Financial Markets and Instruments

This financial markets course explains the instruments a quant or trader will model and the machinery that moves them. It covers equities, bonds, futures, options, swaps, currencies and funds, and the exchanges, dealers and clearing houses that stand between a buyer and a seller.

What will I know at the end?

You will know how each instrument pays, how it is quoted and where it trades. You will be able to look at a futures contract specification and say what one point is worth, read an options chain, convert a bond price into a yield, and explain why a trade agreed today settles a day or two later. These are the facts every later course assumes without saying so.

How is the course taught?

Each unit has an audio lesson on the general subject, explainer films for the parts that are easier seen than heard, and a workbook with worked examples, cheat sheets and exercises. The written case at the end is marked by the faculty, with written feedback.

Who is this course for?

People new to finance who want to become quants, traders or risk analysts, and engineers who already code but have never looked inside a market. It is the first course of the Foundation Certificate in Computational Finance, and so of the Professional Diploma in Algorithmic Trading and the Fellowship in Computational Finance.

What you will be able to do

• Describe the cash flows, risks and quoting conventions of equities, bonds, futures, options, swaps, FX and funds.
• Explain the roles of exchanges, brokers, dealers, market makers, clearing houses and custodians.
• Follow a trade from order to settlement and name the costs and risks at each step.
• Read a term sheet, a futures contract specification and an options chain correctly.

Syllabus, module by module

1. Why markets exist

   Raising capital, sharing risk and finding prices; primary and secondary markets.

2. Equities and funds

   Shares, indices, corporate actions, ETFs and mutual funds, and how their prices are quoted.

3. Bonds and money markets

   Coupons, yields, day counts, repo and the government, corporate and money-market curves.

4. Futures, forwards and swaps

   Contract specifications, margin, rolling, basis, and the plain interest rate swap.

5. Options and FX

   Calls, puts, payoffs and chains; spot and forward currency, crosses and points.

6. Venues, clearing and settlement

   Exchanges, dark pools, dealers, central counterparties, custody and the settlement cycle.

How the certificate is earned

Quizzes at the end of each unit and a graded written case in which you trace one trade in each asset class through its venue, clearing and settlement. On a pass you receive the Course certificate in Financial Markets and Instruments, issued by the Institute with a verification code. Read how certification works.