Develop a comprehensive, practical understanding of forwards and futures including market conventions, contract specifications, valuation, and trading strategies. In this course – Forwards and Futures, the basic financial theories and concepts relevant to the topic will be discussed. The relationship between Forwards and Futures and the underlying security will also be explained. We'll also review concepts such as cost of carry, transportation, storage, and convenience factors that should be incorporated in the valuation of Forwards and Futures.
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Forwards and Futures play an extremely important role in the current world of finance and investment. Long-term investors, speculators, and hedgers extensively use them. They enable market participants to establish large positions with smaller market impacts and lower transaction costs. Many Forward and Future contracts are in fact much more liquid than the underlying securities, and sometimes trade a larger volume than the underlying markets.
This course also looks into the application of Forwards and Futures in equity, commodity, and interest rate markets. The importance of margin in Future trading, type of contracts, and their specifications such as size, maturity, and pricing standards are also explored.
Forwards and Futures are important hedging tools used by individuals as well as institutions and companies. Therefore, it is important to examine the concept of hedging and the role of Forwards and Futures.
This course is part of the Derivatives Professional Certificate.
What you'll learn
- Explain Forwards and Futures and their applications in finance.
- Understand the valuation of Forwards and Futures, and concepts such as interest rate, cost of carry, storage, and convenience charge.
- Understand Forward interest rate and bootstrapping.
- Apply Forwards and Futures to physical commodities such as wheat, oil and financial securities such as interest rates, currencies and equities.
- Understand Forwards and Futures trading, margin, and contract specifications.
Syllabus
Module 01: Fundamentals
Module 02: Forwards and Futures Contracts
Module 03: Forwards and Futures Valuation
Module 04: Commodity Markets
Module 05: Hedging with Forwards and Futures
Module 06: Short Term Financial Forwards and Futures
Module 07: Long Term Financial Forwards and Futures
