Transcription of FINANCIAL DERIVATIVES
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LECTURE NOTES ON FINANCIAL DERIVATIVES MBA IV SEMESTER (IARE R16) Prepared by Mr. M Ramesh Assistant Professor, Department of MBA DEPARTMENT OF MASTER OF BUSINESS ADMINISTRATION INSTITUTE OF AERONAUTICAL ENGINEERING (Autonomous) Dundigal, Hyderabad 500 043 SYLLABUS UNIT- I: INTRODUCTION TO DERIVATIVES Development and growth of derivative markets, types of DERIVATIVES uses of DERIVATIVES , fundamental linkages between spot & derivative markets, the role of DERIVATIVES market, uses and misuses of DERIVATIVES . UNIT-II: FUTURE AND FORWARD MARKET Structure of forward and future markets, mechanics of future markets hedging strategies, using futures, determination of forward and future prices, interest rate futures currency futures and forwards.
One of the key features of financial markets are extreme volatility. Prices of foreign currencies, petroleum and other commodities, equity shares and instruments fluctuate all the time, and poses a significant risk to those whose businesses are linked to such fluctuating prices . To reduce this risk, modern finance provides a method called hedging.
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