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FINANCIAL MARKET COURSES

Forwards & Futures – Hedging (Part I)

The elimination of future price risk lies at the heart of derivatives, whether in the form of forward trades or futures contracts. This course explains the basic principle behind hedging using 'prices in the future' and shows how this principle is applied across many markets. It also outlines the differences between, and relative attractions of, using either futures contracts or OTC forwards when hedging a position. The additional difficulties of hedging interest rate risk are covered in a subsequent course.

  • OBJECTIVES

    On completion of this course, you will be able to:

    Explain how futures contracts and forward trades are used to hedge an existing or anticipated asset position

    Compare and contrast hedging using futures with hedging using forwards

    Outline some of the different hedging approaches used in different markets

  • COURSE OUTLINE

    Topic 1: Simple Hedges

    Symmetrical Risks

    Hedging Using Futures

    Topic 2: Futures or Forwards

    All Things are not Equal

    Changes in the Basis

    Range of Contracts for Hedging

    Futures vs. Forwards

    Topic 3: Hedging Other Major Assets

    Equity Portfolio Hedging

    Foreign Exchange Hedging

  • PREREQUISITE KNOWLEDGE

  • ESTIMATED COMPLETED TIME

    60 Minutes

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