How the Financial Markets Work
How the Financial Markets Work
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Description
Course overview 'How the Financial Markets Work' provides delegates
with a comprehensive understanding of the global financial markets
and their role in the World’s economy. The relationship between the
real economy and financial markets is explored, including the role
of financial intermediaries in facilitating international capital
and money flows. Full coverage of fundamental financial mathematics
is provided from first principles to enable delegates to model
securities prices and to carry out sensitivity analysis of prices
to key risk factors. Through case studies and practical, hands-on
exercises, delegates will gain knowledge and experience of the
mechanisms underpinning the functionin…Frequently asked questions
There are no frequently asked questions yet. If you have any more questions or need help, contact our customer service.
Course overview 'How the Financial Markets Work' provides delegates
with a comprehensive understanding of the global financial markets
and their role in the World’s economy. The relationship between the
real economy and financial markets is explored, including the role
of financial intermediaries in facilitating international capital
and money flows. Full coverage of fundamental financial mathematics
is provided from first principles to enable delegates to model
securities prices and to carry out sensitivity analysis of prices
to key risk factors. Through case studies and practical, hands-on
exercises, delegates will gain knowledge and experience of the
mechanisms underpinning the functioning of the financial system and
an understanding of the key factors underlying risks and returns in
securities markets and portfolios. The programme offers a 360⁰ view
of financial markets from the perspectives of issuers and
borrowers, investors, traders and regulators. The course covers all
traditional securities and derivatives markets as well as providing
insights into the latest innovations in financial products such as
credit derivatives and exchange traded funds and their impact on
the structure of financial markets. Through detailed case study
analyses, delegates will gain a deep understanding of some of the
principal weaknesses within financial markets which have resulted
in the system being undermined and the difficulties facing
regulators in maintaining confidence in the system. Summary of
course content How inter-related global financial markets serve the
real economy The role of participants in global securities and
money markets The role of derivative markets in risk management and
speculation Practical market analysis tools for traders, investors
and regulators Global financial system strengths and weaknesses and
recent innovations Methodology Active participation is encouraged
to ensure understanding and reinforce concepts. You will be
provided with complete lecture notes, cases, and selected readings
to serve as a reference. Who should attend this training course?
This course is suitable for those who want to gain an overall
perspective on financial markets from banks, financial institutions
and corporations, etc. Analysts Risk Managers Credit Managers
Traders and Dealers Financial Consultants Financial and Treasury
Managers Accountants and Auditors Lawyers and legal professionals
Supporting publications:
Day 1 How do financial markets relate to the real economy? The globalised nature of the world’s economy National economies: internal and external factors Key economic indicators The Business Cycle Financial intermediation: purpose and structure The banking system: wholesale, retail and “universal” banks The role of securities exchanges and market makers Institutional investors: pension funds and insurance firms Offshore markets: “Euro-” securities The global financial markets in 2014 Interest rates Interest rates as the opportunity cost of capital The time value of money: present and future values How are interest rates determined? Overview of global interest rate markets Pivotal role of interest rates in money, bond, equity and FX markets Practical exercise: the time value of money In small groups, delegates will work through a number of simple exercises to reinforce their understanding of key concepts Risk and return in financial markets Return generation factors Characterising risk in financial markets The risk/return trade off Day 2 Overview of the main instruments Money markets: short dated debt Bonds: longer dated Government debt and credit markets Equities: ownership stakes in commercial enterprises Foreign exchange markets Commodities Introduction to Derivatives Swaps Futures Options Interest rate derivatives: FRAs, Caps and Floors How securities markets are inter-related Introduction to money markets What distinguishes “money” markets from “capital” markets? Discount versus interest bearing securities Key instrument types Certificates of Deposits (CDs) Bills and Notes Commercial Paper Repurchase Agreements (Repos) Practical exercise: money market instruments Delegates will work through a number of short exercises to reinforce their understanding of money markets and their associated financial arithmetic. Introduction to bond markets What is a bond? How do bond markets work? The principal bond markets Government bonds The Credit market US Dollar denominated debt securities Emerging markets The role of credit derivatives The key players Originators and arrangers Market makers Institutional investors Hedge funds Credit ratings agencies Bond prices and yields What does a bond’s price represent? What information is contained in bond yields? Day 3 Bond analysis I – Prices and Yields Bonds as a series of future cash flows Valuation: calculating a bond’s fair value price Bond yields: the market price of risk Calculating yield: the internal rate of return (IRR) of a bond The role of benchmark bonds Credit spreads How the market adjusts for excess supply and demand Practical exercise: bond analysis Delegates will reinforce their understanding of bond analysis through a structured exercise involving the calculation of a bond’s price from fundamental inputs of cash flows and yield. Bond analysis II – Risk Metrics Time-weighted cash flows Macaulay’s Duration: calculation and use Modified Duration: calculation and use Foreign Exchange (FX) Markets What drives FX markets? Trade balances Interest rates Key FX market participants Spot rates – pivotal role of US Dollar Cross rates – derivation and calculation Forward rates – derivation from spot rates and interest rates Practical exercise: foreign exchange Delegates will reinforce their understanding of foreign exchange market dynamics by working through exercises to calculate cross and forward rates from spot rates and interest rates Technical Analysis Role of technical analysis in financial markets Underlying statistical theory and assumptions Key concepts Mean reversion Momentum Support & resistance Behavioural finance Overview of principal techniques Chartist Candlesticks Filter rules Momentum models Moving averages Day 4 Introduction to equity markets The big picture: equity markets, inflation and global demographics Position of equity relative to debt in a firm’s capital structure Private versus public equity markets The role of stock exchanges How are returns generated for equity owners? Equity valuation and company accounts: the key ratios Equity valuation modelling Assessing risk and return in equity markets Practical exercise: equity valuation Delegates will run through a series of equity valuation exercises, based on case studies from different industrial sectors to deepen their understanding of equity markets and valuation and the difficulties involved in fair market valuation. Commodity Markets What are commodities? The key global commodity markets Energy Minerals Agriculture Rising markets including freight, carbon credits and semi-conductors Principal participants: hedgers, investors and speculators How do financial markets facilitate commodity trading? Commodity pricing fundamentals Commodity derivatives Practical exercise: commodity future pricing Delegates will run through a series of commodity future valuation exercises, based on different spot markets, to deepen their understanding of commodity market dynamics. Day 5 Financial derivatives Forwards and futures Swaps Options Financial market risk management What is risk? Risk specification Asset-Liability Management (ALM) Portfolio mandates Risk tolerance Measuring risk Managing risk Matching cash flows of assets to liabilities Portfolio diversification Practical exercise: risk modelling Delegates will run through a series of exercises exemplifying approaches to risk measurement and modelling to reinforce their understanding of the theory and practice of risk management. Case Study: how the Financial Markets don’t Work Securitisation and the Sub-prime mortgage market Participating in financial markets Simulation: portfolio management Delegates will be given a portfolio comprising equities, bonds and cash to manage through four calendar periods. Their objective will be to optimise their risk versus return whilst remaining within the constraints specified by the trustees. In addition to the diversification opportunities open to them, delegates will be able to manage their risk using futures, forward FX, options and swaps. Course summary and close
Day 1 How do financial markets relate to the real economy? The globalised nature of the world’s economy National economies: internal and external factors Key economic indicators The Business Cycle Financial intermediation: purpose and structure The banking system: wholesale, retail and “universal” banks The role of securities exchanges and market makers Institutional investors: pension funds and insurance firms Offshore markets: “Euro-” securities The global financial markets in 2014 Interest rates Interest rates as the opportunity cost of capital The time value of money: present and future values How are interest rates determined? Overview of global interest rate markets Pivotal role of interest rates in money, bond, equity and FX markets Practical exercise: the time value of money In small groups, delegates will work through a number of simple exercises to reinforce their understanding of key concepts Risk and return in financial markets Return generation factors Characterising risk in financial markets The risk/return trade off Day 2 Overview of the main instruments Money markets: short dated debt Bonds: longer dated Government debt and credit markets Equities: ownership stakes in commercial enterprises Foreign exchange markets Commodities Introduction to Derivatives Swaps Futures Options Interest rate derivatives: FRAs, Caps and Floors How securities markets are inter-related Introduction to money markets What distinguishes “money” markets from “capital” markets? Discount versus interest bearing securities Key instrument types Certificates of Deposits (CDs) Bills and Notes Commercial Paper Repurchase Agreements (Repos) Practical exercise: money market instruments Delegates will work through a number of short exercises to reinforce their understanding of money markets and their associated financial arithmetic. Introduction to bond markets What is a bond? How do bond markets work? The principal bond markets Government bonds The Credit market US Dollar denominated debt securities Emerging markets The role of credit derivatives The key players Originators and arrangers Market makers Institutional investors Hedge funds Credit ratings agencies Bond prices and yields What does a bond’s price represent? What information is contained in bond yields? Day 3 Bond analysis I – Prices and Yields Bonds as a series of future cash flows Valuation: calculating a bond’s fair value price Bond yields: the market price of risk Calculating yield: the internal rate of return (IRR) of a bond The role of benchmark bonds Credit spreads How the market adjusts for excess supply and demand Practical exercise: bond analysis Delegates will reinforce their understanding of bond analysis through a structured exercise involving the calculation of a bond’s price from fundamental inputs of cash flows and yield. Bond analysis II – Risk Metrics Time-weighted cash flows Macaulay’s Duration: calculation and use Modified Duration: calculation and use Foreign Exchange (FX) Markets What drives FX markets? Trade balances Interest rates Key FX market participants Spot rates – pivotal role of US Dollar Cross rates – derivation and calculation Forward rates – derivation from spot rates and interest rates Practical exercise: foreign exchange Delegates will reinforce their understanding of foreign exchange market dynamics by working through exercises to calculate cross and forward rates from spot rates and interest rates Technical Analysis Role of technical analysis in financial markets Underlying statistical theory and assumptions Key concepts Mean reversion Momentum Support & resistance Behavioural finance Overview of principal techniques Chartist Candlesticks Filter rules Momentum models Moving averages Day 4 Introduction to equity markets The big picture: equity markets, inflation and global demographics Position of equity relative to debt in a firm’s capital structure Private versus public equity markets The role of stock exchanges How are returns generated for equity owners? Equity valuation and company accounts: the key ratios Equity valuation modelling Assessing risk and return in equity markets Practical exercise: equity valuation Delegates will run through a series of equity valuation exercises, based on case studies from different industrial sectors to deepen their understanding of equity markets and valuation and the difficulties involved in fair market valuation. Commodity Markets What are commodities? The key global commodity markets Energy Minerals Agriculture Rising markets including freight, carbon credits and semi-conductors Principal participants: hedgers, investors and speculators How do financial markets facilitate commodity trading? Commodity pricing fundamentals Commodity derivatives Practical exercise: commodity future pricing Delegates will run through a series of commodity future valuation exercises, based on different spot markets, to deepen their understanding of commodity market dynamics. Day 5 Financial derivatives Forwards and futures Swaps Options Financial market risk management What is risk? Risk specification Asset-Liability Management (ALM) Portfolio mandates Risk tolerance Measuring risk Managing risk Matching cash flows of assets to liabilities Portfolio diversification Practical exercise: risk modelling Delegates will run through a series of exercises exemplifying approaches to risk measurement and modelling to reinforce their understanding of the theory and practice of risk management. Case Study: how the Financial Markets don’t Work Securitisation and the Sub-prime mortgage market Participating in financial markets Simulation: portfolio management Delegates will be given a portfolio comprising equities, bonds and cash to manage through four calendar periods. Their objective will be to optimise their risk versus return whilst remaining within the constraints specified by the trustees. In addition to the diversification opportunities open to them, delegates will be able to manage their risk using futures, forward FX, options and swaps. Course summary and close
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