week. Each student will need to state whether the objective of the trades is for hedging or speculation, explain the market view and industry setting.

Students are expected to log their activities each week to explain and monitor their trading decisions. Examples will be given provided in the first class to demonstrate what is expected from these logs.

COURSE SCHEDULE

Weeks	Topic	Assignment / Midterm
1	Introduction – Risk Management and the relevant Financial Tools
2	Lumber Trading in North America Cash and Futures/Options	#1 – Futures to Forwards (Mar 11)
3	Basis in Lumber Trading Position Maintenance – Margin, Roll / Exit, EFP, OI / Volume	#2 – Arbitrage (Mar 18)
4	Introduction – Foreign Exchange FX Risk in Lumber
5	Review Exchange and OTC Products – FX / Commodities	Midterm (Mar 27)
6	Easter Monday Speculation using Options	#3 – FX & Options (Apr 8)
7	Pricing Analysis & Forecast Technology, Data and AI	Final Report (Apr 26)

MFRE PROGRAM - COURSE PROTOCOL POLICIES

Recordings

There is no required distribution of recordings of class. Recording will be provided based upon on the decision of the course instructor. Classes are designed as and are intended to be in‐person.

Copyright

All materials of this course (course handouts, lecture slides, assessments, course readings, etc.) are the intellectual property of the instructor or licensed to be used in this course by the copyright owner. Redistribution of these materials by any means without permission of the copyright holder(s) constitutes a breach of copyright and may lead to academic discipline and could be subject to legal action. Further, audio or video recording of classes are not permitted without the prior consent of the instructor.

Missing Classes/Labs

Students are expected to attend all classes, labs, or workshops. If you cannot make it to a class, lab, or workshop due to a medical or personal emergency, please email your instructor, your course assistant, and Olivier Ntwali, MFRE Program Coordinator ahead of time to let them know.

Respectfulness in the Classroom

Students are expected to be respectful of their colleagues at all times, including faculty, staff and peers. This means being attentive and conscious of words and actions and their impact on others, listening to people with an open mind, treating all MFRE community members equally and understanding diversity.

Respect for Equity, Diversity, and Inclusion

The MFRE Program strives to promote an intellectual community that is enhanced by diversity along various dimensions including status as a First Nation, Métis, Inuit, or Indigenous person, race, ethnicity, gender identity, sexual orientation, religion, political beliefs, social class, and/or disability. It is expected that all students and members of our community conduct themselves with empathy and respect for others.

Centre for Accessibility

The Centre for Accessibility (CfA) facilitates disability‐related accommodations and programming initiatives designed to remove barriers for students with disabilities and ongoing medical conditions. If you are registered with the CfA and are eligible for exam accommodations, it is your responsibility to let Olivier Ntwali, Academic Program Coordinator, and each of your Course Instructors know. You should book your exam writing with the CFA using its exam reservation system: for midterm exams or quizzes, at least 7 days in advance; and final exams, 7 days before the start of the formal exam period.

MFRE PROGRAM - ACADEMIC HONESTY POLICIES

Plagiarism and Academic Dishonesty

Academic dishonesty and plagiarism are taken very seriously in the MFRE program. All incidences of plagiarism will be escalated to the MFRE Academic Director with penalties ranging from a mark of zero on the assignment, exam or course to being required to withdraw from the program. Note: If a student needs to extend his/her program due to a failed course or unsatisfactory progress, they will have to pay the full MFRE tuition fees for that term/s.

Academic misconduct that is subject to disciplinary measures includes, but is not limited, to the following:

Plagiarism, which is intellectual theft, occurs where an individual submits or presents the oral or written work of another person as his or her own. In many UBC courses, you will be required to submit material in electronic form. The electronic material will be submitted to a service which UBC subscribes, called TurnItIn. This service checks textual material for originality. It is increasingly used in North American universities. For more information, review TurnItIn website online.
Using Generative Artificial Intelligence (AI) tools like ChatGPT, Bard, or other Generative AI models to generate content or conduct analysis for evaluations, without proper citation and or if asked not to use AI, is considered plagiarism and academic misconduct. If students use AI in their submissions, they must cite the AI generator using citations consistent with the UBC Academic Honesty Standards.
Cheating, which may include, but is not limited to falsification of any material subject to academic evaluation, unauthorized collaborative work; or use of unauthorized means to complete an examination.
Working with Others on an Assignment: You are encouraged to work with other students, but you must turn in your own individual assignment. If you have an answer that is too close to another student’s answer, this will be considered academic dishonesty and this will be handled according to the MFRE and UBC policies.
Resubmission of Material, submitting the same, or substantially the same, essay, presentation, or assignment more than once (whether the earlier submission was at this or another institution) unless prior approval has been obtained from the instructor(s) to whom the assignment is to be submitted.
Use of academic ghostwriting services, including hiring of writing or research services and submitting papers or assignments as his or her own.

Student Responsibility: Students are responsible for informing themselves of the guidelines of acceptable and non‐acceptable conduct for examinations and graded assignments as presented via MFRE Code of Conduct; MFRE Turn it in, Course Syllabus, MFRE Instructors; Canvas and UBC academic misconduct policies.

Penalties for Academic Dishonesty: Penalties for academic dishonesty are applied at the discretion of the MFRE program. Incidences of academic misconduct may result in a mark of zero on the assignment, examination, or course, required withdrawal from the program, and/or the matter being is referred to UBC Graduate Studies.