Course details

Interest Rate Futures and Forward Rate Agreements

Interest Rate Futures and Forward Rate Agreements


Overview/Description
Target Audience
Expected Duration
Lesson Objectives
Course Number


Overview/Description
Management of interest rates is an important aspect for any financial institution that lends or borrows funds, as well as for those that invest in fixed income instruments and any other company that uses debt to fund its operations. Benchmark interest rates, which are set by economic authorities in various regions of the world, such as the London Interbank Offered Rate, can materially affect the bottom line profit of these companies. Interest rate management is an important activity for these companies. Using interest rates related activities, these companies can offset any adverse effects associated with interest rate movements. These products are also used by entities that wish to speculate on the movement of interest rates, essentially taking an educated bet on where interest rates may move to over a period of time, and profiting from such moves. This course examines the fundamentals of both long-term and short-term interest rate futures and their specifications, as well as their application in hedging and speculation. It also introduces and demonstrates how Forward Rate Agreements may be used by a corporation to lock in a funding rate into the future.

Target Audience
Financial services professionals, consultants, and sales professionals interested in providing or selling products and services to banks, investment companies, and other financial corporations, and everyone interested in understanding interest rate futures and forward rate agreements

Expected Duration (hours)
1.0

Lesson Objectives

Interest Rate Futures and Forward Rate Agreements

  • differentiate between the role of hedgers and of speculators
  • recognize differences between short-term and long-term interest rate futures
  • identify characteristics of major benchmark interest rates
  • identify characteristics of interest rate futures
  • recognize components of speculating with short-term interest rate futures
  • recognize components of using LTIRF to hedge a financial portfolio
  • recognize major features of Forward Rate Agreements
  • identify characteristics of interest rate futures applications
  • Course Number:
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