Financial Derivatives

Course Description

This advanced-level course, "Financial Derivatives," is part of the MicroMasters® Program in Finance offered by MITx. It is designed to provide students with a comprehensive and enduring understanding of valuation and hedging methods, as well as a fundamental familiarity with major markets and instruments in the world of financial derivatives. The course emphasizes tools for quantifying, hedging, and speculating on risk, which are essential skills for any well-trained financial practitioner.

What Students Will Learn

• Advanced derivatives pricing approaches that can be adapted to value new products
• Various techniques for shaping risk exposure using derivatives
• Critical information about the world's largest financial markets
• In-depth knowledge of forwards, futures, and options in stock, fixed income, and commodity markets
• Understanding of exotic options, real options, interest rate and currency swaps
• Insights into mortgages, credit risk, securitization, yield curve, duration, and convexity

Prerequisites

• Completion of 415.1x Foundations of Modern Finance I
• Completion of 415.1x Foundations of Modern Finance II
• A strong background in economics and finance
• Familiarity with basic financial concepts and instruments

Course Content

• Forwards, futures, and options in stock, fixed income, and commodity markets
• Exotic options and real options
• Interest rate and currency swaps
• Mortgages and credit risk
• Securitization
• Yield curve analysis
• Duration and convexity concepts
• Risk quantification, hedging, and speculation techniques
• Major financial markets and instruments

Who This Course Is For

• Students planning careers in sales and trading, portfolio management, or commercial banking
• Aspiring investment bankers, insurance professionals, or hedge fund managers
• Analysts or managers in public sector financial institutions, central banks, or financial regulatory agencies
• Corporate financial managers who use complex financial products and hedging instruments
• Individuals preparing for CFA exams
• Anyone seeking to deepen their understanding of financial derivatives and risk management

Real-World Applications

• Develop sophisticated risk management strategies for corporations or financial institutions
• Design and price new financial products
• Analyze and trade complex derivatives in global markets
• Manage investment portfolios with a deep understanding of risk and hedging techniques
• Advise clients on financial risk management and hedging strategies
• Navigate regulatory requirements related to derivatives and risk management
• Enhance decision-making in corporate finance roles
• Excel in CFA exams and other professional finance certifications