There are no prerequisites.

Course Description

A derivative is a financial product that derives its value based on an underlying asset, liability, or other variable (such as an interest rate, foreign currency, or commodity price). Derivatives have become very popular tools for 'hedging' (i.e. reducing) financial risk; they have also become an increasingly standard item on big companies' balance sheets. Yet understanding how they work, what they are used for, and how they can affect the bottom line of a business has proven to be a significant challenge for the accounting and auditing industries.

This course provides an 'accountant-friendly' overview of financial risk management and derivative instruments. This overview focuses on the various types of risk that impact financial markets today, as well as the four major categories of derivatives commonly used to hedge these risks (i.e. forwards, futures, swaps, and options).


Michael J. Walker, CPA

Michael J. Walker, CPA, is based in New England and has decades of accounting experience in the financial services, information technology services, and construction industries. He has an extensive technical accounting background that includes hands-on experience with U.S. GAAP and International Financial Reporting Standards (IFRS). His expertise includes accounting for financial instruments, securitizations, and other banking products. He graduated from Bentley University with a BS in finance and an MS in accountancy.

Course Specifics

Sep 10, 2019
There are no prerequisites.

Compliance Information

Qualifies for CA Fraud: No

Learning Objectives

Upon successful completion of this course, participants will be able to:

Chapter 1

  • Recognize the various types of risk that impact financial markets, noting defining characteristics and examples
  • Identify proper financial risk management practices
  • Cite examples of tools used to manage financial risk, noting the basic types of derivative instruments and their usage

Chapter 2

  • Cite examples of forward contracts, noting their unique characteristics
  • Identify appropriate hedging practices using forward contracts
  • Calculate the payoff from a forward contract
  • Calculate forward prices, noting the effects of arbitrage on forward pricing

Chapter 3

  • Identify a futures contract, noting the difference between a futures contract and a forwards contract and the risks associated with each
  • Cite the mechanics of futures exchanges, noting applicable terminology and examples of futures orders
  • Calculate futures daily margin requirements
  • Identify the financial and operational risks associated with using futures contracts as hedging tools

Chapter 4

  • Identify the various types of swap agreements, noting the unique characteristics and mechanics of each
  • Calculate swap settlement amounts
  • Identify appropriate hedging practices using swaps

Chapter 5

  • Cite examples of option contracts, noting defining characteristics and key differences with other derivative products
  • Identify appropriate hedging practices using option contracts
  • Calculate the payoff from an option contract

Choose Your Preferred Format

Online Access

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online access
Hard Copy

Our self-study materials are authored by top-quality, industry experts. You’ll receive a bound notebook of all the course materials, shipped to you within one business day. In addition, you’ll also have full online access. Each self-study package includes a robust collection of learning and reference materials to help you cover the information efficiently and put it into practice immediately.

hard copy
Self-Study Video

Experience high-quality instruction with our Self-Study Videos, available to you 24/7. With more than 80+ videos currently in the Western CPE Self-Study Video library, you can see and hear our expert instructors deliver the information you need in a dynamic way that allows you to immediately apply your learning. Unlike a live course or webcast, you can complete the course on your own time, playing and pausing as needed. Self-Study Videos allow you to complete your CPE requirements on your own time.

hard copy

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