Time: 3 Hours; Marks: 60

Chapter-1: Introduction to Derivatives

  • 1.1 Types of Derivative Contracts.
  • 1.2 History of Financial Derivatives Markets.
  • 1.3 Participants in a Derivative Market.
  • 1.4 Economic Function of the Derivative Market.

Chapter-2: Understanding Interest Rates and Stock Indices

  • 2.1 Understanding Interest rates.
  • 2.2 Understanding the Stock Index.
  • 2.3 Economic Significance of Index Movements.
  • 2.4 Index Construction Issues.
  • 2.5 Desirable Attributes of an Index.
  • 2.6 Applications of Index.

Chapter-3: Futures Contracts, Mechanism and Pricing

  • 3.1 Forward Contracts.
  • 3.2 Limitations of Forward markets.
  • 3.3 Introduction to Futures.
  • 3.4 Distinction between Futures and Forwards Contracts.
  • 3.5 Futures Terminology.
  • 3.6 Trading Underlying vs. Trading Single Stock Futures.
  • 3.7 Futures Payoffs. 3.8 Pricing Futures.
  • 3.9 Pricing Stock Futures.

Chapter-4: Application of Future Contracts

  • 4.1 Understanding Beta (β).
  • 4.2 Numerical illustration of Applications of Stock Futures.
  • 4.3 Hedging using Stock Index Futures.

Chapter-5: Options Contracts, Mechanism and Applications

  • 5.1 Option Terminology.
  • 5.2 Comparison between Futures and Options.
  • 5.3 Options Payoffs.
  • 5.4 Application of Options.

Chapter-6: Pricing of Options Contracts and Greek Letters

  • 6.1 Variables affecting Option Pricing.
  • 6.2 The Black Scholes Merton Model for Option Pricing (BSO).
  • 6.3 The Greeks.

Chapter-7: Trading Of Derivatives Contracts

  • 7.1 Futures and Options Trading System.
  • 7.2 The Trader Workstation.
  • 7.3 Futures and Options Market Instruments.
  • 7.4 Criteria for Stocks and Index Eligibility for Trading.
  • 7.5 Charges.

Chapter-8: Clearing and Settlement

  • 8.1 Clearing Entities.
  • 8.2 Clearing Mechanism.
  • 8.3 Settlement Procedure.
  • 8.4 Risk Management.
  • 8.5 Margining System.

Chapter-9: Regulatory Framework

  • 9.1 Securities Contracts (Regulation) Act, 1956.
  • 9.2 Securities and Exchange Board of India Act, 1992.
  • 9.3 Regulation for Derivatives Trading.
  • 9.4 Adjustments for Corporate Actions.

Chapter-10: Accounting for Derivatives

  • 10.1 Accounting for futures.
  • 10.2 Accounting for options.
  • 10.3 Taxation of Derivative Transaction in Securities.