Fixed Income Markets and Valuation

Catalog description

This course introduces students to the role that fixed-income securities play in the global money and capital markets. Fixed-income instruments, including money markets, bonds, and derivatives, are described and their relative risk, return and liquidity characteristics are explored. Valuation techniques are covered including the calculation of total return, the bond pricing model, and the calculation of yield to maturity, duration, and convexity. Important relationships in the fixed-income markets are monitored throughout the semester including the term structure of interest rates (the yield curve ); credit differentials and international interest rate differentials. The important role that the credit rating agencies play in this market are also discussed. The dominant role that the Federal Reserve and economic indicators play in interest rate determination and bond pricing are emphasized. Introduces basic concepts of bond portfolio management and trading strategies. Prerequisite: FIN 2500 .