Financial Instruments - Equities, Bonds, Derivatives

Table of Contents

1. Introduction
2. Equities
3. Bonds
4. Derivatives
5. Understanding Risk and Return
6. Summary

Introduction

Welcome to the ninth course in our series on quantitative finance and investment. In this course, we will introduce various financial instruments including equities, bonds, and derivatives, and their roles in financial markets.

Equities

Equities, also known as stocks or shares, represent ownership in a company. We will cover the various types of equities, how they are traded, their risk-return profile, and their role in portfolio construction.

Bonds

Bonds are debt instruments issued by governments and corporations to raise capital. We will discuss the characteristics of bonds, the relationship between bond prices and interest rates, and the role of bonds in a diversified portfolio.

Derivatives

Derivatives are financial contracts whose value depends on an underlying asset or set of assets. Common types of derivatives include futures, options, and swaps. We will introduce these instruments, explain how they work, and discuss their use in hedging, speculation, and risk management.

Understanding Risk and Return

Understanding the trade-off between risk and return is fundamental to investment decision-making. We will discuss how different financial instruments can have different risk-return profiles and how investors can use these instruments to construct a portfolio that matches their risk tolerance and investment objectives.

Summary

This course introduced various financial instruments and their roles in financial markets. We covered equities, bonds, and derivatives, each with unique characteristics and applications in finance. Understanding these instruments is key for any investor or financial analyst.