Bonds in Finance Course

Lesson 1 • Major Bond Categories

Classifies bonds by issuer type and structural features. Provides the taxonomy needed to analyse any fixed-income instrument.

Lesson 2 • What Bonds Are and How They Work

Defines bonds as debt instruments and explains the borrower-lender relationship. Establishes vocabulary used throughout the course.

Lesson 3 • Bond Market Size and Significance

Quantifies the global fixed-income market and its macroeconomic role. Motivates why bond analysis is essential for finance professionals.

Lesson 4 • Bond Market Participants

Identifies issuers, investors, intermediaries, and regulators. Shows how each participant influences pricing and liquidity.

Lesson 1 • Time Value of Money Essentials

Reviews present and future value concepts as the mathematical basis for bond pricing. Ensures all students share the same quantitative foundation.

Lesson 2 • Cash Flow Structure of Bonds

Maps coupon payments and principal repayment onto a timeline. Prepares students to apply discounting to realistic bond structures.

Lesson 3 • Bond Pricing Formula and Application

Derives the standard bond pricing equation and applies it to multiple bond types. Connects theoretical formula to market price quotation conventions.

Lesson 4 • Price-Yield Relationship

Demonstrates the inverse relationship between bond price and yield. Builds intuition for how market rates affect portfolio values.

Lesson 1 • Coupon Rate vs. Current Yield

Distinguishes nominal coupon rate from current yield and explains their limitations. Sets the stage for more precise yield measures.

Lesson 2 • Yield to Call and Yield to Worst

Extends YTM analysis to callable bonds and other embedded options. Students identify the yield scenario most relevant to investor risk.

Lesson 3 • Total Return Analysis

Measures realised return by incorporating reinvestment income and horizon price. Provides a complete picture of bond performance over an investment horizon.

Lesson 4 • Yield to Maturity

Defines yield to maturity as the internal rate of return on all bond cash flows. Students solve for YTM using iterative and financial-calculator methods.

Lesson 1 • Convexity and Its Applications

Introduces convexity as the second-order correction to the duration approximation. Students improve price-change estimates and compare bonds with different convexity profiles.

Lesson 2 • Portfolio Duration Management

Applies duration and convexity to multi-bond portfolios and immunisation strategies. Students adjust portfolio duration to match liability profiles.

Lesson 3 • Sources of Interest Rate Risk

Identifies price risk and reinvestment risk as the two components of rate exposure. Motivates the need for precise sensitivity measures.

Lesson 4 • Macaulay and Modified Duration

Derives Macaulay duration as a weighted average time to cash flows and converts it to modified duration. Students apply modified duration to estimate price changes.

Lesson 1 • Fundamental Credit Analysis

Applies financial statement analysis and qualitative factors to assess issuer creditworthiness. Students build a structured credit opinion for a corporate issuer.

Lesson 2 • Credit Spread Analysis

Measures the yield premium demanded for credit risk and decomposes it into components. Students calculate option-adjusted spreads and Z-spreads.

Lesson 3 • Sovereign and Emerging Market Credit

Adapts credit analysis to government issuers and cross-border risk factors. Students evaluate fiscal sustainability and political risk for sovereign bonds.

Lesson 4 • Credit Rating Systems

Explains how rating agencies assign and revise credit ratings and what each category implies. Students interpret rating scales and understand investment-grade thresholds.

Lesson 1 • Floating-Rate and Structured Notes

Covers bonds with variable coupons tied to reference rates and structured payoff profiles. Students analyse reset mechanisms and cap/floor features.

Lesson 2 • Overview of Embedded Options

Catalogues the types of options embedded in bonds and explains why issuers and investors use them. Establishes the framework for option-adjusted valuation.

Lesson 3 • Convertible Bonds

Examines the hybrid equity-debt nature of convertible bonds and their valuation components. Students calculate conversion premium and assess equity sensitivity.

Lesson 4 • Putable and Extendable Bonds

Analyses bonds with investor-held options that provide downside protection. Students value put options and assess their effect on duration and yield.

Lesson 1 • Securitisation Process and Structure

Explains the mechanics of pooling assets and issuing tranched securities through a special-purpose vehicle. Establishes the structural vocabulary for all subsequent sections.

Lesson 2 • Risks and Valuation of Structured Products

Integrates credit, prepayment, and liquidity risks into a unified valuation framework for structured securities. Students apply OAS and scenario analysis to structured products.

Lesson 3 • Collateralised Debt Obligations

Examines CDO structures backed by corporate loans, bonds, or other ABS tranches. Students assess correlation risk and tranche sensitivity to default rates.

Lesson 4 • Mortgage-Backed Securities

Analyses pass-through securities and collateralised mortgage obligations backed by residential loans. Students model prepayment risk and its effect on cash flows.

Lesson 1 • Active Fixed-Income Strategies

Examines duration positioning, yield curve trades, and sector rotation as sources of active return. Students construct trades based on rate and spread forecasts.

Lesson 2 • Performance Measurement and Attribution

Decomposes fixed-income portfolio returns into yield, duration, spread, and selection effects. Students evaluate manager skill and identify sources of outperformance.

Lesson 3 • Liability-Driven Investment

Aligns bond portfolio cash flows with future liability streams for pension funds and insurers. Students apply cash flow matching and duration matching techniques.

Lesson 4 • Passive Fixed-Income Strategies

Covers index replication and buy-and-hold approaches that minimise active risk. Students evaluate tracking error and sampling methods for large bond indexes.