Fixed income – Online
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- Location : Online.
Fixed Income teaches how to analyze, valuate and manage fixed-income securities. This course also describes the primary issuers, sectors and types of bonds, as well as yields and spreads that affect monetary policies on financial markets. Primary tools for valuation and analysis are also explained such as basic valuation theory and techniques for bonds and fixed-income investment valuation (interest rate, yield valuation, interest rate measurement and analysis).
Modules in this course
Module 1: Features of Debt Securities
A bond prospectus is the legal document that describes all the features of any debt instrument.This module explains the basics of a bond from the variety of coupon structures to the kinds of provisions for redemption and retirement of bonds. These lessons also explore the most common covenants of bond indentures, their typical embedded options and the basic methods of financing debt purchases.
Module 2: Risks Associated with Investing in Bonds
Investing in bonds entails multiple risks. In this module, the risks are segregated and discussed independently. Interest risk, yield curve risk, reinvestment risk, liquidity risk, credit risk, event risk, inflation risk, exchange-rate risk, yield volatility. Interest rate risk is discussed in more depth for fixed coupon bonds, floating rate bonds, and bonds with embedded options. Duration is defined as a measure of interest rate sensitivity.
Module 3: Overview of Bond Sectors and Instruments
Bonds are issued by Sovereigns, Agencies, municipalities, and corporations. This module describes the basic US Treasury bond instruments (bills, notes, bonds, and inflation protection securities) and coupon and principal STRIPS; mortgage backed securities and collateralized mortgage obligations that are mainly issued by Federal agencies. A rich variety of bond instruments are issued by corporations (corporate bonds, medium-term notes, structured notes, commercial paper, negotiable CDs, and bankers acceptances, asset backed securities, and collateralized debt obligations). The distribution methods for placing bonds in the primary market and secondary markets are also outlined.
Module 4: Understanding Yield Spreads
The most common quantitative concepts for bonds are yields, yield spreads, and yield curves. This module covers the topic in depth: The basic theories of the term structure of interest rates and the corresponding yield curve shapes; the various yield spread measures; the effect of embedded options on yield spreads. LIBOR, the benchmark interest rate, is defined and its importance in fixed income funding is addressed.
Module 5: Introduction to the Valuation of Debt Securities
This module presents a thorough explanation of the basic quantitative framework for the valuation of a typical fixed coupon-bearing and zero-coupon bond, which entails discounting future cash flows. Lessons also discuss the necessary adaptations for the valuation of floating rate bonds and the valuation of a bond as a function of the selection of the discount rate and as time to maturity declines. In addition, this module explains the arbitrage-free valuation method of a bond and its use for identifying trading opportunities.
Module 6: Yield Measures, Spot Rates, and Forward Rates
This module presents an in-depth look into the three components of the return from investing in bonds with a focus on reinvestment risk that affects realized returns. Lessons also define and differentiate the nominal spread, the zero-volatility spread, and the option-adjusted spread. Finally, forward rate calculations are explained and used for bond valuation to be compared to the use of spot rates.
Module 7: Introduction to the Measurement of Interest Rate Risk
First and second order bond valuation sensitivity for changes in interest rates, are examined in this module. The first order measures are based on the full valuation approach (scenario analysis) and the various duration measures (effective, modified, price value of a basis point (PVBP)). The second order measures are reflected in the bond's convexity measures (effective, modified). Lessons also discuss the advantages and limitations of each measure.
All course materials and assessments are online. Each course is available 24 hours a day, 7 days a week. Courses (and the modules that make up the courses) can be accessed from anywhere around the world with an Internet connection, and without requiring any software to download onto your computer. Courses can be accessed for a duration of three months, giving you plenty of time to review, study and not only test your knowledge, but improve your grades. Course materials are offered in audio and print format and can be reviewed in any order enabling you to have complete control of your learning process.
The credit hours listed in each course description page serve as an approximation of the total learning time required to complete a module or a course. This includes watching the video lectures, completing the readings and exercises, and going through other assigned course materials. However, it is understood that this value is an approximation, since it will vary for each individual learner. Once registration is complete, the access given to a module or a course is three months, which gives plenty of time to continue reviewing the study materials or to improve grades.