Use this syllabus as your coverage checklist for DFC. Topic weightings and exam structure are from CSI’s official Exam & Credits page; chapter mapping follows the official Curriculum page.
What’s covered
An Overview of Derivatives (3%)
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Chapter 1 - An Overview of Derivatives
- Define what a Derivative is.
- Explain Common Features of All Derivative Instruments.
- Explain Types of Derivative Instruments.
- Differentiate between Option-Based and Forward-Based Derivatives.
- Explain Exchange-Traded and Over-the-Counter Derivatives.
- Differentiate between Exchange-Traded and Over-the-Counter Derivatives.
- Explain Types of Underlying Interests.
- Explain Commodities in the context of An Overview of Derivatives.
- Explain Financials in the context of An Overview of Derivatives.
- Explain why Derivatives Useful.
- Explain Operational Considerations in the context of An Overview of Derivatives.
- Explain Who Uses Derivatives and to What Extent Are They Used.
Futures Contracts (40%)
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Chapter 2 - Introduction to Futures Contracts
- Define what a Forward-Based Derivative is.
- Explain Types of Forward-Based Derivatives.
- Differentiate between Exchange-Traded and OTC Forward-Based Products.
- Identify key definitions and terminology for Introduction to Futures Contracts.
- List practical implications of differences between Exchange-Traded and OTC Forward-Based Products (concept).
- Describe What Is a Forward-Based Derivative.
- Identify Types of Forward-Based Derivatives.
Chapter 3 - Basic Features of Forward Agreements and Futures Contracts
- Summarize Forward-Based Derivatives.
- Describe the history of Forwards.
- Define what a Forward Agreement is.
- Define what a Futures Contract is.
- Explain Organized Futures Markets.
- Explain how to buy and sell a Futures Contract.
- Explain Cash Settlement in the context of Basic Features of Forward Agreements and Futures Contracts.
- Explain Margin Requirements and Marking-to-Market.
- Explain Futures Trading and Leverage.
- Interpret a Futures Quotation Page.
- Explain Contract Size and the Value of the Underlying Interest.
Chapter 4 - Exchanges and Clearinghouses
- Explain Futures Exchanges in the context of Exchanges and Clearinghouses.
- Explain Futures Exchange Functions.
- Explain Clearinghouses in the context of Exchanges and Clearinghouses.
- Explain Clearinghouse Functions in the context of Exchanges and Clearinghouses.
- Identify key definitions and terminology for Exchanges and Clearinghouses.
- Explain how margining and daily settlement can change risk outcomes in Exchanges and Clearinghouses (concept).
- Explain the main functions and responsibilities covered by Futures Exchange Functions.
Chapter 5 - Pricing of Futures Contracts
- Summarize Futures Pricing.
- Explain Futures Market versus Cash Market.
- Explain Cost of Carry.
- Define basis and explain its role in futures pricing and hedging.
- Explain Cash and Carry Arbitrage.
- Explain Reverse Cash and Carry Arbitrage.
- Explain Conditions that Facilitate Arbitrage.
- Explain inverted markets (backwardation) and how they relate to the futures curve.
- Explain convergence between futures and spot prices as expiry approaches.
Chapter 6 - Hedging with Futures Contracts
- Explain Hedging in the context of Hedging with Futures Contracts.
- Explain Types of Hedges.
- Explain Imperfect Hedges in the context of Hedging with Futures Contracts.
- Explain Optimal Hedge Ratio.
- Identify key definitions and terminology for Hedging with Futures Contracts.
- Distinguish hedging intent from speculation intent for scenarios in Hedging with Futures Contracts.
- Describe Hedging.
Chapter 7 - Speculating with Futures Contracts
- Explain What Attracts Speculators.
- Explain Types of Speculators.
- Explain Price Forecasting Techniques.
- Explain Fundamental Analysis in the context of Speculating with Futures Contracts.
- Explain Technical Analysis in the context of Speculating with Futures Contracts.
- Identify key definitions and terminology for Speculating with Futures Contracts.
- Describe What Attracts Speculators.
Chapter 8 - Interest Rate Futures
- Summarize interest rate futures.
- Define what an Interest Rate Futures Contract is.
- Explain Bond and Note Futures.
- Explain Money Market Interest Rate Futures.
- Explain pricing of Interest Rate Futures.
- Explain pricing of Money Market Interest Rate Futures.
- Explain Applications for Interest Rate Futures.
Chapter 9 - Equity Futures
- Explain Stock Index Futures.
- Explain What Are Equity Futures Contracts.
- Explain pricing of Equity Futures.
- Explain Equity Futures Applications.
- Identify key definitions and terminology for Equity Futures.
- Apply pricing intuition from Equity Futures to interpret a basic numeric example (concept).
- Describe Stock Index Futures.
Chapter 10 - Currency Futures
- Explain Foreign Exchange Markets.
- Explain pricing of Currency Futures Contracts.
- Explain Currency Futures Applications.
- Identify key definitions and terminology for Currency Futures.
- Apply pricing intuition from Currency Futures to interpret a basic numeric example (concept).
- Describe Foreign Exchange Markets.
- Identify Pricing of Currency Futures Contracts.
Chapter 11 - Over-the-counter Forwards and Other Futures Contracts
- Explain Forwards versus Futures.
- Explain Forward Rate Agreements.
- Explain Forward Exchange Agreements.
- Explain Contracts for Differences (CFDs).
- Explain Weather Derivatives in the context of Over-the-counter Forwards and Other Futures Contracts.
- Explain Volatility Derivatives in the context of Over-the-counter Forwards and Other Futures Contracts.
- Identify key definitions and terminology for Over-the-counter Forwards and Other Futures Contracts.
Exchange-Traded Options (42%)
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Chapter 12 - Introduction to Option-Based Contracts
- Define what an Option-Based Derivative is.
- Explain Types of Option-Based Contracts.
- Describe similarities between Options and Forwards.
- Differentiate between Options and Forwards.
- Identify key definitions and terminology for Introduction to Option-Based Contracts.
- Calculate payoff directionally for common option positions referenced in Introduction to Option-Based Contracts (concept).
- List practical implications of differences between Options and Forwards (concept).
Chapter 13 - Basic Features of Options
- Explain The History of Options.
- Explain Key Option Terminology and Definitions.
- Explain Application of Key Terms and Definitions.
- Explain Why Investors Buy Options.
- Explain Why Investors Write Options.
- Explain Other Related Benefits of Options.
- Explain Advantages of Exchange-Traded Options versus Over-the-Counter Options.
- Interpret Option Quotations.
- Explain Common Questions Pertaining to the Options Market.
Chapter 14 - Pricing of Options
- Explain pricing of Options.
- Explain Major Factors that Affect the Price of an Option.
- Calculate intrinsic value for calls and puts in basic scenarios.
- Explain time value and time decay in option premiums.
- Interpret delta as a measure of option price sensitivity to the underlying.
- Identify key definitions and terminology for Pricing of Options.
- Apply pricing intuition from Pricing of Options to interpret a basic numeric example (concept).
Chapter 15 - Basic Option Strategies
- Explain Exchange-Traded Options Strategies.
- Explain Bullish Option Strategies.
- Explain Bearish Option Strategies.
- Explain Other Option Strategies.
- Identify key definitions and terminology for Basic Option Strategies.
- Calculate payoff directionally for common option positions referenced in Basic Option Strategies (concept).
- Describe Exchange-Traded Options Strategies.
Chapter 16 - Non-Equity Exchange-Traded Options
- Explain Non-Equity Options in the context of Non-Equity Exchange-Traded Options.
- Explain Stock Index Options.
- Explain Foreign Currency Options.
- Explain Options on Futures.
- Explain A Last Word on Non-Equity Options.
- Identify key definitions and terminology for Non-Equity Exchange-Traded Options.
- Calculate payoff directionally for common option positions referenced in Non-Equity Exchange-Traded Options (concept).
Chapter 17 - Over-the-Counter Options
- Explain Over-the-Counter Interest Rate Options.
- Explain Interest Rate Caps.
- Explain Interest Rate Floors.
- Explain Interest Rate Collars.
- Explain Exotic Options in the context of Over-the-Counter Options.
- Identify key definitions and terminology for Over-the-Counter Options.
- Calculate payoff directionally for common option positions referenced in Over-the-Counter Options (concept).
Swaps (8%)
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Chapter 18 - Introduction to Swaps
- Summarize the Swap Market.
- Define what a Swap is.
- Explain Role of the Swap Dealer.
- Explain History of Swaps.
- Explain OTC Derivatives Market Reform.
- Identify key definitions and terminology for Introduction to Swaps.
- Describe common swap cash-flow legs and how they exchange risk in Introduction to Swaps (concept).
Chapter 19 - Interest Rate Swaps
- Explain Plain Vanilla Interest Rate Swap.
- Explain A Note on Rate and Day Count Conventions.
- Explain The Structure of an Interest Rate Swap.
- Explain Pricing an Interest Rate Swap.
- Explain Indication Pricing Schedule.
- Explain credit risk in OTC derivatives and why collateral/clearing can matter.
- Explain Terminating an Interest Rate Swap.
- Explain why Interest Rate Swaps Used.
- Explain Deliverable Interest Rate Swap Futures and Centrally Cleared Swaps.
- Explain Other Types of Interest Rate Swaps.
- Explain Swaptions in the context of Interest Rate Swaps.
Chapter 20 - Currency Swaps
- Explain The Structure of a Currency Swap.
- Explain Currency Swaps as a Portfolio of Fixed- and/or Floating-Rate Bonds.
- Explain pricing of Currency Swaps.
- Explain Reasons for Currency Swaps.
- Identify key definitions and terminology for Currency Swaps.
- Apply pricing intuition from Currency Swaps to interpret a basic numeric example (concept).
- Describe common swap cash-flow legs and how they exchange risk in Currency Swaps (concept).
Chapter 21 - Credit Swaps
- Explain Credit Derivatives in the context of Credit Swaps.
- Explain The Role of Credit Derivatives.
- Explain The Structure of Credit Default Swaps (CDSs).
- Explain What are Index CDSs.
- Explain why CDSs and Index CDSs Used.
- Identify key definitions and terminology for Credit Swaps.
- Describe common swap cash-flow legs and how they exchange risk in Credit Swaps (concept).
Chapter 22 - Other Types of Swaps
- Explain Equity Swaps in the context of Other Types of Swaps.
- Explain Commodity Swaps in the context of Other Types of Swaps.
- Identify key definitions and terminology for Other Types of Swaps.
- Describe common swap cash-flow legs and how they exchange risk in Other Types of Swaps (concept).
- Describe Equity Swaps.
- Identify Commodity Swaps.
- Explain Equity Swaps.
How Investment Funds and Structured Products Use Derivatives (5%)
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Chapter 23 - Mutual Funds
- Explain Regulatory Framework for Canadian Investment Funds and Structured Products.
- Explain Use of Derivatives in Mutual Funds.
- Explain Risks of Derivatives Use by Mutual Funds.
- Identify key definitions and terminology for Mutual Funds.
- Classify risk types and identify basic controls discussed in Mutual Funds.
- Describe Regulatory Framework for Canadian Investment Funds and Structured Products.
- Identify Use of Derivatives in Mutual Funds.
Chapter 24 - Alternative Mutual Funds, Closed-End Funds, and Hedge Funds
- Explain Use of Derivatives by Alternative Mutual Funds and Closed-End Funds.
- Explain Alternative Investments and Alternative Strategies.
- Explain Hedge Funds Compared to Alternative Mutual Funds.
- Explain Types of Alternative Strategies.
- Explain Advantages and Disadvantages of Derivatives.
- Identify key definitions and terminology for Alternative Mutual Funds, Closed-End Funds, and Hedge Funds.
- Distinguish hedging intent from speculation intent for scenarios in Alternative Mutual Funds, Closed-End Funds, and Hedge Funds.
Chapter 25 - Principle protected Notes (PPNs)
- Explain Principal-Protected Notes (PPNs) - What Are They.
- Explain PPN Structures and the Use of Derivatives.
- Explain CPPI and Zero-Coupon Bond Plus Call Option Structures - Key Differences.
- Identify key definitions and terminology for Principle protected Notes (PPNs).
- Calculate payoff directionally for common option positions referenced in Principle protected Notes (PPNs) (concept).
- Describe Principal-Protected Notes (PPNs) – What Are They.
- Identify PPN Structures and the Use of Derivatives.
Chapter 26 - Derivative Based ETFs
- Explain Introduction in the context of Derivative Based ETFs.
- Explain Commodity ETFs in the context of Derivative Based ETFs.
- Explain Swap-Based ETFs and the Synthetic Replication of Indexes.
- Explain Leveraged and Inverse ETFs.
- Identify key definitions and terminology for Derivative Based ETFs.
- Describe common swap cash-flow legs and how they exchange risk in Derivative Based ETFs (concept).
- Describe Introduction.
Operational Considerations (2%)
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Chapter 27 - Risk Assessment, Valuation and Monitoring
- Explain Derivatives - Friend or Foe.
- Explain Types of Risks Associated with Derivatives.
- Explain Measuring Risk in the context of Risk Assessment, Valuation and Monitoring.
- Explain Internal Control and Monitoring.
- Explain The Amaranth Debacle.
- Identify key definitions and terminology for Risk Assessment, Valuation and Monitoring.
- Classify risk types and identify basic controls discussed in Risk Assessment, Valuation and Monitoring.
Chapter 28 - Accounting, Disclosure and Taxation
- Explain accounting considerations for derivatives and derivative positions.
- Explain financial reporting and disclosure considerations for derivatives and derivative-based products.
- Explain taxation considerations for derivatives and derivative-based products.
- Identify key definitions and terminology for Accounting, Disclosure and Taxation.
- Identify common taxation considerations for derivative positions referenced in Accounting, Disclosure and Taxation (concept).
- Describe Accounting.
- Identify Financial Reporting and Disclosure.
Tip: Most DFC questions collapse to “what’s the exposure?” + “what’s the intent?” If you can restate those in one sentence, you’re usually very close to the best answer.
Sources: https://www.csi.ca/en/learning/courses/dfc/curriculum and https://www.csi.ca/en/learning/courses/dfc/exam-credits