Formation/Cours

– Basic financial management skills
– Basic knowledge of financial markets and instruments

At the end of the course, the student should be able to:

– Be familiarised with bond markets and instruments
– Understand the underlying principles of bond valuation and analyse the market value of bonds
– Be aware of the role of credit ratings in bond market and apply them in credit risk assessment
– Be aware of the risks associated with bond investment and apply derivative instruments for risk mitigation
– Be aware of the motivations and the pass-through structure of ABS

Part 1: Overview

1. Fixed income instruments
2. Bond features
3. Initiation and market mechanism
4. Current issues in bond market

Part 2: Bond valuation fundamentals

1. Present value and bond yield
2. Mechnism of non-standard bonds

Part 3: Credit ratings

1. The use of ratings and the role of rating agencies
2. Credit analysis
3. Rating behaviour

Part 4: Applications of derivatives in bond investment

1. Interest rate derivatives
2. Credit derivatives

Part 5: Asset-backed Securitisation (ABS)

1. Motivation of ABS
2. Pass-through structure
3. Role of offshore centers
4. Implications for financial stability