CISI Training: Derivatives Markets – Their Structure and Function Relevant to the following CISI qualifications: ICWIM, ICAWM, Derivatives, IISI DEFINITION Derivatives markets attract three main types of participants: hedgers, speculators, and arbitrageurs. Hedgers reduce the risk that they face in terms of asset prices by using futures or options markets. Speculators focus on future price…
CISI Exam Prep: Identifying and Managing Exposure to Interest and Exchange Rate Risks Relevant to the following CISI qualifications: Risk in Financial Services, Derivatives DEFINITION The successful management of a portfolio includes maximizing returns from shifts in exchange and interest rates, which in turn requires an appreciation of the associated exposures. Not knowing the exposure…
CISI Exam Prep: Hedging Interest Rate Risk – Case Studies and Strategies Relevant to the following CISI qualifications: Risk in Financial Services, Derivatives, ICAWM DEFINITION Risks arise from the way the value of an investment changes with the level of interest rates. This is most clearly seen in the value of fixed-rate investments such as…
CISI Exam Prep: Hedging Foreign Exchange Risk—Case Studies and Strategies Relevant to the following CISI qualifications: Risk in Financial Services, Derivatives, ICAWM DEFINITION A company that imports raw materials, exports finished goods, or has overseas assets or subsidiaries is exposed to fluctuations in exchange rates. Adverse movements can wipe out export profits, while positive changes…
CISI Exam Prep: Hedging Credit Risk – Case Studies and Strategies Relevant to the following CISI qualifications: Risk in Financial Services, Derivatives DEFINITION Credit risk is the uncertainty about the ability of a debtor or the counterparty in an agreement to make a payment. Strategies for managing credit risk use traditional credit analysis techniques to…