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Equity, Foreign Exchange (FX), and Rate Futures
1h 7mAdvanced2025-01-16
Authors
Corporate Finance Institute (CFI)
Course details
Understanding currency, equity index, and interest rate futures and forwards is crucial for finance and accounting professionals, because these tools are often used to manage financial risk, improve forecasting accuracy, and optimize investment strategies. Knowledge of these instruments helps professionals hedge against market volatility, manage exposure to interest rate or currency fluctuations, and make informed decisions on pricing assets and liabilities. It also allows them to advise clients or companies on risk management and enhance the financial stability of their portfolios. In this course, designed by Corporate Finance Institute (CFI), discover the essentials of currency futures, equity index futures, and interest rate futures and forwards. Along the way, gather insights into key financial concepts such as cross rates, triangular arbitrage, currency swaps, forward rate agreements (FRAs), short-term interest rate futures (STIRs), interest rate swaps (IRSs), and more.
Learning objectives
Identify triangular arbitrage opportunities by calculating cross rates.
Understand how to use equity index futures to hedge a position.
Describe the relationship between spot rates and forward rates.
Explain FRAs, STIRs, and IRSs.
Understand currency futures, equity index futures, and interest rate futures.
Learning objectives
Identify triangular arbitrage opportunities by calculating cross rates.
Understand how to use equity index futures to hedge a position.
Describe the relationship between spot rates and forward rates.
Explain FRAs, STIRs, and IRSs.
Understand currency futures, equity index futures, and interest rate futures.
Skills covered
Accounting SkillsFinance and AccountingOne-Off
Concepts
Equity, Foreign Exchange (FX) and Rate Futures
- 01 - Introduction
1. Currency Futures Contracts
- 02 - Exchange rates overview - Key concepts
- 03 - Understanding cross rates and triangular arbitrage
- 04 - Steps in triangular arbitrage
- 05 - Introduction to forward exchange swaps
- 06 - Forward exchange swap - Example
- 07 - Foreign currency futures - Example
- 08 - Understanding bid-offer spread in FX
- 09 - Buying and selling currency futures - Example
- 10 - What is a currency swap
- 11 - Example of a currency swap
- 12 - Stages of a currency swap
- 13 - Managing currency and interest rate risk
- 14 - Example of foreign exchange (FX) forwards
- 15 - Example of FX forwards (continued)
- 16 - Calculating forward price
- 17 - Quoting forward rates
2. Equity Index Futures Contracts
- 18 - Individual equity futures
- 19 - Index futures
- 20 - Index futures contract sizes
- 21 - Example of index futures contract profit
- 22 - Calculating the fair value of an equity index future
- 23 - Fair value of index futures - Q1
- 24 - Index arbitrage
- 25 - Index futures calculations
- 26 - Understanding the simple hedge ratio
- 27 - Evaluating hedge outcomes
3. Interest Rate Futures and Forward Contracts
- 28 - Comparing spot rates vs. forward rates
- 29 - Example of a 2x5 FRA (forward rate agreement)
- 30 - Series of FRAs
- 31 - Introduction to STIR (short-term interest rate) futures
- 32 - Understanding futures codes
- 33 - Example of STIR futures
- 34 - FRA vs. futures contracts - Key differences
- 35 - Creating a forward rate
- 36 - Forward spot interest rate - Answer
- 37 - Example of interest rate swap
- 38 - Introduction to bond futures
- 39 - Understanding notional coupons in bond futures
- 40 - Deliverable list and price factors
- 41 - Price factor - What it is and how it s calculated
Conclusion
- 42 - Course summary