Finance  |  Format: Flash

Introduction to Derivatives and Hedging: Part 2 of 3

Course Overview:

This course focuses on two specific types of derivative instruments: forward contracts and futures contracts. The course begins with an overview of forward contracts and a description of the unique characteristics of those contracts. Hedging practices through the use of forward contracts is reviewed, and the calculation of a forward contract's payoff is exhibited with examples and illustrations. Forward pricing is discussed and foreign exchange forwards and forward rate agreements are further defined and explained. The course concludes with a detailed review of futures contracts, and the subcomponents of futures markets, including futures exchanges, standardization features of futures contracts, market mechanics, the concept and use of futures margin and margin requirements, and the futures exchange clearinghouse, through which futures trades are cleared.

Learning Objectives:

After completing this course, the course participant should be able to:

  • Identify the unique characteristics of forward contracts.
  • Recognize appropriate hedging practices using forward contracts.
  • Identify the differences between futures and forwards.
  • Recognize the financial and operational risks associated with using futures contracts as hedging tools.
    Catalog Number: 99WAL03b-v2
    CPE Credits: 2 Registry / 2 QAS
    Author: Michael J. Walker
    Advanced Preparation:
    Knowledge of accounting and finance concepts, and basic derivatives terminology and mechanics
    Course Level: Basic
    Field of Study: Finance
    Content Partner: SmartPros Ltd.
    QAS: QAS Certified based on 50 minute hours.
    Course Type: Self-study
    Minimum Passing Grade: 70%
    Soft/Hardware Reqs.:  Adobe Acrobat® Reader for the .pdf files
     Adobe® Flash® Player 9 or higher
     56k or Greater Internet Connection
     Modern DHTML Compatible Browser
     Ram: 256 MB minimum
     Windows or Mac OS
    Release/Expiration Dates: Mar 24, 2015 / Dec 31, 2020