Derivatives and Active Risk Mitigation

This week’s topics

Derivatives and Active Risk Mitigation

1. Hedging equity and interest rate exposures using futures and forwards
2. Options hedging strategies (protective puts, covered calls, and collars)
3. Stop-loss orders, trailing stops, and position-sizing frameworks
4. Stress testing, scenario analysis, and enterprise risk management (ERM) integration
5. ACCA AFM | Interest Rate Hedging | Collar Options on Interest Rate Futures | Lecture 45
6. CIMA P3 Enterprise risk management

What you will be able to do

• 3.2 Assess how investment risks can be mitigated.

Activity

Start with this week’s 2 videos, then: Seminar, guided reading and a short written task: assess how investment risks can be mitigated.

Study materials

Videos

• ACCA AFM | Interest Rate Hedging | Collar Options on Interest Rate Futures | Lecture 45 · YouTube · Tutor Star · 27 min · for registered students
• CIMA P3 Enterprise risk management · YouTube · OpenTuition · 12 min · for registered students
• Dynamic Risk Management webcast 4 of 8: Risk mitigation intention and benchmark derivatives · YouTube · IFRS Foundation · 9 min · for registered students

Further resources

• MIT 15.401 Finance Theory I, lecture notes: Forward and Futures Contracts · PDF · Other, slides · for registered students
• MIT 15.401 Finance Theory I, lecture notes: Options · PDF · Other, slides · for registered students
• Risk Management for Enterprises and Individuals, ch. 5: The Evolution of Risk Management: Enterprise Risk Management · PDF · Saylor Academy, textbook chapter; pp. 185–229 · for registered students