Fixed Income Analysis Workbook
Barbara S. Petitt
- English
- ePUB (mobile friendly)
- Available on iOS & Android
Fixed Income Analysis Workbook
Barbara S. Petitt
About This Book
THE THOROUGHLY REVISED AND UPDATED FOURTH EDITION OF THE COMPANION WORKBOOK TO FIXED INCOME ANALYSIS
Now in its fourth edition, the Fixed Income Analysis Workbook offers a range of practical information and exercises that will enhance your understanding of the tools, strategies, and techniques associated with fixed-income portfolio management. Written by a team of knowledgeable contributors, this hands-on resource helps busy professionals and those new to the discipline apply the concepts and methodologies that are essential for mastery.
The Workbook is an accessible guide for understanding the metrics, methods, and mechanics as applied in the competitive world of fixed-income analysis. It also provides a stress-free way to practice the tools and techniques described in the companion text. The Fixed Income Analysis Workbook includes information and exercises to help you:
- Work real-world problems associated with fixed-income risk and return
- Review the fundamentals of asset-backed securities
- Comprehend the principles of credit analysis
- Understand the arbitrage-free valuation framework
- Practice important methods and techniques before applying them in actual situations
The fourth edition provides updated coverage of fixed income portfolio management including detailed applications of liability-driven and index-based strategies, exposure to the major types of yield curve strategies, and practical approaches to implementing active credit strategies.
For anyone who wants a more solid understanding of fixed-income portfolio management, the Fixed Income Analysis Workbook is a comprehensive and practical resource.
Frequently asked questions
Information
PART I
LEARNING OBJECTIVES,
SUMMARY OVERVIEW,
AND PROBLEMS
CHAPTER 1
Fixed-income Securities: Defining Elements
Learning Outcomes
- describe basic features of a fixed-income security;
- describe content of a bond indenture;
- compare affirmative and negative covenants and identify examples of each;
- describe how legal, regulatory, and tax considerations affect the issuance and trading of fixed-income securities;
- describe how cash flows of fixed-income securities are structured;
- describe contingency provisions affecting the timing and/or nature of cash flows of fixed-income securities and identify whether such provisions benefit the borrower or the lender.
Summary Overview
- The three important elements that an investor needs to know when investing in a fixed-income security are: (1) the bondâs features, which determine its scheduled cash flows and thus the bondholderâs expected and actual return; (2) the legal, regulatory, and tax considerations that apply to the contractual agreement between the issuer and the bondholders; and (3) the contingency provisions that may affect the bondâs scheduled cash flows.
- The basic features of a bond include the issuer, maturity, par value (or principal), coupon rate and frequency, and currency denomination.
- Issuers of bonds include supranational organizations, sovereign governments, non-sovereign governments, quasi-government entities, and corporate issuers.
- Bondholders are exposed to credit risk and may use bond credit ratings to assess the credit quality of a bond.
- A bondâs principal is the amount the issuer agrees to pay the bondholder when the bond matures.
- The coupon rate is the interest rate that the issuer agrees to pay to the bondholder each year. The coupon rate can be a fixed rate or a floating rate. Bonds may offer annual, semi-annual, quarterly, or monthly coupon payments depending on the type of bond and where the bond is issued.
- Bonds can be issued in any currency. Bonds such as dual-currency bonds and currency option bonds are connected to two currencies.
- The yield to maturity is the discount rate that equates the present value of the bondâs future cash flows until maturity to its price. Yield to maturity can be considered an estimate of the marketâs expectation for the bondâs return.
- A plain vanilla bond has a known cash flow pattern. It has a fixed maturity date and pays a fixed rate of interest over the bondâs life.
- The bond indenture or trust deed is the legal contract that describes the form of the bond, the issuerâs obligations, and the investorâs rights. The indenture is usually held by a financial instituti...