This module covers derivatives and various investments that use derivatives. The mechanics and uses of options and futures, hedging, managed futures, hedge funds (including hedge fund strategies), and the various types of private equity are covered. Also addressed are structured products including principal protected products like market-linked CDs and contingent convertible bonds (CoCos).

7-1 Explain terminology, characteristics, risks, concepts, and strategies for the use and valuation of various types of option investments.
7-2 Evaluate the effective use of options as speculative investments and as hedging instruments.
7-3 Explain terminology, characteristics, risks, concepts, and strategies for the use of commodity futures.
7-4 Describe characteristics of hedge funds, including the latest regulatory requirements.
7-5 Explain hedge fund costs and fees, and distinguish between the main categories of hedge fund strategies.
7-6 Explain the four major private equity strategies.
7-7 Explain the general characteristics and mechanics of structured products.
7-8 Explain the payoff scenarios of a principal-protected structured product.
7-9 Understand the benefits, risks, and regulatory concerns of principal-protected structured products.
7-10 Describe the mechanics, benefits, risks, and suitability of market-linked CDs and contingent convertible bonds.

Author: Craig Kinnunen, MS, CFP®

Craig Kinnunen, MS, CFP® is an associate professor at the College for Financial Planning. Prior to joining the College, Craig enjoyed a long and successful career in personal financial planning and wealth management. Craig’s enthusiasm for financial planning extends beyond the classroom, as he also spends time providing pro bono financial education and individual financial counseling to members of the Colorado National Guard. Craig earned a bachelor of science degree in accounting from Northern Michigan University and followed that up with a master of science degree in finance from the University of Colorado in Denver. You can contact Craig at craig.kinnunen@cffp.edu..

Complexity Level: Advanced