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Derivatives and Hedging
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Course Description

This course is designed to provide a clear and relevant overview of derivatives and hedging, beneficial to any financial professional seeking to gain knowledge and understanding about today’s financial markets.  A Derivative is a financial product that derives its value based on an underlying asset, liability, or other variable (such as an interest rate, foreign currency, or commodity price). Derivatives have become very popular tools for “hedging” (i.e. reducing) financial risk; they have also become an increasingly standard item on big companies' balance sheets. Yet understanding how they work, what they are used for, and how they can affect the bottom line of a business has proven to be a significant challenge for the accounting and auditing industries.

Learning Objectives
  • Objective 1
    • Identify the various types of risk that impact financial markets.
    • Recognize proper financial risk management practices.
    • Recognize the tools used to manage financial risk.
  • Objective 2
    • Identify the unique characteristics of forward contracts.
    • Recognize appropriate hedging practices using forward contracts.
    • Calculate the payoff from a forward contract.
    • Calculate forward prices and describe the effects of arbitrage on forward pricing.
  • Objective 3
    • Recognize the differences between futures and forwards.
    • Identify the mechanics of futures exchanges. 
    • Calculate futures daily margin requirements.
    • Recognize the financial and operational risks associated with using futures contracts as hedging tools.
  • Objective 4
    • Identify the unique characteristics of swap agreements and recognize the differences between the various types of swaps.
    • Calculate swap settlement amounts.
    • Recognize appropriate hedging practices using swaps.
  • Objective 5
    • Identify the unique characteristics of option contracts.
    • Recognize the differences between option contracts and other types of derivative products.
    • Recognize appropriate hedging practices using option contracts.
    • Calculate the payoff from an option contract.
  • Instructional Delivery Method
    QAS Self Study
  • Course Format
    PDF / Text
  • Prerequisite
    None
  • Field of Study
    Finance
  • Level of Knowledge
    Overview
  • Recommended CPE Credit
    6.00
  • CPE Final Exam Required Passing Grade
    70.00%
  • Advanced Preparation
    None
  • Course Reviewed / Updated
    08/10/2020
  • Course Author
    Michael J. Walker, CPA
Please Note:

Please Note: This course must be completed within 12 months of date of receipt of this course for CPE credit.

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