Fixed Income Markets I - DayOnce considered a safe haven, fixed income investing now presents an array of choices for every risk profile. This course gives a comprehensive overview of the fixed income market. It covers basic bond terminology, bond fundamentals, yield calculations and the specifics of corporate, government and municipal bonds. Designed for those new to the bond market, as well as for those in related areas of the business seeking to expand their knowledge of this market. For personnel in sales, portfolio management, research, operations, and systems. |
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| Sales personnel, junior research analysts, operations and systems staff, new entrants to fixed income markets, finance analysts and corporate bankers. |
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| No advance preparation required. |
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Students will be able to:- Describe the fixed income market, characteristics, features and risks of fixed income securities
- Explain the basics of bonds
- Explain a conceptual framework for fixed income investing and the risk involved
- List the fixed income products available to your clients and discuss their specific suitability
- Understand and describe Federal Reserve policies and activities and their impact on fixed income markets
- Describe the current public credit ratings used for fixed income products
- Understand bond prices, including percentage values, quotation conventions, conversions and premium pricing
- Understand accrued interest and standard payment dates, trade and settlement dates, accrued interest calculations
- Calculate nominal yield, current yield, real yields and yield to maturity
- Understand duration analysis - definition, calculation, interpretation, limitations and advantages
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| Financial calculator required. |
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| Fixed Income Markets II - DayFixed Income Markets II - Evening |
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Size and importance of the bond marketMajor debt market categories- Money markets
- Capital markets
Choice of equity or debt for capital formation- Condition of the company
- Condition of the market place
- Nature of the need for funds
Tax advantages/disadvantages- Loss of financial flexibility through leverage
- Deduct interest payments
- Dividends paid from after-tax income
- Regulatory restraints on bank lending
Issuers- Foreign governments and firms
- Domestic corporations
- Municipal governments
- Federal governments and its agencies
Bond fundamentals- Par value
- Maturity
- Interest rate
- Interest payment
Bond pricing- Percentage values
- Quotation conventions
- Converting prices to dollar amounts
- Premium price
Accrued interest- Standard payment dates
- Trade date and settlement date
- Different market conventions for treasuries
- Calculation
Yield calculations- Yield vs. return vs. interest rate
- Nominal yield
- Current yield
- Real yields
- Price and yield
- Yield to maturity
Duration Analysis - Introduction- Definition
- Calculation - explained
- Interpretation
- Limitations/advantages
Risks in the market- Reinvestment risk
- Inflation risk
- Call risk
- Interest rate risk
- Sector risk
- Liquidity risk
- Event risk
- Sovereign risk
Credit/investments risk- Credit risk vs. market risk
- Market performance: a function of rating
The rating services- Moody's
- Standard & Poor's
- Fitch Investor's Services
- External research analysis firms
- Research departments
Structure of an issue- Secured vs. unsecured bond
- Senior vs. subordinated bond
- Callability
- Structure of the call feature
- Sinking fund
- The indenture
- Notes vs. bonds
- Serial borrowing
- Term borrowing
- Bullets
- Basic elements - rate, time, principal return
The money markets- Types of issuers
- Issued as discount
- Less than one year maturities
| U.S. government securities & agency issues- Types of issues
- Primary government security dealers
- The treasury auction
- The secondary market
- The Government securities yield curve
The corporate bond markets- Types of issuers
- Utility; transportation; financial; telecommunication; industrial
Municipal securities- Definition
- Taxation
- Types of issuers
- Credit risk and credit ratings
- The secondary market
Mortgage securities- Traditional mortgage
- Government agencies
- Lenders
- Borrowers
- CMOs
Other asset backed securities- Credit cards
- Auto loans
- Student loans
- Corporate debt
Yield curves- Definition of yield curve
- Determinants of shape of yield curve
- Shape of yield curve and market expectations
- Spreads between yield curves
The economy- Business cycles
- Monthyl indicators
- Watching the Fed
Fiscal policyMonetary policy- Concept of reserves - money creation
- Transmission process to the economy
- Key interest rates
- Impact on security yields
Role of the Federal Reserve in the American economyStructure of the Federal Reserve- Board of Governors
- The FOMC
- 12 Federal Reserve Banks
Targets and Goals- Reserve management
- Short run targets - reserves and rates
- Intermediate targets - money supply
- Final goals - credit flows and the economy
Tools of the Fed- Reserve requirements
- Discount rates
- Open market operations
- Margin requirements
Role of the New York Fed- Demand and supply for reserves
- Operations
- Primary Reporting Dealers
The Federal funds market- Importance of Federal funds
- Defined as a security
- Methods of Federal funds exchange
| Key interest rates- Discount rate
- Fed funds rate
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| Clients who register for this course will receive a complimentary 6 month subscription to the Financial Times and FT.com. The Financial Times is the world's most respected financial newspaper providing a broad assessment on finance, business and the industrial sector. Subscriptions will start within 6-8 weeks of the application process, and are limited to one per client. For questions about your subscriptions call 800-628-8088 or email uscirculation@ft.com. US and Canada enrollees only. |
Lunch included for all students taking day classes. |
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