Mastering Global Financial Markets

Trace the shift from gold-backed to fiat currencies under Bretton Woods, and compare fixed, floating, and pegged regimes, including devaluation, appreciation, and the impossible trinity.

Explore the global forex market's 24-hour structure, spot and forward trading, and the two-tier system of retail and interbank participants, featuring major currencies like the USD, euro, and JPY.

Explains how the balance of payments captures all international transactions, organized into current, financial, and capital accounts, and signals exchange rate pressure and market potential.

Explore how inflation and price levels link to exchange rates through purchasing power parity, using the Big Mac index to illustrate relative currencies and arbitrage.

Examine how interest rate parity and purchasing power parity link inflation to exchange rates, and how forward contracts, swap points, and carry trades arise from interest differentials.

Explore the time value of money by comparing present and future values, discount rate, and compounding versus simple interest, using the fv = pv(1+r)^n formula to value assets.

Calculate how to accumulate 3 million for retirement using time value of money, present value and annuity concepts, with Excel PV and PMT, and observe rate effects.

Bond valuation fundamentals show how coupon payments, face value, and maturity create cash flows discounted to present value using yield as the discount rate, setting the bond price.

Explore how corporate bonds are rated, priced, and traded, focusing on coupon rates, maturity, investment grade status, debenture, callable features, and terms like offering date and date count basis.

Analyze how interest rate changes drive bond prices above or below face value through premiums and discounts, and examine coupon rates, yields, convexity, and maturity.

Duration measures a bond's price sensitivity to yield changes by combining maturity and coupon payments into a single metric, with zero coupon bonds showing the highest sensitivity.

Explore how bond yields form spreads, including the term spread and benchmark spread, reflecting risk premium for default risk, credit quality, and liquidity differences across market sectors.

Explore how bond yields vary by issuer, maturity, and macro conditions to reveal the term structure and how upward, flat, or inverted curves signal future rate paths.

Explain how equity value reflects an ownership stake and the present value of future dividends, discounted by risk, using the dividend discount model and Gordon growth model.

Decompose a stock’s value into its no-growth value and the present value of growth opportunities, using dividends, earnings, and the required rate of return.

Examine limitations of the constant growth dividend discount model and apply multi-stage models to value companies through early high growth and later steady dividends.

Estimate growth rates using dividend data and the average compound growth rate, and explain sustainable growth via retention and return on equity that drive value in the dividend discount model.

Explore relative valuation through the price-earnings ratio, its link to r and g, and how growth creates higher p/e, with caution on negative earnings and alternatives like price-to-book, price-to-cash-flow.

Model a two-asset stocks and bonds portfolio to measure risk and return with weighted returns and variance, highlighting diversification and the portfolio frontier under correlation.

Explore how the efficient frontier maps risk and return for portfolios with risky assets and a risk-free asset, revealing the optimal capital allocation line and complete portfolio.

Learn how the Capital Asset Pricing Model prices stocks via market risk and a beta measure. Diversification eliminates specific risk, leaving a market risk premium and potential alpha opportunities.

Market efficiency links random walks to unpredictable returns, with prices reflecting information under weak form and strong form, implying limited value from active strategies and favoring passive management.

Explore value investing, growth strategies, and growth at a reasonable price by examining P/E, forward and trailing earnings, and PEG to assess undervalued stocks and growth potential.

Stock splits increase shares and lower price per share without changing cash flows, affecting value through signaling, liquidity, and trading-range considerations; dates include announcement, record, and payable.