Crash Course in Bonds and Debt

A step-by-step course designed for those pursuing a career in fixed income research, investments, sales and trading or investment banking (debt capital markets).

Crash Course in Bonds and Debt

Course Description

If you’ve ever tried to learn about bonds – either through a textbook, a university class, or CFA training materials, you’ve most likely discovered that it quickly gets painful. We’ll be blunt: bond analysis is usually taught horribly. Beyond super-basic concepts of bond pricing and interest rate valuation, concepts like convexity, modified duration and forward curves are introduced with no connection to how they relate to real-world investment strategies. This course by Wall Street Prep is made with one overall objective in mind: to make something truly different than what’s out there now. Something that completely demystifies fixed income analysis and gives people a clear window to the inside. We feel certain we’ve accomplished this. We take you step-by-step through the core concepts you need, and completely cut... Read More »

If you’ve ever tried to learn about bonds – either through a textbook, a university class, or CFA training materials, you’ve most likely discovered that it quickly gets painful. We’ll be blunt: bond analysis is usually taught horribly. Beyond super-basic concepts of bond pricing and interest rate valuation, concepts like convexity, modified duration and forward curves are introduced with no connection to how they relate to real-world investment strategies.

This course by Wall Street Prep is made with one overall objective in mind: to make something truly different than what’s out there now. Something that completely demystifies fixed income analysis and gives people a clear window to the inside.

We feel certain we’ve accomplished this. We take you step-by-step through the core concepts you need, and completely cut out concepts you’ll never use. The result is an intuitive look at the use of bonds in fixed income research, sales and trading and investment banking.

 

Course Summary

First, we’ll take a look at the role of bonds in financing governments, corporations, households and financial institutions around the world. Next, we’ll dive into bond math. You’ll learn the various calculations and concepts required to accurately analyze the large variety of fixed income products. We’ll start slow, but will quickly build up to some of the most traditionally confusing bond concepts: convexity, duration, spot rates, forward rates and the drivers of changes to the all-important yield curve. We conclude with a discussion of credit analysis and an overview of debt capital markets. Enjoy the course!

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Course Details:

Target Audience

For learners pursuing a career in fixed income research, investments, sales and trading or investment banking (debt capital markets).

Access Timeframe

Lifetime
Certificate Info:

Type of Certification

Certificate of Completion

Format of Certification

Digital

Method of Obtaining Certification

There is a 3-hour examination at the end of the course. You are eligible to take the exam for 24 months from the date you registered for the course. Those who complete the exam and score above 80% will receive a Certification in Bond Analysis. The exam is challenging and covers the most difficult concepts covered in the program.

Course Outline

  • What is fixed income?
  • Size of the bond market
  • Bond market geographic breakdown
  • Basic bond terms
  • Basic bond math
  • Using Excel’s RATE() function
  • Reinvestment assumption of YTM
  • YTM vs. current vs. nominal yield
  • Annuities
  • Bond price as present value of a bond’s cash flows
  • Simple bond price exercise
  • More bond terms
  • Bond issuance costs
  • The price/yield relationship
  • Primary vs. secondary bond market
  • The bid/ask spread
  • Coupon frequency and bond equivalent yield (BEY)
  • BEY vs Effective annual yield (EAY)
  • Converting from BEY to EAY
  • Compounding conventions of 0-coupon bonds
  • Money market yield
  • Money market math exercises
  • Compounding
  • Discount basis
  • Converting interest rates
  • Money market instruments
  • Settlement date
  • Bond pricing between coupons
  • Fractional periods
  • Day count convention
  • Dirty price
  • Dirty price exercise
  • Clean vs dirty price
  • Useful Excel functions
  • Bond pricing exercise, part 1
  • Bond pricing exercise, part 2
  • Bond pricing exercise, part 3
  • Interpreting the Bloomberg bond screen
  • Realized compound yield and holding period yield
  • RCY / HPY exercise, part 1
  • RCY / HPY exercise, part 2
  • RCY / HPY exercise, part 3
  • Intro to interest rate risk
  • DV01
  • Hedging interest rate risk
  • Estimating the price impact of rate changes
  • Modified duration & dollar duration
  • Modified duration exercise
  • Useful Excel functions for interest rate risk
  • Modified duration exercise, part 2
  • Modified duration exercise, part 3
  • Convexity
  • Convexity exercise
  • How convexity is applied in practice
  • Duration/convexity between coupons
  • Duration/convexity between coupons exercise
  • Interpreting the Bloomberg YAS screen
  • Make whole call
  • Make whole call, Apple example
  • Callable bonds
  • Sinking fund redemption
  • Yield to call and yield to worst
  • Yield curve intro
  • Term structure theory
  • Monetary policy intro
  • Federal funds and the discount rate
  • Open market operations
  • Other central bank tools
  • Summary of forces affecting the yield curve
  • Yield curve shape at various points in the business cycle
  • Spot rates intro
  • Spot rates role in bond valuation
  • Full vs YTM bond valuation approaches
  • Bootstrapping the spot curve, part 1
  • Bootstrapping the spot curve, part
  • Yield spreads and the z-spread
  • Option adjusted spread
  • Forward rates
  • Forward rate exercise, part 1
  • Forward rate exercise, part 2
  • Forward rate exercise, part 3
  • Trading strategy using forward rates
  • Credit risk
  • Credit analysis
  • Navigating Clear Channel’s bond agreement

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