Finance Fundamentals

Financial Risk

• The nature of financial risk
• What can be done about financial risk?

Fundamental Financial Markets

• Cash
• Bonds
• Foreign currencies
• Equities

Managing Financial Markets Risks

Managing Interest Rate Risk

• Using forward rate agreements (FRAs) and futures
• Using swaps
• Using options: caps, floors, collars and swaptions
• Comparison of interest rate risk management techniques

Managing Foreign Currency Risk

• Forwards, futures and options
• Comparison of strategies

Managing Equity Price Risk

• Stock index futures and options
• Portfolio insurance
• Bull and bear strategies

Integrating Financial Transactions in a Risk Management Framework

Overview

Mark to Market and Capital Allocation

Measuring Value at Risk (VAR)

• Group of Thirty Report
• RiskMetrics and other approaches
• Stress testing
• Using VAR: ongoing debating points
• Respective methodologies: pros and cons
• Who should use VAR?