A Comprehensive Overview of Derivatives
A Comprehensive Overview of Derivatives is a comprehensive, modular, self study CPD Workbook for financial advisors.
This Workbook is aimed at those who either need to or want to have a sound understanding of the basics of derivatives. Specifically:
- Financial advisors.
- Management or staff who are involved in providing financial services and investment advice and who are not licensed to deal in derivatives.
- Management or staff of companies or organisations that are using derivatives for hedging exchange risk, interest rate risk or market risk.
The Workbook is written in a bullet point style that is very easy to read and understand (Refer to the Table of Contents for additional detail). At the end of each chapter are review questions for you to test your comprehension of the material.
When you have completed this Workbook, you have the option of writing a non-qualifying exam on the content, and the exam is marked remotely. Exam certificates are issued to those who successfully complete the passing requirements.
The Scope of This Workbook
Even if you do not have any previous understanding of derivatives, completing this easy to read and understand Workbook will quickly give you a sound grasp of forwards, futures and options, including the major types of contracts plus major strategies.
Either directly or indirectly, derivatives touch the lives of all of us:
- Derivatives are used by the vast majority of financial institutions: banks, insurance companies, fund managers, as well as unit and investment trusts. They are used to manage the three fundamental financial risks: interest rate risk, exchange rate risk and market risk.
- Consequently, derivatives are fundamental tools in managing the profitability of a wide diversity of organisations.
- Derivatives are also used by many businesses in all sectors of the economy to manage the same three risks mentioned above as they affect their own business operations (e.g. using a futures contract to lock in a market price for a commodity that is used in the business).
We find that most business people who wish to make the most of their career opportunities welcome the opportunity to acquire a basic understanding of derivatives, especially when presented in the easy-to-read-and-comprehend format of this Workbook.
The Purpose of this Workbook
- Broaden and deepen your general knowledge with respect to derivatives.
- Help you, where necessary, meet your Continuing Professional Development requirements as effectively as possible.
- Help you identify and leverage appropriate opportunities for self development and career advancement through a broader based understanding of derivatives.
This Workbook is not written with the intention of helping students pass any derivatives, options or futures licensing exam. However, using this Workbook in conjunction with licensing course material should help the student, considerably.
With respect to self study CPD hours, this Workbook represents 35 CPD self study hours.
Studying for and writing the optional exam will qualify for approximately another 15 CPD study hours.
Summary of the Content
Section 3 - Option Based Derivatives
- Introduction
- Overview of Equity Options
- Pricing Of Options
- Basic Option Strategies
- Non-Equity Options
- Option Like Corporate Securities and Bonds with Embedded Options
- Option Like Securities Issued by Third Parties
- Over the Counter Interest Rate Options
Section 4 - Swaps
- Introduction
- Interest Rate swaps
- Currency Swaps
- Other Types of Swaps
- Other OTC Traded Derivatives
Section 5 - Operational Considerations
- Risk Assessment, Valuation and Monitoring
Section 1 - An Overview of Derivatives
- The Definition of a Derivative
- Common Features of all Derivatives
- Types of Derivatives
- Option-Based Derivatives
- Forward-Based Derivatives
- Key Differences Between an Option and a Forwar-Based Derivative
- Exchange Traded Derivatives
- Over the Counter Derivatives
- Key Differences Between Exchange Traded and Over the Counter Traded Derivatives
- Types of Underlying Interests
- Why Derivatives are Useful (Risk Reductin/Hedging, Cost Reduction, Market Entry and Exit, Yield Enhancement, Speculation, Arbitrage)
- Operational Considerations
- Review Questions
Section 2 - Forward Based Derivatives
- Introduction
- An Overview of Forward-Based Derivatives
- Futures Exchanges and Clearinghouses
- Pricing of Forward-Based Derivatives
- Hedging With Futures Contracts
- Speculation With Futures Contracts
- Interest Rate Futures
- Stock Index Futures
- Currency Futures
- Over the Counter Forwards
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Comprehensive Overview of Derivatives
