INTRODUCTION TO DERIVATIVES
Année du cours : 3 année(s)
Etablissement : IÉSEG School of Management
Langue : English
Formation(s) dans laquelle/lesquelles le cours apparait :
Période : S2
Basics of Financial Markets: knowledge about financial markets, primary assets such as stocks and bonds, valuation of primary assets, interest rates, compounding and discounting processes.
At the end of the course, students should have knowledge about the:
1. Mechanisms of the most used derivatives;
2. Broad principles of derivatives’ valuation and hedging;
3. Elaboration of simple computer-based tools (e.g. Excel) to manage/report derivative positions.
The objective of this course is to provide basic knowledge about most used derivatives (e.g. common financial derivatives products). Such knowledge deals with the nature of derivatives, usage and also implications for regulation and related regulatory changes. The focus is globally set on derivatives as well as their use for debt management.
The understanding of derivatives market starts from the diversity of derivatives traders and their different motives for trading such derivatives. Moreover, major derivatives instruments are introduced as well as their interest to risk management. In this light, the hedging properties of derivatives and related possible arbitrage opportunities are highlighted. However, derivatives are also subject to specific risks that investors or derivatives traders should notice.
The course is composed of 4 lectures to be taught across 6 sessions as follows:
• Lecture 1: Introduction, and institutional aspects of futures and forward contracts (2 sessions).
• Lecture 2: Determination of forward and futures prices, and hedging strategies using futures contracts.
• Lecture 3: Swaps (1.5 sessions).
• Lecture 4: Options markets, trading strategies, and exotic options (1.5 sessions).
