Formation/Cours

Part 1. Equity Investment

Overview of Equity Investment

• Importance of Equity Securities


• Characteristics of Equity Securities


• Private Versus Public Equity Securities


• Non-domestic Equity Securities


• Risk and Return Characteristics


• Equity and Company Value

Equity Val Estimated Value and Market Price

• Three major categories of Equity Valuation Models


• Present value models


• The use of multiples in valuation


• Asset-based valuation: Concept and Basic Tools

ESG Integration

Part 2. Fixed Income Investment

Introduction

• Definition of bonds/debt securities. Terminology (issuer, holder, maturity, coupon/face interest, redemption/final value, capitalization rate, rate of return. Public and private bonds


• Different categories of bonds (fixed and variable-rate bonds/securities/notes)


• Coupon bonds, zero-coupon, perpetuities.


• Public and private bonds


• Bonds, bills and notes.


• Money market, interbank market and bond markets in Eurozone, France and UK.

Fixed income but variable value

• Market value and actuarial value of bonds. Why thy converge?


• The reason actuarial value of bonds changes while coupons and redemption value remain unchanged.


• Sensibility, duration and volatility of a bond.


• Variable rate bonds again

Which maturity to choose? The term structure of interest rates

• Yield curves: observations.


• Normal (upward slopping), inverted (downward slopping) and flat


• Explanation 1: Expectations of the future evolution of short-term interest rates


• Explanation 2: Preferred habitat and segmentation of bond market


• Explanation 3: Maturity and liquidity of bonds


• Explanation 4: Back on sensibility and duration, the risk of interest rate variations.


• Managing the risk of interest rates variation: forwards and futures, swaps, options.

Which signature to choose? Issuers and default risk

• Types of issuers and risk of default: private issuers, public issuers, Governments.


• Default risk and maturity: back on inverted yield curves


• Constant annuities.


• The “subprime crisis” and the “sovereign debt crisis”


• Credit default swaps and other types of securitizations.