How the Financial Markets Really Work

Course Overview

This programme offers an introductory insight into the mechanics of today's global financial marketplace. The course emphasises practical application over theory, demystifying financial jargon, with no prerequisites required.

Session 1: Introduction & overview of the financial market ecosystem — the most liquid market in the world: foreign exchange

• Geography of liquidity in the market
• Purchasing Power Parity and the Big Mac Index
• Spot vs forward foreign exchange
• Currency movement forecasting
• FX as a zero-sum game and asset class
• Cryptocurrency discussion
• Case study: popular currency pairs

Session 2: The bond markets — an introduction

• Bond mechanics: prices vs yields, par values
• Bond structures: fixed vs floating rate coupons, zero coupons
• Bond universe: sovereign to corporate, risk-free rates, credit ratings
• Asset-backed, Eurobonds, convertibles, exchangeables, callable, puttable bonds
• Yield curves: normal, flat and inverted
• Case study: sovereign bond yields in practice

Session 3: The equity markets and equity-linked instruments

• Equities compared with bonds
• Equity risk premium analysis
• Corporate actions: dividends, buybacks, stock splits
• Depositary receipts for emerging markets
• Securities lending practices
• Algorithmic trading & dark pools
• Case study: share turnover velocities globally

Session 4: An introduction to the derivatives markets

• Definition, users and applications
• Exchange traded vs over-the-counter instruments
• Swap execution facilities & central counterparties
• Vanilla vs exotic derivatives
• Financial characteristics and settlement types
• Derivative risks
• Wrap-up quiz