Underlying Assets

Financial Regulation Courses (FRC)

Overview

The Underlying Assets course, offered by Financial Regulation Courses (FRC), provides a comprehensive study of various asset classes that serve as the foundation for derivative products.
This course covers key financial and commodity-based assets such as money market instruments, bonds, foreign exchange (FX), equities, and commodities like metals, energy, and agricultural products.
Learners will explore how these underlying assets are used in derivative contracts and how changes in their value affect the pricing of derivatives.
The course also delves into the risks associated with different asset classes and how they are managed in derivative markets.

Learning Objectives

By the end of this course, learners will:

Understand the characteristics of key money market instruments and their role in the financial markets.

Learn the structure and risks of fixed income securities, including government bonds and corporate debt.

Explore the dynamics of the foreign exchange (FX) market and the factors that influence FX rates.

Gain insight into equities as an underlying asset, including the differences between ordinary and preference shares.

Understand the commodity markets, focusing on metals, energy, and agricultural products, and their use in derivative contracts.

Analyse the risks associated with each asset class, including interest rate risk, liquidity risk, and counterparty risk.

Learning Outcomes

Upon successful completion of the course, learners will:

Demonstrate a solid understanding of the major asset classes used in derivative contracts.

Confidently evaluate and manage the risks associated with different underlying assets in a portfolio.

Apply knowledge of money market instruments, bonds, FX, and commodities to derivative trading strategies.

Understand the impact of changes in underlying asset values on the pricing of derivative products.

Assess and manage interest rate, credit, and market risks when dealing with various asset classes.