Fundamentals of financial markets

Cash instruments, derivatives and associated risks

Course objectives

  • Understand the role of financial markets in the economy and the functioning of cash products
  • Master the mechanics of derivatives and options
  • Address the definition of measurement and management" of the various risks : equity, interest rate and exchange

What is the role of markets?

  • The functions of financial markets
  • The cash and derivatives markets: equity, fixed income, foreign exchange, credit

Actors in the financial market

  • Motivations and inte-relations: State, companies, individuals, banks, asset management companies ...
  • Roles and activities of investment banks

Case Study: Construction of a simplified bank balance sheet

  • Regulatory organizations in France: AMF, ACP, ECB

Cash products: how does it work?

  • Equity
  • Money Market products and Bonds

Case Study: Why do bond prices fall when rates rise?

  • Foreign exchange Products

What is a firm derivative?

  • Forwards and Futures: principles and applications by market
  • Forward exchange

Case Study: Excel Calculation of a hedge by Futures / forward exchange

  • The world of Swaps
    • IR Swaps: mechanism, examples of use

Case Study: How to make a fixed rate loan?

Optional derivatives

  • Underlying Equity
    • Stock options: Call / Put
    • Settings and price sensitivities: measuring risk
    • Usage: hedging / leverage
  • Underlying Rate / Change
    • Adaptation to the world of interest rate and foreign exchange
    • What strategies for hedging or risk-taking?
  • Underlying credit
    • What is a CDS?
    • Uses and risks

Case Study: Analyze optional strategies

Sources of risk

  • Foreign exchange risk
  • Risk of fluctuations in bond prices
  • Risk of fluctuations in stock prices
  • Risk of fluctuations in commodity prices
  • Volatility of commodity prices
  • Forwards and futures
  • Delivery risk / liquidity risk

Hedging practices

  • Hedging of linear risks
  • Hedging of non-linear risks

Each point will be illustrated by a case study

Alain Bouijoux

Alain Bouijoux

Head of sales in London and Paris on a desk for foreign exchange and interest rate derivatives, Alain has evolved for over 10 years in the markets. He faced the needs of his clients as well as the requirements of traders and management obligations of back and middle offices. Today he puts that experience at your disposal to answer all your questions about markets and their actors.

Oscar Relier

Oscar Relier

Oscar has worked in corporate finance and trading room for SBC Warburg, UBS and Deutsche Bank. He masters the mechanism, use and pricing of derivatives. Also trained in behavioral techniques, he designs and conducts training on public presentation and on the issues of communication and management.

Christine Turpaud

Christine Turpaud

Christine has 20 years of experience in investment banks, including 10 years as an analyst "fixed income" and 5 years in Structured Finance Middle Office. She has created a company for valuation of bond portfolios and transaction control. She is responsible for the Bärchen’s preparation for professional certifications.

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