This one day course will give you a comprehensive introduction to the fixed income market covering both products and risk management. No prior knowledge or experience is required.
Price per person (Ex. VAT): Provided on request
KEY OUTCOMES
- How bonds work and the terminology used in the bond markets
- Provide a full understanding of the mechanics and cash flows of bond
- Learn the main concepts of bond pricing and how it works in practice
- Identification of the main risks associated with bond markets
- Examine the measures of sensitivity and interest rate risk
COURSE OVERVIEW
From vanilla bonds to an overview of bond risk management, this course provides an understanding of the product ranges and how market professionals analyse and price fixed income instruments. Case studies and illustrations are used to demonstrate the product applications.
Bond Fundamentals
What is a bond?
1. Who issues and invests?
Bond characteristics
2. Coupon structures – fixed vs floating
3. Government vs. corporate bonds
4. Senior vs. subordinated issues
The capital structure explained
5. When an issuer defaults – who get paid out first
Credit Ratings
The role of the rating agencies and their rating scales
The ratings methodology and process
6. ‘True’ vs. market-implied spreads and default probabilities
7. Intuitive explanation of discrepancies between ratings and market spreads
Bond Pricing
Clean vs. dirty pricing
8. Accounting for coupon accruals between contractual payments dates
9. The bond price as the discounted sum of cash flows
10. Bond quotations – the price, the yields and the different spreads used
11. Understanding the price-yield relationship of bonds
12. The bond yield (Yield-to-Maturity) defined
13. Pitfalls of yield as a measure of value
14. Pricing as sum of discounted cash flows
15. Pricing FRNs and the discount margin concept
Bond Risk Analysis
Bond risk identification
16. The main factors driving the bond price
Measures of bond price sensitivity
17. Macaulay Duration and Modified Duration
18. Factors driving Modified Duration
19. Introducing the PV01 (Present Value of a Basis Point) and Dollar Duration
20. Calculation and interpretation of duration
21. The non-linear properties of duration – introducing convexity
If you have any questions about this course, please feel free to get in touch via email on info@thezishi.com or by calling +44 (0)204 551 8568 (please choose option 2).
This one day course will give you a comprehensive introduction to the fixed income market covering both products and risk management. No prior knowledge or experience is required.
Price per person (Ex. VAT): Provided on request
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