STUDY SESSION 17 Derivatives
Derivatives—financial instruments that derive their value from the value of some underlying asset—have become increasingly important and fundamental in effectively managing financial risk and creating synthetic exposures to asset classes. As in other security markets, arbitrage and market efficiency play a critical role in establishing prices. This study session builds the conceptual framework for understanding the basic derivatives (forwards, futures, options, and swaps), derivative markets, and the use of options in risk management.
Reading 57 Derivative Markets and Instruments
Reading 58 Basics of Derivative Pricing and Valuation
Reading 59 Risk Management Applications of Option Strategies