INTRODUCTION TO FINANCIAL MARKETS: EQUITIES
ACCOUNTING IN A DAY
PROGRAM OUTLINE
Accounting isn’t that dull, in fact, it can even get interesting. Either way, accounting is very important in the financial services industry and the more of it you know the better for many riles. This class will not try to turn you into an accountant but will give you just enough to decipher the language you may come across.
PRE-REQUISTES
None required.
CONTENT
-Introduction to what accountants do
-How to account for a new company
-Basic accounts preparation (basic double-entry)
-Accruals/matching concept
-Financial statements preparation
-Financial statements linkage
-Consolidation accounting made easy
COURSE DURATION
1 Day
WHO SHOULD TAKE THIS COURSE?
This is a first course in accounting for those with limited company exposure. Those dealing with management accounts internally or moving onto looking at financial accounts would find this useful.
FINANCIAL STATEMENTS ANALYSIS
PROGRAM OUTLINE
This class provides a basic introduction to the techniques in analysing company financial statements. The class included a brief review of basic accounting and the structure of income statement, balance sheet and cash flow statement, and looks at working capital requirement, measures of operating and financing efficiencies.
PRE-REQUISTES
Only very limited pre-knowledge about accounting is needed (going through the *Accounting Fundamentals* e-learning module can be helpful.
CONTENT
– Review of accounting and the structure of financial statements
– Income measures: operating income, EBIT, EBITDA
– Working capital requirement
– Cash flow measures operation cash flow, Capex
– Usual ratios, margin, capital efficiency, leverage, returns, coverage
– Understanding company’s operating and financial health
COURSE DURATION
1 Day
WHO SHOULD TAKE THIS COURSE?
This class is suitable for sales and trading, and anyone who is interested in an introductory course that layout the basic elements of understanding the operation and financing of a company through financial statement analysis
EQUITY VALUATION IN A DAY
PROGRAM OUTLINE
The aim of the day is to look at different valuation techniques and understand the important parameters that can cause theoretical valuation to break down if overlooked.
This is a condensed version of three equity valuation classes – we will take a brief overview of various techniques for equity valuation, focus on Discounted Cash Flow techniques and show that DCF and multiples actually do the same thing – but only if you make the same assumptions. Models will be based on real companies.
PRE-REQUISTES
Accounting from a course such as Accounting in a Day in the Introduction to Financial Markets: Equities module, and familiarity with financial statements and financial statements analysis such as the course in this series.
CONTENT
Introduction to Valuation techniques
– Introduction to valuation techniques for equities
– Analysts language vs accounting language
– ‘Enterprise Value’. Another way to look at the balance sheet?
Multiples and Value Drivers – Factors to consider when multiples differ
– Value drivers in a business
– Relationship of growth to value in real and modelling world
– Equity vs Enterprise Multiples
DCF – Defining concept of ‘enterprise free cash flow’
– Discounting forecasted cash flows
– Terminal values-how to extend forecasts to infinity
– DCF mathematics made easy
– Adding value creation assumptions in the long run
COURSE DURATION
1 Day
WHO SHOULD TAKE THIS COURSE?
Appropriate for students who are primarily focused on single stock analysis, but does not exclude those doing credit analysis
FINANCIAL MODELLING
PROGRAM OUTLINE
The course teaches a standardised methodology for analysts which will make research easier to perform and easier to understand. Rather than trying to impose an approach, the course aims to reach you how to model for yourself so you can then tailor your approach according to the companied you cover. Rather than using a stooge company with over-simplified financial statements, the course will model a real local company and try to deal with real problem areas found on financial statements such as ‘other’.
Students will use EXCEL to create forecast financial statements with a balancing bland sheet, no circular references and understand why. They won’t be told how to do this, they will learn how to do this.
IMPORTANT: All attendees need to provide their own laptop.
PRE-REQUISTES
None required.
CONTENT
Day 1
– Introduction and overview of the approach to modelling
– Spreadsheet tricks aimed at making life easier – be prepared to bring some your own
– Making sense of historical financial statements
– Identifying drivers for modelling
– Forecasting drivers
– Forecasting Income Statements
Day 2
– Forecasting Balance Sheets
– Forecasting Cashflow Statements
– Understanding how a financial statements must be linked together
– Stress-testing forecasts for sanity
– Segmental analysis of turnover and margins
– Detailed calculation of inserts charges and debt balances
– How to get into further detail – even when you don’t know what you’re doing
COURSE DURATION
1 Day
WHO SHOULD TAKE THIS COURSE?
Typical attendees are buy or sell side analysts, investments bankers or those working on projects that require EXEL modelling and forecasting
INTRODUCTION TO FINANCIAL MARKETS: FIXED INCOME
BOND CALCULATIONS
PROGRAM OUTLINE
Bond calculations is a natural extension of the Internet Rate Calculations class. Bond pricing is a mathematically tricky exercise made simpler between bond prices and yield to maturity. Linked to pricing of bonds is a risk concept called Duration. Often presented as a convoluted mathematical concept we will introduce it as a way to understand rick and to take a view on markets as an investor.
PRE-REQUISTES
None required.
CONTENT
– Bond pricing
– Yield-to-maturity
– Durations
– Bond delta or PVBP
COURSE DURATION
1 Day
WHO SHOULD TAKE THIS COURSE?
Anyone dealing with products and portfolios that have a fixed income element
BOND MARKET FUNDAMENTALS
PROGRAM OUTLINE
This course is an introduction to bond markets, covering different kinds of bonds and related fixed income products in terms of their risks, how they are suited, traded, priced and hedged.
PRE-REQUISTES
Although the aim of this class is to keep mathematics to a minimum, understanding bond pricing risk and duration would be a big advantage.
CONTENT
– Durations as risk measure and managing with swaps
– Short & long term investment strategies
– Price, yield & risk
– Financing & repo
– Bond forwards & futures – trading & quotation; use in portfolios
– Bond prices and spreads, spread risk; trading the spread
– Asset swap spreads
– Credit default swaps & indices
COURSE DURATION
This class is offered in four separate half-day units that run concurrently. These can be taken separately but there are themes that run through the units.
WHO SHOULD TAKE THIS COURSE?
Clients on the buy side and anyone trying to get away from just the mathematics of the bond markets
CONVERTIBLE BONDS
PROGRAM OUTLINE
Described by some practitioners as a bit of everything – they link to the debt, equity and option markets, CB’s can be seen as daunting. They are if you look into the modelling aspect of CB’s as models are proprietary as we have no universally recognised approach to valuing a CB. This class is an introduction bonds, explaining the products, the variations and when they make sense of issuers and investors.
PRE-REQUISTES
Those who understand the basics of bond pricing and options – bond calculations and options basics and strategies in the series is adequate.
CONTENT
– Traditional asses classes: debt vs. equity
– Terms and definitions for CB’s
– Optionality Variations of CB’s
– Issuers and investors rationale
– Additional complications drew clauses, early redemptions
COURSE DURATION
1 Day
WHO SHOULD TAKE THIS COURSE?
Anyone interested in hybrid products
CREDIT DERIVATIVES
PROGRAM OUTLINE
This class introduced students to credit markets and instruments. We will review LIBOR markets and examine the drivers of credit speeds and see how these are traded in the asset swap market.
Then we will look at credit default swaps (mechanics, uses, users) being the most commonly traded credit derivative. We will also cover credit-linked notes and asset-backed (CLOs, CBOs, etc) securities. We will look at hoe various risk ranches are created and rated.
PRE-REQUISTES
Students should already have an understanding of interest rate mathematics and relationships between interest rates and bond prices. This can be gained from the Interest Rate Calculation and Bond Calculations classes offered in this module.
CONTENT
– Interest rate risk on floaters vs. bonds
– Credit (spread) ‘delta’
– Asset swaps and asset swap margin
– Drivers of credit spreads
– Trading credit spreads
– Credit default swaps
– Asset-backed securities
COURSE DURATION
1 Day
WHO SHOULD TAKE THIS COURSE?
Cross-product audience as although its natural for the fixed income worlds to be interested, periodically the equities world rediscovers that credit can have a major impact on the value of equities
INTRODUCTION TO FINANCIAL MARKETS: INTEREST RATES AND FX
INTEREST RATE CALCULATIONS
PROGRAM OUTLINE
Interest rates can be observed, traded through and affect pricing of products in all asset classes. Studying them is useful to understand the interest rate and fixed income markets better but also essential in equity valuation models and also when analysing returns on investments. Understanding of interest rates can often be overrun with mathematics and formulae. This class will aim to have markets focus and keep mathematics to a minimum. That said, as the titles says, there will be calculations – so bring a calculator (preferably a bond calculator or bond calculator app)
PRE-REQUISTES
None required.
CONTENT
– Products and conventions in the money markets
– Interest, present and future call calculations
– Compounding calculations Interest rate forwards and futures
– Yield curve relationships and calculations
– Floating rate notes
COURSE DURATION
1 Day
WHO SHOULD TAKE THIS COURSE?
Staff and clients from every asset class
FOREIGN EXCHANGE FUNDAMENTALS
PROGRAM OUTLINE
Is this the most confusing asset class? Is it an asset class? This class is a basic class that will dispel the elements that usually confuse and look at the FX market from the spot market to exotic options.
PRE-REQUISTES
None required.
CONTENT
– Spot market
– Cross rates
– Forwards
– Options
– Hedging with exotic options
COURSE DURATION
1 Day
WHO SHOULD TAKE THIS COURSE?
Anyone working in the FX area or for whom foreign exchange offers a challenge in their work
FORWARDS, FUTURES & SWAPS
PROGRAM OUTLINE
This is an introduction to derivatives looking at ‘Delta’s’ products. It forms a basis for understanding options, an approach that will continue into following classes.
PRE-REQUISTES
None required.
CONTENT
Forwards
– Risk characteristics vs. underlying assets (equity, bond, commodities, interest rates)
– Hedging
– Cash or physical settlement
Futures
– Comparison to forward contracts
– Marking-to-market
– Index futures
Pricing
– Spot-forward arbitrage-feee-pricing
– Where arbitrage-free pricing falls down
– Trade cashflows
Swaps
– Equity swaps
– Interest rate swaps
COURSE DURATION
1 Day
WHO SHOULD TAKE THIS COURSE?
Staff and clients who are new to derivatives, who want to understand the futures and swaps markets and also those intending on studying options in the future
OPTIONS AND STRATEGIES
PROGRAM OUTLINE
This is an introduction to options from the beginning. It builds on ideas and language from the forwards, futures and swaps class in this series and forms a stepping stone to future classes on option pricing and risk measure.
PRE-REQUISTES
An awareness of forwards and forward pricing from a court such as forwards, futures and swaps in this series is advised.
CONTENT
Options
• Basic definitions and risk profiles
• The language in an option contract
• Hedging
• What happens at expiry
• ‘Moneyness’ before expiry • ‘Forward value’ and ‘uncertainty value’
• Does selling options makes sounds like a good idea?
Breakeveness and strategies
• The difference between value graph and breakeven • Combining option and forward positions
• Directional trades and volatility plays
COURSE DURATION
1 Day
WHO SHOULD TAKE THIS COURSE?
Staff and clients who are new to options, who want to understand the very basics in options. Also for people who want to continue on this series to look at option pricing and risk measures (known as Greeks)
OPTIONS PRICING 1
STRUCTURED PRODUCTS BASICS
PROGRAM OUTLINE
We will look at typical equity-linked note offerings. What are they? How are they constructed? Who uses (should use) them? What are the benefits and risks? What are there in rates, credit, and FX world? What are the most frequently asked questions by investors?
PRE-REQUISTES
A basic grounding in derivatives as could be gained from forwards and futures and option basics in this series.
CONTENT
• Basic building blocks; stocks and bonds
• Convertible bonds as structured products
• Risk management products;calls and puts
• Greedy, cheap and scared investors
• Guaranteed return/protection notes
• Yield enhancement notes
• Certificates
• Exotic twists
COURSE DURATION
1 Day
WHO SHOULD TAKE THIS COURSE?
Should appeal to staff and clients from all asset classes and in particular private client advisors
OPTION GREEKS
PROGRAM OUTLINE
Fischer Black and Myron Scholes are immortalised for their 1973 publication of the coalition formula for European options (work for which the Nobel Prize in Economics was awarded in 1997). The true legacy of that work, however, is not the valuation of options given by the Black-Scholes equation, but the risk measures that are derived from it. These rich measures, commonly called the ‘Greeks’ for the letters used to denote and refer to them, enable the dynamic management of an options’ book. Accurate knowledge of an options’ Greeks is more valuable than accurate knowledge of its value!
We will examine and calculate each of the common Greeks without calculus and describe how they are used to manage and hedge option risk. We will also answer the question: how do option traders make money?
PRE-REQUISTES
An awareness of options pricing, preferably via a course like Basic Option Pricing, part of this series of classes.
CONTENT
Risk measures
• The options dashboard
• Delta – what is hedging all about?
• Is Delta a hedge-ratio, probability, a sensitivity ratio, calculus?
• Vega – what is my exposure to the ‘vol markets’?
• Theta – options are a decaying asset and this costs the trader
• Gamma – is it a win-win situation? • Busting curve whilst dynamically hedging (in English: how options traders make money)
COURSE DURATION
1 Day
WHO SHOULD TAKE THIS COURSE?
This class is aimed at staff and clients who might be risk managing options or working with those who do or anyone who wants to decipher option ‘trader steak’.
Course accreditation:None
VOLATILITY DERIVATIVES
PROGRAM OUTLINE
Options allow one to trade both the direction (‘delta’ views) of an underlying (as a proxy for a spot position) and / or its volatility. Exactly what does it mean to ‘trade volatility’? How do you do this? Variance swaps are one way. How do they work?
PRE-REQUISTES
None is specifically assumed but a basic understanding of options and how they are hedged will help one take more away from the class.
CONTENT
• What is volatility?
• Calculating volatility
• Interpreting volatility
• Observations about volatility
• Sources of volatility
• Variance swaps (definition, vega notional, marking-to-market, uses, options on variance swaps, conditional variance swaps)
• Other ways to trade vol
COURSE DURATION
1 Day
WHO SHOULD TAKE THIS COURSE?
Anyone wanting to know more about ‘vol trading’
OPTIONS PRICING 2
EXOTIC DERIVATIVES
PROGRAM OUTLINE
A look at ‘non-standard’ options (barriers, knock-ins and knock-outs, Asians, loopbacks, etc) and who uses them and why; including a brief look at how they are valued vs plain vanilla options.
PRE-REQUISTES
Advanced understanding of standard options; their graphical representations, their risk measures and how they are valued. The earlier classes in this syllabus would provide that knowledge.
CONTENT
Path independent
• Binary/digital bet options
• Replication
• Range payouts
Path dependent
• One-touch options
• Asian options
• Barrier options Multi-asset
• Baskets
• Quanto
• Worst-of
COURSE DURATION
1 Day
WHO SHOULD TAKE THIS COURSE?
Students who are already comfortable with standard options and the language including understanding uses of ‘Greek’ risk measures
STRUCTURED PRODUCTS ADVANCED
PROGRAM OUTLINE
We will look at typical equity-linked note offerings. What are the? How are they constructed? Who uses (should use) them? What are the benefits and risks? What are there in rates, credit and FX world? What are the most frequently asked questions by investors?
PRE-REQUISTES
An awareness of options pricing, preferably via a course like Option Pricing 1, part of this series or classes.
CONTENT
• Basic building blocks; stocks and bonds
• Convertible bonds as structured products
• Risk-management products; calls and puts
• Greedy, cheap and scared investors
COURSE DURATION
1 Day
WHO SHOULD TAKE THIS COURSE?
Should appeal to staff and clients from all asset classes and in particular private client advisors
INTEREST RATES SWAPS AND SWAPTIONS
PROGRAM OUTLINE
Interest rates swaps are yet another derivative that gets a bad name. As the most actively traded thing in the world of finance, there has to be a justified reason doe using them. Their rational is a very simple and what they do – the clue is in the name.
PRE-REQUISTES
An awareness of options pricing, preferably via a course like Option Pricing 1, part of this series or classes.
CONTENT
Swaps
• Swap cash flows
• Asset swaps, liability, swaps
• Swap prising, risk and hedging
• Swap pricing in your head and swap PVO1
Swaptions
• Swaption pricing, risk and hedging
• Swaption pricing in your head and PVO1
COURSE DURATION
1 Day
WHO SHOULD TAKE THIS COURSE?
Corporate treasurers and staff working in the rates area
CREDIT DERIVATIVES
PROGRAM OUTLINE
The class introduces students to credit markets and instruments. We will review LIBOR markets and examine the drivers of credit spreads and see how these are traded in he asset swap market.
Then we will look at credit default swaps (mechanics, uses, users) being the most commonly traded credit derivative. We will also cover credit-linked and asset backed (CLOs, CBOs, etc.) securities. We will look at his carious tranches are created and rated.
PRE-REQUISTES
Students should already have an understanding of interest rate mathematics and relationships between interest rates and bonds prices. This can be gained from the Interest Rate Calculations and Bond Calculations classes in this series.
CONTENT
• Interest rate risk on floaters vs bonds
• Credit (spread) ‘delta’
• Asset swaps and asset swap margin
• Drivers of credit spreads
• Trading credit spreads
• Credit default swaps
• Asset-backed securities
COURSE DURATION
1 Day
WHO SHOULD TAKE THIS COURSE?
Cross-product audience as although its natural for the fixed income world to be interested, periodically the equities world rediscovers that credit can have a major impact on the value of equities
FX OPTIONS
PROGRAM OUTLINE
If you find FX confusing, then FX options might be really confusing! When to gets to FX options, many trainers avoid FX altogether and try to how you how it works for equities. This course is to put that right.
PRE-REQUISTES
FX markets form a class like FX Fundamentals in this series.
CONTENT
• FX Options – calls or puts
• ATM – spot or forward
• Put-call parity
• Which delta?
COURSE DURATION
1 Day
WHO SHOULD TAKE THIS COURSE?
Anyone working in the FX area or for whom foreign exchange offers a challenge. This class was originally designed for the global FX derivatives distribution teams