Understanding Fixed Income

In addition to your class tuition and study materials, you will receive the following:


Case Study

• Determining the price of a new bond issue

Other Extras

• Certificate of attendance

Level: Introductory


Synopsis:
Call them what you like: bonds, debt securities, interest rates, credit or liquidity products. Find out what makes the biggest securities market in the world tick.... From vanilla bonds to collateralised mortgage obligations, the course provides a thorough introduction to the product ranges, investor-types and how market professionals analyse and price fixed income instruments.


At the end of the course participants will be able to: Know the 'hot issues' and current developments in the global bond market place . Explain the process of securitisation and its uses . Define the concept of 'spreads' and why they are important in the bond market . Evaluate the concept of yield and the yield curve . Examine the measures of sensitivity and interest rate risk . Compute the price of fixed income securities using the concepts of discounted cash flow techniques . Discuss the concept of time value of money and its application to bond pricing . Identify the role played by credit rating agencies . Compare the similarities and differences between types of fixed income instruments . Identify the major players in the fixed income market . Describe the government and corporate bond markets, including issuance .


Prerequisites:
None


Suitable For:
Individuals who are seeking an understanding of fixed income and related instruments. New staff to debt divisions of investment banks will find the concepts discussed during the course particularly useful. Technology staff supporting these functions will also benefit.


Overview of debt capital markets

• The differences between equity and debt products
• The differences between loans and bonds
• Hybrid securities
• Securitisation

The structure of the global bond markets

• Reviewing the role played by a firm's Debt Capital Markets / Fixed Income Division
• Features of domestic bonds

Governments and corporates

• Eurobonds
• The markets in MBS and ABS securities

Understanding bond mathematics

• The concept of time value of money, i.e. the cost of money
• Present value and future value
• Compounding and discounting

Pricing a bond

• Pricing a bond using DCF
• The concept of accrued interest
• Clean vs. dirty prices
• Using the yield to maturity to analyse a bond's price
• Spread analysis; focusing on nominal spread analysis

Understanding sensitivity analysis

• The determinants of sensitivity
• Macaulay and modified duration
• Using duration as a measure of sensitivity
• Taking convexity into account

Credit ratings

• Credit risk
• The credit rating agencies
• Credit rating conventions

Yield curves

• Constructing a basic yield curve
• Yield curve shapes
• The inferences of different yield curve shapes