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    Ifca Derivatif

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    januar
    This document provides an overview of derivatives for a CFA Level I exam study session. It includes an introduction to derivatives, an overview of derivative markets and instruments, and outlines the key topics tested on the exam related to forwards, futures, options, swaps, and credit derivatives. The content defines different derivative contracts, compares their characteristics, and explains concepts like arbitrage and its role in pricing derivatives and promoting market efficiency.

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    Ifca Derivatif

    Uploaded by

    januar
    37 views14 pages
    This document provides an overview of derivatives for a CFA Level I exam study session. It includes an introduction to derivatives, an overview of derivative markets and instruments, and outlines the key topics tested on the exam related to forwards, futures, options, swaps, and credit derivatives. The content defines different derivative contracts, compares their characteristics, and explains concepts like arbitrage and its role in pricing derivatives and promoting market efficiency.

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    This document provides an overview of derivatives for a CFA Level I exam study session. It includes an introduction to derivatives, an overview of derivative markets and instruments, and outlines the key topics tested on the exam related to forwards, futures, options, swaps, and credit derivatives. The content defines different derivative contracts, compares their characteristics, and explains concepts like arbitrage and its role in pricing derivatives and promoting market efficiency.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    37 views14 pages

    Ifca Derivatif

    Uploaded by

    januar
    This document provides an overview of derivatives for a CFA Level I exam study session. It includes an introduction to derivatives, an overview of derivative markets and instruments, and outlines the key topics tested on the exam related to forwards, futures, options, swaps, and credit derivatives. The content defines different derivative contracts, compares their characteristics, and explains concepts like arbitrage and its role in pricing derivatives and promoting market efficiency.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 14

    CFAspace

    Provided by APF
    Academy of Professional Finance 专业金融学院

    CFA Level I
    Derivatives
    Study Session 17
    CFA Lecturer: Elise Jia
    Contents

    1 Brief introduction of Derivatives

    2 Derivative Markets and Instruments

    2
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    CFA Exam Topic Area Weights

    3
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    Candidate Body of Knowledge Topic Outline

     A. Types of Derivative Instruments and

    their Characteristics

     B. Forward Markets and Instruments

     C. Futures Markets and Instruments

     D. Options Markets and Instruments

     E. Swaps Markets and Instruments

     F. Credit Derivatives Markets and

    instruments

    4
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    Brief Introduction of Derivatives

    Reading 60:Derivative markets and instruments

    Reading 61:Forwards

    Reading 62:Futures

    Reading 63:Options

    Reading 64:Swaps

    Reading 65:Use of options in risk management

    5
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    Derivative Markets and Instruments

    LOS 60.a: Define a derivative and distinguish 
    between exchange‐traded and over‐the‐
    counter derivatives.

    ☐A derivative is a financial instrument that offers a return based on


    the return of some other underlying asset.

    Example 1:

    6
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    Derivative Markets and Instruments

    Exchange-traded contracts

    • standard terms and features


    • are traded on an organized
    derivatives trading facility
    • backed by a clearinghouse

    Over-the-counter contracts

    • any transactions created by two


    parties anywhere else

    7
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    Derivative Markets and Instruments

    LOS 60.b: Contrast forward commitments 
    and contingent claims. 

    ☐ A forward commitment is a legally binding promise to perform


    some action in the future.
    Include: forward contracts, future contracts and swaps.

    ☐ A contingent claim is a claim (to a payoff) that depends on a


    particular event.
    We generally refer to these types of derivatives as options.

    8
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    Derivative Markets and Instruments

    LOS 60.c: Define forward contracts, futures 
    contracts, options {calls and puts), and swaps
    and compare their basic characteristics.

    ☐A futures contract is a forward contract that is


    standardized and exchange-traded.

    ☐In a forward contract, one party agrees to buy and the


    counterparty to sell a physical asset or a security at a
    specific price on a specific date in the future.

    9
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    Derivative Markets and Instruments

    LOS 60.c: Define forward contracts, futures 
    contracts, options {calls and puts), and swaps
    and compare their basic characteristics.

    ☐A swap is a series of forward contracts.

    ☐An option to buy an asset at a particular price is termed a call


    option.

    ☐An option to sell an asset at a particular price is termed a put


    option.

    10
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    Derivative Markets and Instruments
    Example 2:

    11
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    Derivative Markets and Instruments

    LOS 60.d: Describe purposes of and 
    controversies related to derivative markets.

    Benefits
    • Provide Price Information.
    • Allow Risk to be managed and shifted
    among market participants.
    • Reduce transaction costs

    Criticism

    • Too risky.

    12
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    Derivative Markets and Instruments

    LOS 60.e: Explain arbitrage and the role it 
    plays in determining prices and promoting 
    market efficiency.

     Arbitrage occurs when equivalent assets or combinations of assets sell


    for two different prices.
     Riskless
     Profitable

    Law of one price

    Two Supporting
    Arguments
    Risk-free portfolio
    should yield the
    risk-free return
    13
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    CFAspace

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