1008050-Cor-1 - EquityDerivatives andRelatedProducts Class1:

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Equity Derivatives  and Related Products Class 1: Indices  and Exchange Traded Funds   Mark Zurack August 31, 2010
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1001110-Sp-MBA-1+2 2 What This Course Is All About Course Objectives Course Structure Today’s Class Share with you the  knowledge of Equity  Derivative Products and  Markets I’ve obtained  working at Goldman Sachs  for 18 years Focus on how the products  are priced and traded,  accounting for all Real  World considerations Combination of lectures,  case studies and  assignments Take-home mid-term and  final exams 60% of your grade will  depend on exam  performance, 40% on class  attendance, participation   and assignments Required Readings:  Textbook, Course Packet,  Articles Introduce important trading  cost considerations when  evaluating strategies that use  equity derivatives Explain how different Equity  Indices are constructed and  managed and that  management affects stock  prices Describe how Exchange  Traded Funds are structured,  traded and used Explain the unique features of  leveraged ETFs Distinguish between ETFs and  Exchange Traded Notes  (ETNs) Discuss ETFs on actively  managed portfolios 1008050-Cor-1
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1001110-Sp-MBA-1+2 3 Derivatives Securities Fall into Two  Major Categories Stock/Portfolio Substitutes Securities and derivatives  that bear the full risk and  return of an underlying  security or portfolio.  The  underlying security’s  volatility does not affect the  pricing ETFs ETFs are exchange-traded single shares that represent ownership in  an underlying index or basket Listed Futures An obligation to buy or sell a market index or a single stock in the  future Total Return  Swaps Contracts which obligate one counterparty to pay either the total  return, appreciation, or depreciation of an index or basket of stocks  to a second counter-party in exchange for a fixed-income payment  or the total return of a different equity index Option-Like Securities Listed Options The right to buy or sell a stock, basket of stocks, or a market index  for a pre-determined price at a specified time Securities and derivatives  that are only exposed to  some of the risk of the  underlying security.   The  volatility of the underlying  security is a critical  parameter in pricing these  derivatives OTC Options Privately-owned options contracts between two parties who agree  on the underlying stock, stock portfolio or index, as well as the strike  price, expiration and exercise style Covered Warrants Legally a security like a stock rather than a bilateral contract like a  derivative, though usually has option-like characteristics Structured Notes
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1008050-Cor-1 - EquityDerivatives andRelatedProducts Class1:

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