Fixed Income Fundamentals, CFA L1 2016

The fundamentals of fixed-income investments.
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Instructed by Tanuja Yadav Test Prep / Other
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  • Lectures 30
  • Length 5.5 hours
  • Skill Level All Levels
  • Languages English
  • Includes Lifetime access
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About This Course

Published 9/2015 English

Course Description

This course will help candidates of CFA Level 1 prepare for the topic of Fixed Income. This course presents the fundamentals of fixed-income investments. Fixed income is one of the largest segments of global financial markets.

This topic area comprises of 10% of the entire CFA L1 curriculum and is considered as one of the toughest subjects to prepare for through self study.

The first reading introduces elements that define and characterize fixed-income securities. The second reading describes the primary issuers, sectors, and types of bonds. The third reading introduces calculation and interpretation of prices, yields, and spreads for fixed-income securities; market conventions for price/yield calculations and quotations; and spot rates, forward rates, and alternative definitions of a yield curve. The fourth reading describes the sources of return on fixed-income securities and measures and analysis of interest rate risk. The final reading introduces measures and analysis of credit risk of fixed income securities.

The course will be completed in 8 lectures, none exceeding 20 minutes.

What are the requirements?

  • Ideally students should be enrolled for taking the CFA exam and should be in possession of the official courseware

What am I going to get from this course?

  • Get an understanding on Fixed Income Products
  • Prepare students for CFA L1 subject Fixed Income which is 10% of the total curriculum
  • Reduce their preparation time for this tough subject to less than one third

What is the target audience?

  • Students enrolled for CFA L1 for the first time
  • Students who had attempted CFA L1 but could not clear due to low performance in Fixed Income

What you get with this course?

Not for you? No problem.
30 day money back guarantee.

Forever yours.
Lifetime access.

Learn on the go.
Desktop, iOS and Android.

Get rewarded.
Certificate of completion.

Curriculum

Section 1: Fixed Income_Basic Concepts
Introduction
Preview
01:20
12:25

The student should be able to:

  1. describe basic features of a fixed-income security;
  2. describe content of a bond indenture;
  3. compare affirmative and negative covenants and identify examples of each;
  4. describe how legal, regulatory, and tax considerations affect the issuance and trading of fixed-income securities;
  5. describe how cash flows of fixed-income securities are structured;
  6. 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.
14:04

The student should be able to:

  1. describe classifications of global fixed-income markets;
  2. describe the use of interbank offered rates as reference rates in floating-rate debt;
  3. describe mechanisms available for issuing bonds in primary markets;
  4. describe secondary markets for bonds;
  5. describe securities issued by sovereign governments;
  6. describe securities issued by non-sovereign governments, quasi-government entities, and supranational agencies;
  7. describe types of debt issued by corporations;
  8. describe short-term funding alternatives available to banks;
  9. describe repurchase agreements (repos) and the risks associated with them.
Section 2: Fixed Income Valuation
10:18

The student should be able to:

  1. calculate a bond's price given a market discount rate;
  2. identify the relationships among a bond's price, coupon rate, maturity, and market discount rate (yield-to-maturity);
  3. define spot rates and calculate the price of a bond using spot rates; d describe and calculate the flat price, accrued interest, and the full price of a bond;
  4. describe matrix pricing;
  5. calculate and interpret yield measures for fixed-rate bonds, floating-rate notes, and money market instruments;
  6. define and compare the spot curve, yield curve on coupon bonds, par curve, and forward curve;
  7. define forward rates and calculate spot rates from forward rates, forward rates from spot rates, and the price of a bond using forward rates;
  8. compare, calculate, and interpret yield spread measures.
FIXED INCOME VALUATION_Part 2
12:47
FIXED INCOME VALUATION_Part 3
12:41
Section 3: Revised: Asset Backed Securities
Introduction
05:50
Securitization Benefits
05:48
Securitization Process
Preview
07:44
Parties involved in the securitization process
04:43
Structure of Securitization and Key role of an SPE
13:17
Residential Mortgage Loans
15:15
16:20

The securities backed by residential mortgages are divided into three sectors: (1) those guaranteed by a federal agency, (2) those guaranteed by a GSE, and (3) those issued by private entities and that are not guaranteed by a federal agency or a GSE. The first two sectors are referred to as agency RMBS, and the third sector as non-agency RMBS.

This lecture discusses agency RMBS, specifically mortgage pass-through securities.

16:37

When the cash flows of mortgage-related products are redistributed to various tranches, the resulting securities are called collateralized mortgage obligations (CMOs).

12:28

Commercial mortgage-backed securities (CMBS) are backed by a pool of commercial mortgages on income-producing property, such as multifamily properties (e.g., apartment buildings), office buildings, industrial properties (including warehouses), shopping centers, hotels, and health care facilities (e.g., senior housing care facilities). The collateral of is a pool of commercial loans that were originated either to finance a commercial purchase or to refinance a prior mortgage obligation.

09:25

Auto loan ABS are backed by auto loans and lease receivables. The focus in this lecture is on the largest type of auto securitizations—that is, auto loan-backed securities. This lecture also talks about Credit card receivables that are used as collateral for the issuance of credit card receivable ABS.

11:23

A collateralized debt obligation (CDO) is a generic term used to describe a security backed by a diversified pool of one or more debt obligations (e.g., corporate and emerging market bonds, leveraged bank loans, ABS, RMBS, and CMBS).

6 questions

MCQs

Section 4: Fixed Income_Analysis of Risk
Introduction to Fixed Income Risk Analysis
01:02
14:50

The candidate should be able to:

  1. calculate a bond's price given a market discount rate;
  2. identify the relationships among a bond's price, coupon rate, maturity, and market discount rate (yield-to-maturity);
  3. define spot rates and calculate the price of a bond using spot rates;
  4. describe and calculate the flat price, accrued interest, and the full price of a bond;
  5. describe matrix pricing;
  6. calculate and interpret yield measures for fixed-rate bonds, floating-rate notes, and money market instruments;
  7. define and compare the spot curve, yield curve on coupon bonds, par curve, and forward curve;
  8. define forward rates and calculate spot rates from forward rates, forward rates from spot rates, and the price of a bond using forward rates;
  9. compare, calculate, and interpret yield spread measures.
10:13

The student should be able to:

  1. describe credit risk and credit-related risks affecting corporate bonds;
  2. describe default probability and loss severity as components of credit risk;
  3. describe seniority rankings of corporate debt and explain the potential violation of the priority of claims in a bankruptcy proceeding;
  4. distinguish between corporate issuer credit ratings and issue credit ratings and describe the rating agency practice of “notching”;
  5. explain risks in relying on ratings from credit rating agencies;
  6. explain the four Cs (Capacity, Collateral, Covenants, and Character) of traditional credit analysis;
  7. calculate and interpret financial ratios used in credit analysis;
  8. evaluate the credit quality of a corporate bond issuer and a bond of that issuer, given key financial ratios of the issuer and the industry;
  9. describe factors that influence the level and volatility of yield spreads;
  10. explain special considerations when evaluating the credit of high yield, sovereign, and non-sovereign government debt issuers and issues.
Fundamentals of Credit Analysis_Part 2
12:23
Section 5: Lectures Repeated: without talking head
Fixed-Income Securities: Defining Elements
12:25
FIXED-INCOME MARKETS: ISSUANCE, TRADING, AND FUNDING
14:04
FIXED-INCOME VALUATION_Part 1
10:18
FIXED-INCOME VALUATION_Part 2
12:47
FIXED-INCOME VALUATION_Part 3
12:41
Introduction to Fixed Income Risk Analysis
14:50
Fundamentals of Credit Analysis_Part 1
10:12
Fundamentals of Credit Analysis_2
12:23
10 questions

Try and answer these questions with atleast 80% accuracy in less than 15 minutes.

10 questions

Please try and complete these questions with 90% accuracy in less than 15 minutes

Bonus Lecture: Coupon codes and Access to free courses
00:40

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Instructor Biography

Tanuja Yadav, Chartered Financial Analyst

A CFA charter holder, I have extensive experience in the field of F&A outsourcing and have worked on various projects within the F&A Arena. I have 11 years of experience in F&A delivery, handling end to end finance and accounting processes, F&A practice and process improvement. I am also a visiting faculty with International College of Financial Planning, New Delhi where I have taken classes for CFA L 2 and 3. I have my own channel on Youtube on Finance and Investments.

Specialties: Finance, Fixed Income, Treasury, Accounts Payable, Accounts Receivables, Reconciliation, Fixed Asset and Project accounting, Solution development, F&A Training, SOX testing, Fraud risk assessment and Process streamlining.

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