Who should attend
This course is aimed at those who are new to finance. The content is covered from first principles with the emphasis on participants gaining an introductory level of knowledge of the topics covered.
About the course
The focus of this one-day course is fixed income securities which are used by governments and corporates to raise finance. Features of these instruments are studied along with pricing principles. The course is practical in nature and uses example securities from the markets throughout. Participants will work in Excel to construct pricing models. Risk from fixed income transactions is studied along with an overview of yield curve transactions.
Key Learning Outcomes:
- Discuss risks from fixed income securities
- Explain the features of money market and bond instruments
- Calculate the cash flow from a bond
- Illustrate the principles of bond pricing
- Define yield curves
Overview of Debt Capital Markets
- The differences between equity and debt products
- The differences between loans and bonds
- Hybrid securities
Bond markets are the benchmarks of the fixed markets. Both government and corporate bonds are analyzed during this day.
- Features of government bonds
- Major issuers of bonds
- Investors in bonds
- Coupon variations
- Credit considerations
- Features of corporate bonds
- Types of corporate bond
- Credit ratings
- Credit spreads
- Case study: Investors and bonds – selecting the most appropriate bond for a series of investors with different risk profiles
Bond Pricing Fundamentals
- Time value of money
- Case study: Present value and future value
- Cash flow from a bond
- Price/yield relationship
- Yield variations
- Case study: Bond pricing – calculating price and calculating yield using Excel
Practical Bond Pricing
- Modeling cash flow from a bond
- Accrued interest
- Clean and dirty pricing
- Discount factors
- Excel exercise: Building a pricing model in Excel – full cash flow models are constructed in Excel for bonds using market data taken from Bloomberg
Bond Risk Metrics
- Modified Duration
- Dollar Duration, DV01, PVBP, PV01
- Hedge ratios
- Excel exercise: Building risk metrics in Excel – completing the modeling of the bonds using Bloomberg risk data
Language of Yield Curves
- Inverted curves
- What does the yield curve tell us?
- Overview of yield curve transactions
Because of COVID-19, many providers are cancelling or postponing in-person programs or providing online participation options.
We are happy to help you find a suitable online alternative.