Financial Instruments & Market Structure
Cash, derivatives, and the plumbing they trade on.
Every pricing model starts from the cashflows an instrument promises and the machinery that delivers them. This track tours the main instrument families, from equities, bonds, money-market claims, FX, and funds to futures, swaps, and options, then closes with exotics and the exchanges, order books, and clearing systems where all of them actually trade.
Cash Instruments
Equities
A share is a residual claim on a firm paying uncertain dividends, and indices aggregate shares into the benchmarks everyone quotes.
Bonds & Fixed Income
Bonds trade the present value of promised coupons and redemption, with duration and convexity summarizing their rate risk against the discount curve.
Money Markets
T-bills, repo, and commercial paper supply the short-dated, collateralized funding layer whose rates anchor everything priced above them.
Foreign Exchange
Currencies trade as base/quote pairs, with dollar legs and crosses making FX the largest and most fragmented market in the world.
ETFs & Funds
Funds pool assets and strike a NAV, while ETFs add creation and redemption, the arbitrage mechanism that keeps price and value locked together.
Derivatives
Futures
Futures standardize forwards and settle gains and losses daily through margin, making them the deepest listed derivatives market.
Forwards & Swaps
Forwards fix a future price bilaterally, and interest-rate swaps stack them into the instrument that dominates the rates market.
Options
Calls and puts confer asymmetric rights whose quoted prices imply the volatility surface the rest of quant finance builds on.