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PyFin Academy
3. Financial Markets and Products
1. Banks
1. Introduction to Bank Risks
2. Economic Capital and Regulatory Capital
3. Basel Committee and Regulatory Capital Regulations
4. Deposit Insurance and Moral Hazard
5. Investment Banking Financing Arrangements
6. Conflicts of Interest in Banking Divisions
7. Banking Book vs. Trading Book
8. The Originate-to-Distribute Banking Model
9. Conclusion
2. Insurance Companies and Pension Plans
1. Introduction
2. Mortality Tables and Premium Calculation
3. Mortality Risk and Longevity Risk
4. Retirement Plans
5. Life Insurance Policies
6. Property-Casualty Insurance Companies
7. Moral Hazard and Adverse Selection Risks
8. Capital Requirements for Insurance Companies
9. Comparison with Banking Industry
10. Conclusion
3. Fund Management
1. Introduction
2. Undesirable Trading Behaviors at Mutual Funds
3. Net Asset Value (NAV) and Share Price
4. Hedge Funds vs. Mutual Funds
5. Hedge Fund Return Calculation and Incentive Fee Structure
6. Hedge Fund Strategies and Associated Risks
7. Performance Evaluation of Mutual Funds and Hedge Funds
8. Conclusion
4. Derivatives
1. Introduction to Derivatives
2. Markets for Derivatives
3. Types of Derivative Contracts
4. Payoffs of Derivative Contracts
5. Categories of Traders
6. Hedging Strategies with Derivative Contracts
7. Speculative Strategies with Derivative Contracts
8. Arbitrage Strategies with Derivative Contracts
9. Risks Associated with Derivatives
10. Conclusion
5. Exchanges and OTC Markets
1. Introduction
2. Developments in Clearing for Risk Reduction
3. Netting Process in Financial Transactions
4. Margining Process and Margin Requirements
5. Buying Stock on Margin Without Using CCP
6. Exchange-Traded and Over-The-Counter (OTC) Markets
7. Risks Associated with OTC Markets
8. Collateralization in the OTC Market
9. Special Purpose Vehicles (SPVs) in OTC Derivatives Market
10. Conclusion
6. Central Clearing
1. Introduction
2. Clearing and Settlement
3. Central Clearing of OTC Derivatives
4. Regulatory Initiatives for OTC Derivatives
5. Margin Requirements and Risk Mitigation
6. Netting in Bilateral and Centralized Markets
7. Impact of Central Clearing on Financial Markets
8. Risks Faced by CCPs
9. Risks to Clearing Members and Non-Members
10. Conclusion
7. Futures Markets
1. Introduction to Futures Contracts
2. Convergence of Futures and Spot Prices
3. Role of Exchanges in Futures Transactions
4. Normal and Inverted Futures Markets
5. Delivery Process and Cash Settlement
6. Trading Order Types
7. Marking to Market and Hedge Accounting
8. Forward and Futures Contracts
9. Conclusion
8. Using Futures for Hedging
1. Introduction
2. Short and Long Hedges
3. Arguments for and against Hedging
4. Basis Risk in Hedging with Futures
5. Cross Hedging and Hedge Ratio
6. Profit and Loss Calculation for Hedges
7. Determining Optimal Futures Contracts for Hedging
8. Changing Stock Portfolio's Beta with Stock Index Futures
9. Long-Term Hedge with Stack-and-Roll Strategy
10. Conclusion
9. Foreign Exchange Markets
1. Introduction
2. Mechanics of Foreign Exchange Markets
3. Bid-Ask Spread in Foreign Exchange Markets
4. Outright (Forward) and Swap Transactions
5. Transaction, Translation, and Economic Risks
6. Hedging Foreign Exchange Risks
7. Multi-Currency Hedging using Options
8. Determinants of Exchange Rates
9. Appreciation and Depreciation of Currencies
10. Purchasing Power Parity (PPP) Theorem
11. Nominal and Real Interest Rates
12. Interest Rate Parity Theorem
13. Covered and Uncovered Interest Rate Parity Conditions
14. Conclusion
10. Financial Forwards and Futures
1. Introduction
2. Financial Assets
3. Short-Selling
4. Forward and Futures Contracts
5. Spot Prices and Forward Prices
6. Forward Price Vs value of a Forward Contract
7. Forward Contract on Asset with Income or Yield
8. Forward and Futures Prices
9. Stock Index Futures Contract
10. Conclusion
11. Commodity Forwards and Futures
1. Introduction
2. Commodities Vs Financial Assets
3. Commodities Concepts
4. Factors Affecting Commodities Prices
5. Pricing Commodity Forwards
6. Arbitrage in Commodity Forwards
7. Lease Rate and No-Arbitrage Values
8. Cost of Carry Model
9. Forward Price with Storage Costs
10. Synthetic Commodity Position
11. Systematic and Nonsystematic Risk
12. Normal Backwardation and Contango
13. Conclusion
12. Options Markets
1. Introduction
2. Types and Uses of Options
3. Payoff Function and Profit & Loss Calculation
4. Exchange Traded Stock Option Contracts
5. Impacts of Dividends and Stock Splits on Stock Options Terms
6. Exchange-Traded Options Trading Characteristics
7. Warrants, Convertible Bonds, and Employee Stock Options
8. Conclusion
13. Properties of Options
1. Introduction
2. Factors Affecting Option Prices
3. Bounds for Option Prices
4. Put-Call Parity and Option Valuation
5. Early Exercise Features of American Options
6. Conclusion
14. Trading Strategies
1. Introduction
2. Covered Call and Protective Put Strategies
3. Principal Protected Notes (PPNs)
4. Spread Strategies
5. Combination Strategies
6. Conclusion
15. Exotic Options
1. Introduction
2. Exotic Derivatives and Plain Vanilla Derivatives
3. Factors Driving the Development of Exotic Derivative Products
4. Conversion of Derivatives into Zero-Cost Products
5. Transformation of Standard American Options into Nonstandard American Options
6. Exotic Options
7. Volatility and Variance Swaps
8. Static Option Replication for Hedging Exotic Options
9. Conclusion
16. Properties of Interest Rates
1. Introduction
2. Interest Rate Benchmarks
3. Compounding Frequencies
4. Interest Rate Conversion
5. Bond Pricing
6. Bond Duration Metrics
7. Limitations of Duration
8. Convexity
9. Bond Price Change Calculation with Duration and Convexity
10. Forward Interest Rates
11. Forward Rate Agreements (FRAs)
12. Zero-Coupon Rate Calculation Using Bootstrap Method
13. Term Structure of Interest Rates
14. Conclusion
17. Corporate Bonds
1. Introduction
2. Bond Trading and Bond Yield
3. Bond Indenture
4. High-Yield Bonds
5. Credit Default Risk Vs Credit Spread Risk
6. Event Risk
7. Bond's Classification
8. Bond's Retirement Mechanisms
9. Recovery Rate and Default Rate
10. Bond’s Expected Return
11. Conclusion
18. Mortgages and Mortgage-Backed Securities
1. Introduction
2. Types of Residential Mortgage Products
3. Fixed-Rate Mortgage Payment
4. Securitization Process of Mortgage-Backed Securities
5. Mortgage Pool Analysis
6. Pass-Through Agency MBS
7. Agency MBS Products
8. Dollar Roll Transaction
9. Prepayment Modeling
10. Valuing MBS Using Monte Carlo Simulation
11. Option Adjusted Spread (OAS)
12. Conclusion
19. Interest Rate Futures
1. Introduction
2. Day Count Conventions and Interest Calculation
3. Conversion of Discount Rate to Price for a US Treasury Bill
4. Clean Price, Accrued Interest and Dirty Price of a US Treasury Bond
5. US Treasury Bond Futures Conversion Factor
6. Cost of Bond Delivery into a Treasury Bond Futures Contract
7. Yield Curve Impact On Cheapest-to-Deliver Treasury Bond Decision
8. Theoretical Futures Price for a Treasury Bond Futures Contract
9. Pricing Eurodollar Futures
10. Eurodollar Futures Convexity Adjustment
11. Extending LIBOR Zero Curve using Eurodollar Futures
12. Duration Based Hedging
13. Limitations of Duration Based Hedging
14. Conclusion
20. Swaps
1. Introduction
2. Plain Vanilla Interest Rate Swap
3. Asset or Liability Transformation with IRS
4. Financial Intermediaries
5. Confirmation in a Swap Transaction
6. Comparative Advantage Argument for IRS
7. Discount rates in a Plain Vanilla IRS
8. Valuing a Plain Vanilla IRS using Two Bonds
9. Valuing a Plain Vanilla IRS using FRAs
10. Currency Swaps
11. Asset or Liability Transformation with Currency Swaps
12. Valuing Currency Swaps Based on Bond Positions
13. Valuing Currency Swaps Using Forward Exchange Rates
14. Other Types of Swaps
15. Credit Risk Exposure in Swap Positions
16. Conclusion
