How the Financial Markets Work

Designed to expel the confusion that often surrounds the financial markets, this course looks at all the major financial markets and will help you understand the products that drive them.

Course Highlights

Excellent course, well delivered, covering both theoretical and practical issues

F.T., Ernst & Young

A two-day, fully comprehensive course on the international capital markets and instruments.

Course objectives:

Gaining full insight into the origins of the capital markets, the key players and the role of the regulatory institutions
Thorough grounding in the main financial products and how they are used, including: bonds, equities, futures and forwards, swaps and options
Defining and exploring the key features and purposes of the financial markets, including fixed income markets, equity markets, money markets, foreign exchange market, swaps market, forwards and futures markets, options market and credit markets
Unravelling the credit crunch: causes, consequences and the future

For details of the course trainer, please download the course brochure

Booking Information

Dates	Prices	Book This Course	Discount
15 - 16 Nov 2010	£ 1899		-
14 - 15 Apr 2011	£ 1899		-

Course Programme

Excellent course, well delivered, covering both theoretical and practical issues

F.T., Ernst & Young

Capital markets: institutions and key players

Background to the structure of the capital markets
The major financial centres
The financial institutions:

investment and commercial banks
insurance and asset management companies
stockbrokers and securities houses

The role of the key players:

issuers and borrowers
investors
brokers, dealers and market-makers

The regulatory framework - the FSA, SEC, BIS and the European Central Banks

Underlying capital markets concepts

Long/short/square
CFDs - contracts for differences
Leverage
Symmetrical and asymmetrical risk profiles: forwards, swaps and options

EXERCISE: Calculating leveraged ROE

The bond and fixed income markets

How borrowers tap the bond markets
The role of investors
Underwriting
The dynamics of price
Understanding asset allocation
'Hybrid' instruments - convertibles, warrants, CoCos and structured products

EXERCISE: Calculating bond prices from yields and yields from prices

CASE STUDY: New international bond issue. Participants will examine a recent bond issue

The equity markets

Earnings multiples
Price/earnings ratios
Valuing a business
Primary offerings vs secondary transactions
Issuing equities
Debt vs equity

CASE STUDY: Pricing primary and secondary issues: VA Linux and Vivendi

The money markets

Domestic and international markets
Understanding LIBOR and other IBORS
Using LIBOR as a reference rate
An overview of money markets products:

Certificates of deposit
Treasury bills
Commercial paper
Bankers' acceptances
Repos

EXERCISE: Participants will analyse the money market rates quoted in the Financial Times

The foreign exchange market

The role of the Forex market
Using the spot and forward markets
Managing foreign exchange risk
How FX swaps work
Relationships between the spot, forward and interest rate markets
Relationship with the money markets
Currency options

CASE STUDY: Comparing the returns on investments after taking currency overlay into account

CASE STUDY: The carry trade: why is it so popular

An introduction to derivatives

Trading and hedging
Changing risk
Why financial institutions and corporates use derivatives
Key derivative instruments and products

CASE STUDY: The benefits of using derivatives as an asset allocation tool

The swaps market

Who uses swaps
Types of swaps: currency, interest rate, equity, commodity and weather derivatives
Why swaps are used
Pricing and trading swaps

EXERCISE: Trading interest rate swaps: expressing a view

CASE STUDY: Using the swap market as an alternative to the bond market for the creation of fixed rate liabilities

The forwards and futures markets

The differences between futures and forwards
Initial and variation margins
OTC vs exchange traded instruments
Types of futures and options

CASE STUDY: Comparing the costs and benefits of hedging with FRAs, futures and swaps

The options market

Using options as a hedging tool
Practical differences between exchange traded and OTC options
Puts and calls
Determinants of price
Put/call parity

CASE STUDY: Managing interest rate risk

The credit markets

Credit spreads
Benchmarking
Rating agencies

CASE STUDY: New issue arbitrage. Understanding the relationship between bonds, loans, asset swaps and credit default swaps

Future trends influencing the global financial markets

The credit cycle & liquidity issues
Regulatory considerations
Growth of the corporate bond market
European and US investment trends
Developments in Pension Funds

CASE STUDY: The credit crunch explained:

What were the causes?
How have market participants responded?
What have we learned?
What are we doing differently?
Will it happen again?