Introductory Remarks and General Guidelines – See Part 1

Week 15 – Derivatives, Part 1

The CFAI has been very generous to you and saved some of the most challenging material for the home stretch.  I would lump derivatives into the middle tier with Corporate Finance and Fixed Income.  Don’t worry, you can do it.

Derivatives starts with the easier stuff and builds to the more challenging material.  In part 1, look for forward basics, currency forwards (think back to Econ), forward rate agreements, futures basics, interest rate futures, and US Treasury bond futures.

Like Fixed Income, Derivatives is a great place to incorporate flash cards.

Week 16 – Derivatives, Part 2; Progress Test 3

Options – you will see both the binomial and Black-Scholes models; both are fair game.  Interest rate options and put-call parity are other important topics.

Swaps & Swaptions – look for interest rate swaps, equity swaps, and currency swaps.  The ability to draw and interpret a swap diagram is a must have skill set.  You will also be introduced to swaptions.

Progress Test 3 – Now is the time to do a progress test through Derivatives.  Hopefully you are noticing improvement over the first two progress tests.  Fixed Income and Derivatives may take additional effort given the volume and complexity of some of the material.  This will be your closest experience to date with a full on practice test, so take it seriously.