Forwards and Futures from edX

Forwards and Futures play an extremely important role in the current world of finance and investment. Long-term investors, speculators, and hedgers extensively use them. They enable market participants to establish large positions with smaller market impacts and lower transaction costs. Many Forward and Future contracts are in fact much more liquid than the underlying securities, and sometimes trade a larger volume than the underlying markets.

In this course – Forwards and Futures, the basic financial theories and concepts relevant to the topic will be discussed. The relationship between Forwards and Futures and the underlying security will also be explained. We'll also review concepts such as cost of carry, transportation, storage, and convenience factors that should be incorporated in the valuation of Forwards and Futures.

This course also looks into the application of Forwards and Futures in equity, commodity, and interest rate markets. The importance of margin in Future trading, type of contracts, and their specifications such as size, maturity, and pricing standards are also explored.

Forwards and Futures are important hedging tools used by individuals as well as institutions and companies. Therefore, it is important to examine the concept of hedging and the role of Forwards and Futures.

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What's inside

Learning objectives

Explain forwards and futures and their applications in finance.
Understand the valuation of forwards and futures, and concepts such as interest rate, cost of carry, storage, and convenience charge.
Understand forward interest rate and bootstrapping.

Apply forwards and futures to physical commodities such as wheat, oil and financial securities such as interest rates, currencies and equities.
Understand forwards and futures trading, margin, and contract specifications.

Explain forwards and futures and their applications in finance.
Understand the valuation of forwards and futures, and concepts such as interest rate, cost of carry, storage, and convenience charge.
Understand forward interest rate and bootstrapping.
Apply forwards and futures to physical commodities such as wheat, oil and financial securities such as interest rates, currencies and equities.
Understand forwards and futures trading, margin, and contract specifications.

Syllabus

Module 01: Fundamentals (Audit this module for Free)

Module 02: Forwards and Futures Contracts

Module 03: Forwards and Futures Valuation

Module 04: Commodity Markets

Module 05: Hedging with Forwards and Futures

Module 06: Short Term Financial Forwards and Futures

Module 07: Long Term Financial Forwards and Futures

Good to know

Know what's good

, what to watch for

, and possible dealbreakers

Explores core uses for financial professionals, like speculation, hedging, and establishing positions

Taught by trusted instructor Jack Farmer who is recognized for their work in this industry

Examines tools and concepts directly applicable to a variety of financial markets, including equity, commodities, and interest rates

Develops skills that are useful for personal growth and development in finance industry

Examines the important concept of hedging and the role that forwards and futures play in it

Teaches practical aspects of trading, like margin and contract specifications

Activities

Be better prepared before your course. Deepen your understanding during and after it. Supplement your coursework and achieve mastery of the topics covered in Forwards and Futures with these activities:

Assist Classmates with Forwards and Futures Concepts

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Reinforces understanding by explaining concepts to others

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Review course materials and identify areas where you have a strong grasp
Join a study group or online discussion forum
Offer help to classmates who are struggling with those concepts

Attend a Guest Lecture on Interest Rate Futures

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Provides access to expert insights on a specific topic

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Identify a guest lecture or webinar on interest rate futures
Register and attend the event
Take notes and ask questions to enhance understanding

Review texts on finance

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Provides foundational knowledge of financial concepts and their applications

View Corporate Finance: The Core, Global Edition on Amazon

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Review Chapters 1-3 of Corporate Finance: Theory and Practice to build a solid understanding of basic financial principles
Summarize the key points and concepts discussed in the chapters
Identify examples of how these principles and theories are applied in the real world

Four other activities

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Calculate Forward Prices

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Develops skills in applying forward pricing formulas

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Use provided datasets to calculate forward prices for different underlying assets
Compare the calculated prices to market prices and analyze any discrepancies

Commodity Futures Trading Simulation

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Provides hands-on experience in futures trading

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Join a simulated futures trading platform
Develop a trading strategy based on course concepts
Test the strategy in the simulation and adjust as needed

Explainer Video on Hedging with Forwards and Futures

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Deepens understanding of hedging concepts by creating a visual aid

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Research different hedging strategies involving Forwards and Futures
Develop a storyboard for the video, outlining key concepts and examples
Produce the video using simple animation or screencasting software

Develop a Trading Bot for Commodity Futures

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Applies course concepts to real-world problem-solving

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Learn basic Python programming for data analysis
Research machine learning algorithms for predictive modeling
Develop a trading strategy based on technical analysis or statistical models
Backtest the strategy on historical data
Deploy the bot on a trading platform

Career center

Learners who complete Forwards and Futures will develop knowledge and skills that may be useful to these careers:

Financial Trader

Financial Traders buy and sell stocks, bonds, currencies, commodities, and derivatives for clients or their own accounts. This course will help build a foundation for understanding the financial markets, the different types of financial instruments, and the strategies used to trade them. The course will also provide insights into the role of Forwards and Futures in the financial markets and how they can be used to hedge risk.

See salaries and explore the career path for Financial Trader

Quantitative Trader

Quantitative Traders use mathematical and statistical models to develop trading strategies. This course will help build a foundation for understanding the financial markets and the different types of financial instruments. The course will also provide insights into the role of Forwards and Futures in the financial markets and how they can be used to hedge risk.

See salaries and explore the career path for Quantitative Trader

Risk Manager

Risk Managers develop and implement strategies to manage financial risk. This course will help build a foundation for understanding the financial markets, the different types of financial instruments, and the strategies used to hedge risk. The course will also provide insights into the role of Forwards and Futures in the financial markets and how they can be used to hedge risk.

See salaries and explore the career path for Risk Manager

Portfolio Manager

Portfolio Managers manage investment portfolios for clients. This course will help build a foundation for understanding the financial markets, the different types of financial instruments, and the strategies used to manage risk. The course will also provide insights into the role of Forwards and Futures in the financial markets and how they can be used to enhance portfolio returns.

See salaries and explore the career path for Portfolio Manager

Financial Analyst

Financial Analysts evaluate the financial performance of companies and make recommendations on investment decisions. This course will help build a foundation for understanding the financial markets, the different types of financial instruments, and the strategies used to value companies. The course will also provide insights into the role of Forwards and Futures in the financial markets and how they can be used to hedge risk.

See salaries and explore the career path for Financial Analyst

Investment Banker

Investment Bankers advise companies on mergers and acquisitions, capital raising, and other financial transactions. This course will help build a foundation for understanding the financial markets, the different types of financial instruments, and the strategies used to value companies. The course will also provide insights into the role of Forwards and Futures in the financial markets and how they can be used to hedge risk.

See salaries and explore the career path for Investment Banker

Hedge Fund Manager

Hedge Fund Managers manage investment portfolios for clients using a variety of strategies, including arbitrage, long-short equity, and global macro. This course will help build a foundation for understanding the financial markets, the different types of financial instruments, and the strategies used to manage risk. The course will also provide insights into the role of Forwards and Futures in the financial markets and how they can be used to enhance portfolio returns.

See salaries and explore the career path for Hedge Fund Manager

Commodities Trader

Commodities Traders buy and sell physical commodities, such as oil, gas, and metals. This course will help build a foundation for understanding the financial markets, the different types of financial instruments, and the strategies used to trade commodities. The course will also provide insights into the role of Forwards and Futures in the financial markets and how they can be used to hedge risk.

See salaries and explore the career path for Commodities Trader

Energy Trader

Energy Traders buy and sell energy commodities, such as oil, gas, and electricity. This course will help build a foundation for understanding the financial markets, the different types of financial instruments, and the strategies used to trade energy commodities. The course will also provide insights into the role of Forwards and Futures in the financial markets and how they can be used to hedge risk.

See salaries and explore the career path for Energy Trader

Insurance Broker

Insurance Brokers help clients manage their insurance needs. This course will help build a foundation for understanding the insurance industry and the different types of insurance products. The course will also provide insights into the role of Forwards and Futures in the financial markets and how they can be used to hedge risk.

See salaries and explore the career path for Insurance Broker

Real Estate Agent

Real Estate Agents help clients buy and sell real estate. This course may be helpful to Real Estate Agents who want to learn more about the financial markets and the different types of financial instruments that can be used to finance real estate transactions.

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Appraiser

Appraisers value real estate and other assets. This course may be helpful to Appraisers who want to learn more about the financial markets and the different types of financial instruments that can be used to value assets.

See salaries and explore the career path for Appraiser

Auditor

Auditors examine the financial records of companies to ensure that they are accurate and compliant with accounting standards. This course may be helpful to Auditors who want to learn more about the financial markets and the different types of financial instruments that can be used to manipulate financial statements.

See salaries and explore the career path for Auditor

Tax Preparer

Tax Preparers help clients file their taxes. This course may be helpful to Tax Preparers who want to learn more about the financial markets and the different types of financial instruments that can be used to reduce tax liability.

See salaries and explore the career path for Tax Preparer