Financial Markets- Bonds, Equities and Derived Instruments. The time dimension – Present value and duration – The term structure of interest rates– Measurement of risk. Stock market operations – Money market funds. Stock exchanges – The over-the-counter stock market – Operational efficiency and the Efficient Market Hypothesis (EMH) – The weak, semi-strong and the strong form of EMH. The Capital Asset Pricing Model (CAPM) – Estimating betas- Implications for portfolio management – Validity of CAPM – Arbitrage Pricing theory- Fama- French model. Stock indices- Price Indices and Total Return Indices. Uses of Derivatives – Forwards- Futures - Options – The origins of Futures trading. Relation among spot and futures prices – financial futures – commodity futures – Derivative Market Participants – Futures and portfolio management. The pay offs from buying and selling options – Boundary conditions on option prices – The put-call parity– The Black-Scholes formula.