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Introductory Derivatives Edition 2

Introductory Derivatives E-Workbook

‘Introductory Derivatives, Edition 2’, is an exciting update to our catalogue of finance E-Workbooks. By providing personal tutoring and integrating with a wide range of textbooks, it is the ideal study tool for students of all levels.


  • Hundreds of new questions across all topics
  • A large variety of question types and difficulties to challenge students of all levels
  • All questions provide students with step-by-step solutions and full academic feedback

Pedagogical features

To ensure students thoroughly learn course concepts, the e-workbook contains:

  • Flashcards: short questions to self-test understanding of the fundamentals
  • Learning paths: series of questions to introduce each topic’s main concepts
  • Scenarios: problem solving activities to practise real-world application

Content covered

Introduction to derivatives

  • Identifying financial risk
  • Hedging approaches
  • New risks caused by using derivatives
  • Trading derivatives, marking-to-market
  • The Sydney Futures Exchange
  • The Australian Stock Exchange
  • The functions of a clearing house

Forward Rate Agreements (FRAs)

  • Introduction to FRAs
  • Spot rates
  • Forward rates and forward ratios
  • Characteristics of FRAs
  • Trading FRAs
  • Creating an effective borrowing hedge


  • Introduction to futures
  • Short and long positions in futures contracts
  • Creating payoff diagrams
  • Trading futures
  • Speculators, arbitragers and hedgers
  • The process of delivering a futures contract
  • Margin accounts and calculating margin calls
  • Factors determining futures prices
  • Identifying arbitrage opportunities
  • Pricing consequences of exploiting arbitrage

Using futures

  • SPI futures
  • BAB futures
  • Treasury bond futures
  • Currency futures
  • Commodity futures


  • Introduction to options
  • Calls and puts
  • American and European options
  • Risk and return profile of counterparties
  • Trading options
  • Creation and uses of caps, floors and collars
  • Spreads, straddles and strangles
  • Synthetic shares and synthetic options

Pricing options

  • Intrinsic and time value of options
  • Put-call parity
  • Black-Scholes model and limitations
  • Binomial model and limitations
  • Delta, theta and gamma
  • Using delta to establish an effective hedge


  • Introduction to swaps
  • The theory of comparative advantage
  • Trading swaps
  • How swaps can help hedge interest rate risk
  • Valuation of interest rate swaps
  • Valuation of currency swaps