Fundamentals of the Derivative Markets (2014)
The derivative markets are the financial markets for derivatives, financial instruments like futures contracts or options, which are derived from other forms of assets. The market can be divided into two, that for exchange traded derivatives and that for over-the-counter derivatives. The legal nature of these products is very different as well as the way they are traded, though many market participants are active in both. Forwards, futures, swaps, options, hybrids (such as swaptions and options on futures) and a category called "other" (including credit derivatives and weather derivatives) make up the derivative markets (also called forward markets). The word is drawn from "derive" and means that the derivative instrument cannot exist on its own; it is closely related to "something" and this something is usually a cash (spot) market instrument and it is called the underlying instrument. This foundation course will expose participants to the context of the derivative markets, discuss key theoretical concepts of the derivative markets, and provide tools to analyze the essential characteristics of each derivative market.
After the course, the participants shoud be able to:
• Describe the elements that comprise the derivative markets;
• Explain the characteristics of the various types of forward contracts;
• Define the aspects and significance of futures markets;
• Prepare a contract either for interest rate, currency, equity, and commodity swaps; and
• Calculate the fair value prices of the derivative instruments.
The course consists of the following modules:
Module 1 Derivative Markets: Context
Module 2 Derivative Markets: Forwards
Module 3 Derivative Markets: Futures
Module 4 Derivative Markets: Swaps
Module 5 Derivative Markets: Options
Module 6 Derivative Markets: Other Derivatives
The debt market, made up of the money market and the bond market, is an important element of the financial system. The bond market, on which this course will focus, is usually seen as the market for long-term marketable debt instruments (i.e. bonds) and the money market as the market for short-term marketable debt instruments, such as commercial paper (CP) and treasury bills (TBs). The bond market can be described as the mechanism and/or conventions that exist for the issue of, investing in, and the trading of marketable instruments that represent the long-term undertakings (usually of a fixed capital nature) of the issuers. This course will expose participants to the broad financial system in the context of the bond market and discuss the specific structure, instruments, mathematics and other tools of the bond market in greater detail.
The intended audience includes members and employees of securities exchanges, dealers in other parts of the financial sector, financial market analysts, economists, company treasury managers and dealers, employees of treasury management companies, private sector bankers, central bankers, government treasury officials, large investors, trustees of retirement funds, corporate borrowers, and commodity manufacturers.
A certificate of completion will be issued by UNITAR to all participants who complete the course-related assignments and assessments successfully. Course schedule is subject to change. Course fee is non-refundable but transferrable to another course or participant and subject to change as per UNITAR's policy on pricing.