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| This series expands on the introductory information provided in Derivative Instruments to present a more in–depth look at forwards and futures. It explores the definitions, pricing and applications of the different types of contracts, including forward rate agreements (FRAs), short–term interest rate futures, bond and note futures, and stock index futures. The series also explains the different types of risk associated with forwards and futures. |
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Who should take this course: |
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Traders, sales professionals, back office professionals, financial analysts, cash/money managers, auditors, compliance professionals, financial and bank officers, accountants and regulators. |
Prerequisites: |
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Derivative Instruments or equivalent level of knowledge |
Training Hours/CPE Credits: |
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6 |
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Modules |
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Introduction to Forwards and Futures - Online |
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| Module Code |
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derv_3011 |
| Level |
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Basic |
| Training Hours/ CPE Credits |
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1 |
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Module Description:
This module provides a basic overview of forwards and futures. |
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| Learning Objectives: |
| After completing this module, you'll be able to:
Identify the similarities between forwards and futures.
Recognize the components of the forward price.
List the credit risks involved in forwards and futures transactions.
Identify the differences between forwards and futures. |
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Forward Rate Agreements (FRAs) |
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| Module Code |
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derv_3012 |
| Level |
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Basic |
| Training Hours/ CPE Credits |
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1 |
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Module Description:
This module covers Forward Rate Agreements, or FRAs. FRAs are one type of forward contract, in which two counterparties agree on an interest rate to be paid on a "deposit" or "loan" at a future date.This module will look at how interest accrues on these agreements, the factors necessary to hedge with an FRA, the uses of FRAs in speculating, and how a forward curve is constructed. |
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| Learning Objectives: |
| After completing this module, you'll be able to:
Describe how interest accrues on forward rate agreements.
Identify key factors necessary to hedge with an FRA.
Identify the uses of FRAs in speculating.
Describe the forward curve and how it is constructed. |
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Short-Term Interest Rate Futures |
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| Module Code |
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derv_3013 |
| Level |
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Basic |
| Training Hours/ CPE Credits |
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1 |
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Module Description:
This module explores short-term non-government denominated interest rate futures. Specifically, characteristics of short-term interest rate futures, quoting conventions, how futures are listed, applications of short-term interest rate futures, uses for short-term interest rate futures contracts, basis risk, strips, and the role of Eurodollar futures in pricing other products. |
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| Learning Objectives: |
| After completing this module, you'll be able to:
Identify short-term interest rate future specifications.
Recognize the different applications of short-term interest rate futures.
Describe what basis risk is and how it is determined.
Recognize how strips are used to create synthetic futures rates and to price other derivative products. |
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Note and Bond Futures |
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| Module Code |
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derv_3014 |
| Level |
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Basic |
| Training Hours/ CPE Credits |
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1 |
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Module Description:
This module covers futures contracts based on fixed income securities. These futures contracts enable you to fix the price of a bond today to be bought or sold in the future. We'll start out by introducing contract specifications and conversion factors, and then work our way through the cheapest to deliver scenario, invoice amounts and accrued interest, pricing, and cash and carry. The module wraps up with a discussion of implied repo rates, finding the cheapest to deliver bond, and hedging with bond and note futures. |
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| Learning Objectives: |
| After completing this module, you'll be able to:
Identify the standard elements of note and bond futures.
Define the function of the conversion factor.
Describe how the cash and carry process determines bond futures pricing.
Recognize the methods for identifying Cheapest To Deliver bonds.
Identify the two measures of bond risk as they're related to hedging. |
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Stock Index Futures |
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| Module Code |
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derv_3015 |
| Level |
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Basic |
| Training Hours/ CPE Credits |
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1 |
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Module Description:
This module covers Stock Index Futures. These are futures contracts based on stock market indices as the underlying asset. This module will look at the characteristics of a stock index futures contract, how to determine the fair futures price, program trading, using stock index futures, and adjusting hedge ratios for beta. |
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| Learning Objectives: |
| After completing this module, you'll be able to:
Define the methods used to weight an index.
Identify characteristics of stock index future contracts.
Describe how to adjust the hedge ratio for beta. |
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Risks of Forwards and Futures |
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| Module Code |
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derv_3016 |
| Level |
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Basic |
| Training Hours/ CPE Credits |
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1 |
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Module Description:
This module discusses the various risks involved in using futures and forwards. Many of these risks apply to all kinds of financial instruments but some are particular to these derivatives. The main ones are: Market Risk, Liquidity Risk, Sovereign Risk, Credit Risk, Replacement Risk, Settlement Risk, Basis Risk, and Roll Risk. |
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| Learning Objectives: |
| After completing this module, you'll be able to:
Identify the risks associated with forwards and futures. |
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