Fixed Income Markets

Learn the characteristics, analysis, and valuation of fixed income securities.

This course provides a thorough understanding of fixed income markets and the analysis and valuation of fixed income securities.

1. Fixed-Income Securities: Defining Elements

The first section discusses the various features of debt securities, the affirmative and negative covenants, and various legal, regulatory and tax considerations. It also discusses the provisions for redemption and retirement of bonds, as well as the common options embedded in a bond issue.

2. Fixed Income Markets: Issuance, Trading and Funding

The focus of this section is on how fixed income securities are issued, traded and funded in the fixed income market. You will learn about how various types of securities are distributed, the primary and secondary market for bond markets. The section also explains the features and structure of various types of securities.

3. Fixed Income Valuation

This section introduces the general principles for valuation of fixed income securities. You will learn about how to value a bond, and the factors affecting the price of a bond. You will also learn about the arbitrage-free valuation approach and how a dealer can generate arbitrage profits from mispriced securities. You will apply the time value of money (TVM) skills to calculate the value of a bond. You will also learn about the yields and spreads and the effect of monetary policy on financial markets. You will learn about the shapes of yield curve, and the theories of term structure of interest rates. You will also learn about spot rates, yield spread measures and credit spreads. The impact of various factors such as embedded options, liquidity, and issue size on yield spreads is discussed. The section also explains the tax implications on securities' yields. Finally you will learn about LIBOR and its importance.

4. Introduction to Asset-backed Securities

This section provides an introduction to the asset-backed securities. You will learn about various types of securities such as mortgage-backed securities, collateralized mortgage obligations, auto loan backed securities, student loan backed securities, home equity loan backed securities, credit card receivables backed securities and more.

5. Understanding Fixed Income Risk and Return

In this section you will learn about the measurement of interest rate risk using two key concepts, namely, duration and convexity. You will learn about how to calculate and interpret duration and convexity, and other related concepts. It’s an important section and you should get a good grasp on these concepts.

6. Fundamentals of Credit Analysis

This section introduces the readers to credit analysis of bonds. You will learn about credit analysis for corporate bonds and also credit risk characteristics of other securities such as sovereign bonds, high yield bonds, and municipal bonds.

Class Curriculum

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