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Financial Engineering in Property (ABPL90406)
Graduate courseworkPoints: 12.5Not available in 2024
Overview
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Property is the choice of investors amongst many avenues of asset classes and constitutes a significant share of the global wealth. The economic performance of most developed countries is influenced by the performance of their real estate markets. The property investment has witnessed numerous cycles of growth and recession, and is now considered as a mature and sophisticated market. In order to attract even wider participation, and to meet the appetite of diverse range of investors, newer instruments (in particular) real estate derivatives, are being developed across the globe. While financial and commodity derivative products are being used widely, financial engineering in property is relatively recent. These products have the potential to offer better returns and diversification, while prone to significant risks as the potential to destabilize the operating environment is large. It would be imperative to have better risk management capacity to configure and utilize these instruments.
The aim of this subject is to expose you to the linkage between structured finance and property markets, and the functioning of financial engineering products prevalent in Property domain, in particular real estate derivates, and to equip you with knowledge, skills required to understand, analyse and value different derivative instruments
This subject is designed to capitalise on the multi-disciplinary nature of participants. As such, it uses active discussions, interactive problem solving, peer review and group work, among other teaching and learning activities. In addition, the major assessment task is designed to allow for a significant amount of flexibility as you will be able to determine the focus of your own assignment. You will also be able to vote to determine subject content towards the end of the semester.
Intended learning outcomes
On completion of this subject, students should be able to
- Differentiate the main features of various structured products and demonstrate the applicability in real estate markets
- Learn to generate a base financial model for structured products
- Apply the understanding of the concepts of options, forwards, futures and swaps to property;
- Relate the linkages between risks in real estate and structured finance products, and formulate methods to mitigate the same.
- Examine various real estate derivative models being used in the industry
Generic skills
- Solve complex problems creatively, using a combination of systemic, design and analytical thinking
- Rapidly and correctly estimate quantities and their order of magnitude
- Work in teams and capitalise on interdisciplinary knowledge
- Provide constructive feedback to peers
- Communicate effectively using data visualisation techniques where appropriate
Last updated: 31 January 2024
Eligibility and requirements
Prerequisites
Code | Name | Teaching period | Credit Points |
---|---|---|---|
ABPL90026 | Property Development | Semester 1 (On Campus - Parkville) |
12.5 |
Corequisites
None
Non-allowed subjects
None
Recommended background knowledge
Knowledge and interest in property finance, interest to learn about how different financial products work and to relate property to broader financial and operating environment. Students are assumed to have reasonable knowledge of basic statistics (such as mean, median, expected value, standard deviation and variance) and basic finance concepts (like discounting/compounding, risk and return).
Inherent requirements (core participation requirements)
The University of Melbourne is committed to providing students with reasonable adjustments to assessment and participation under the Disability Standards for Education (2005), and the Assessment and Results Policy (MPF1326). Students are expected to meet the core participation requirements for their course. These can be viewed under Entry and Participation Requirements for the course outlines in the Handbook.
Further details on how to seek academic adjustments can be found on the Student Equity and Disability Support website: http://services.unimelb.edu.au/student-equity/home
Last updated: 31 January 2024
Assessment
Description | Timing | Percentage |
---|---|---|
Two in-class quizzes (cumulative 1500 words equivalent). Due week 3 and week 5 (15% each)
| Week 3 and Week 5 | 30% |
Applicability of financial engineering methods to a property market in a region. Group work, including oral presentation (5 minutes per student; group size 3 – 5), analysis and assumption notes, 1500 words equivalent per student (including the preparation for oral presentation) (10% oral presentation and 20% written report)
| Last day of teaching period | 30% |
Assignment on financial engineering products in property.
| 4 weeks after the last class | 40% |
Last updated: 31 January 2024
Dates & times
Not available in 2024
What do these dates mean
Visit this webpage to find out about these key dates, including how they impact on:
- Your tuition fees, academic transcript and statements.
- And for Commonwealth Supported students, your:
- Student Learning Entitlement. This applies to all students enrolled in a Commonwealth Supported Place (CSP).
Subjects withdrawn after the census date (including up to the ‘last day to withdraw without fail’) count toward the Student Learning Entitlement.
Last updated: 31 January 2024
Further information
- Texts
Prescribed texts
Real Estate Derivatives: From Econometrics to Financial Engineering by Radu S. Tunaru
- Available through the Community Access Program
About the Community Access Program (CAP)
This subject is available through the Community Access Program (also called Single Subject Studies) which allows you to enrol in single subjects offered by the University of Melbourne, without the commitment required to complete a whole degree.
Entry requirements including prerequisites may apply. Please refer to the CAP applications page for further information.
- Available to Study Abroad and/or Study Exchange Students
This subject is available to students studying at the University from eligible overseas institutions on exchange and study abroad. Students are required to satisfy any listed requirements, such as pre- and co-requisites, for enrolment in the subject.
Last updated: 31 January 2024