{"product_id":"financial-theory-fixed-income-securities","title":"Finance Theory: Fixed-Income Securities","description":"\u003cp\u003eThis mini course from the MIT Open Courseware Library, explains concepts related to fixed income securities. As part of a larger course on Financial Theory, this series of lectures introduces fixed-income securities along with an industry overview and examples. \u003c\/p\u003e\n\u003cp\u003eFrameworks for valuations are covered as well as spot and forward rates in the context of yield curves and interest rate forecasts. Other topics in this course include the law of one price in working with multiple coupon bonds, methods to measure interest-rate risks of a bond, and securitization.  Trading frequency and the framework for valuation are presented by use of an example involving a coupon bond.\u003c\/p\u003e\n\u003cp\u003eThis course was originally taught in Fall 2008 and references several financial events that occurred at the time. \u003c\/p\u003e\n\u003cmeta charset=\"utf-8\"\u003e\n\u003cp\u003e\u003cspan\u003eAndrew Lo. \u003c\/span\u003e\u003cem\u003e15.401 Finance Theory I, Fall 2008\u003c\/em\u003e\u003cspan\u003e. (Massachusetts Institute of Technology: MIT OpenCourseWare), \u003c\/span\u003e\u003ca href=\"http:\/\/ocw.mit.edu\/courses\/sloan-school-of-management\/15-401-finance-theory-i-fall-2008\" target=\"_blank\"\u003ehttp:\/\/ocw.mit.edu\u003c\/a\u003e\u003cspan\u003e (Accessed 15 Jul, 2015). License: \u003c\/span\u003e\u003ca href=\"http:\/\/creativecommons.org\/licenses\/by-nc-sa\/4.0\/\"\u003eCreative Commons BY-NC-SA\u003c\/a\u003e\u003c\/p\u003e\n\u003cmeta charset=\"utf-8\"\u003e\n\u003ch3\u003eLearning Objectives:\u003c\/h3\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eDefine fixed income securities and its various categories\u003c\/strong\u003e\u003c\/li\u003e\n\u003cli\u003e\u003cstrong\u003eCalculate valuations of discount bonds and coupon bonds\u003c\/strong\u003e\u003c\/li\u003e\n\u003cli\u003e\u003cstrong\u003eIdentify the relationship between discount and coupon bonds, and use that as a basis for valuation\u003c\/strong\u003e\u003c\/li\u003e\n\u003cli\u003e\u003cstrong\u003eDefine yield curves and their relationship to interest rates and pricing\u003c\/strong\u003e\u003c\/li\u003e\n\u003cli\u003e\u003cstrong\u003eCalculate interest rates based on pattern in the yield curve\u003c\/strong\u003e\u003c\/li\u003e\n\u003cli\u003e\u003cstrong\u003eMeasure interest-rate risk\u003c\/strong\u003e\u003c\/li\u003e\n\u003cli\u003e\u003cstrong\u003eDefine and identify when fixed-income arbitrage occurs\u003c\/strong\u003e\u003c\/li\u003e\n\u003cli\u003e\u003cstrong\u003eDefine corporate bonds and calculate default risk\u003c\/strong\u003e\u003c\/li\u003e\n\u003cli\u003e\u003cstrong\u003eIdentify why securitization of loans occur and how this lead to the sub-prime crisis\u003c\/strong\u003e\u003c\/li\u003e\n\u003c\/ul\u003e\n\u003col class=\"sections\"\u003e\n\u003cli\u003e\n\u003ch4\u003eOverview and Objectives - \u003cspan style=\"color: #ff0000;\"\u003e4 minutes\u003c\/span\u003e\n\u003c\/h4\u003e\n\u003col\u003e\n\u003cli\u003eOverview\u003c\/li\u003e\n\u003cli\u003eWhat do you already know?\u003c\/li\u003e\n\u003c\/ol\u003e\n\u003c\/li\u003e\n\u003cli\u003e\n\u003ch4\u003eDefining Fixed Income Securities - \u003cspan style=\"color: #ff0000;\"\u003e14 minutes\u003c\/span\u003e\n\u003c\/h4\u003e\n\u003col\u003e\n\u003cli\u003eWhat is a Fixed Income Security and Industry Overview\u003c\/li\u003e\n\u003cli\u003eFixed Income Market Participants\u003c\/li\u003e\n\u003c\/ol\u003e\n\u003c\/li\u003e\n\u003cli\u003e\n\u003ch4\u003eValuation of Coupon Bonds - \u003cspan style=\"color: #ff0000;\"\u003e22 minutes\u003c\/span\u003e\n\u003c\/h4\u003e\n\u003col\u003e\n\u003cli\u003eFramework for Valuing Fixed Income Securities\u003c\/li\u003e\n\u003cli\u003eComponents of Valuation\u003c\/li\u003e\n\u003cli\u003ePricing Discount Bonds\u003c\/li\u003e\n\u003cli\u003eDiscount Bond Prices as an Indicator of Future Interest Rates\u003c\/li\u003e\n\u003cli\u003eDetermining Interest Rates of Discount Bonds\u003c\/li\u003e\n\u003cli\u003eSpot Rates of Interest\u003c\/li\u003e\n\u003cli\u003eDefining r\u003c\/li\u003e\n\u003cli\u003e\n\u003cp\u003eExample: Defining r\u003c\/p\u003e\n\u003c\/li\u003e\n\u003c\/ol\u003e\n\u003c\/li\u003e\n\u003cli\u003e\n\u003ch4\u003eYield Curves - \u003cspan style=\"color: #ff0000;\"\u003e21 minutes\u003c\/span\u003e\n\u003c\/h4\u003e\n\u003col\u003e\n\u003cli\u003eTerm Structure of Interest Rates or the Yield Curve\u003c\/li\u003e\n\u003cli\u003eYield Curves and Forward Rate Forecasts\u003c\/li\u003e\n\u003cli\u003eExample: Calculating Forward Transactions and Forward Interest Rates\u003c\/li\u003e\n\u003cli\u003eExample: Calculating Forward Interest Rates continued\u003c\/li\u003e\n\u003cli\u003eExample 2: Calculating Forward Interest Rates\u003c\/li\u003e\n\u003c\/ol\u003e\n\u003c\/li\u003e\n\u003cli\u003e\n\u003ch4\u003eValuation of Coupon Bonds - \u003cspan style=\"color: #ff0000;\"\u003e9 minutes\u003c\/span\u003e\n\u003c\/h4\u003e\n\u003col\u003e\n\u003cli\u003eWhat is a Coupon Bond? \u003c\/li\u003e\n\u003cli\u003ePricing Coupon Bonds and Bond Yields\u003c\/li\u003e\n\u003c\/ol\u003e\n\u003c\/li\u003e\n\u003cli\u003e\n\u003ch4\u003eYield Curves and Interest Rates - \u003cspan style=\"color: #ff0000;\"\u003e4 minutes\u003c\/span\u003e\n\u003c\/h4\u003e\n\u003col\u003e\n\u003cli\u003eWhat Yield Curves Tell Us About Interest Rates\u003c\/li\u003e\n\u003cli\u003eChanges in Yield Curves and Market Expectations\u003c\/li\u003e\n\u003c\/ol\u003e\n\u003c\/li\u003e\n\u003cli\u003e\n\u003ch4\u003eModels of the Term Structure - \u003cspan style=\"color: #ff0000;\"\u003e4 minutes\u003c\/span\u003e\n\u003c\/h4\u003e\n\u003col\u003e\n\u003cli\u003eDifferent Models of the Term Structure\u003c\/li\u003e\n\u003cli\u003eExpectations Hypothesis \u003c\/li\u003e\n\u003cli\u003eDo These Models Work? \u003c\/li\u003e\n\u003c\/ol\u003e\n\u003c\/li\u003e\n\u003cli\u003e\n\u003ch4\u003eAnother Valuation Method for Coupon Bonds - \u003cspan style=\"color: #ff0000;\"\u003e4 minutes\u003c\/span\u003e\n\u003c\/h4\u003e\n\u003col\u003e\n\u003cli\u003eAnother Valuation Method for Coupon Bonds\u003c\/li\u003e\n\u003c\/ol\u003e\n\u003c\/li\u003e\n\u003cli\u003e\n\u003ch4\u003eArbitrage - \u003cspan style=\"color: #ff0000;\"\u003e8 minutes \u003c\/span\u003e\n\u003c\/h4\u003e\n\u003col\u003e\n\u003cli\u003eLaw of One Price\u003c\/li\u003e\n\u003cli\u003eArbitrage\u003c\/li\u003e\n\u003cli\u003eDeeper Dive into the Law of One Price\u003c\/li\u003e\n\u003cli\u003eArbitrage and Short Selling\u003c\/li\u003e\n\u003c\/ol\u003e\n\u003c\/li\u003e\n\u003cli\u003e\n\u003ch4\u003eMultiple Coupon Bond and Fixed-Income Arbitrage - \u003cspan style=\"color: #ff0000;\"\u003e10 minutes\u003c\/span\u003e\n\u003c\/h4\u003e\n\u003col\u003e\n\u003cli\u003eMultiple Coupon Bonds and Fixed-Income Arbitrage\u003c\/li\u003e\n\u003c\/ol\u003e\n\u003c\/li\u003e\n\u003cli\u003e\n\u003ch4\u003eMeasuring Risk - \u003cspan style=\"color: #ff0000;\"\u003e18 minutes\u003c\/span\u003e\n\u003c\/h4\u003e\n\u003col\u003e\n\u003cli\u003eOverview of Measuring Risk\u003c\/li\u003e\n\u003cli\u003eMacauley Duration as a Measure of Bond Riskiness\u003c\/li\u003e\n\u003cli\u003eWhy Macauley Duration Matters\u003c\/li\u003e\n\u003cli\u003eExample: Measuring Interest Rate Risk\u003c\/li\u003e\n\u003cli\u003eMacauley Duration for Intra-year Coupons\u003c\/li\u003e\n\u003cli\u003eConvexity as a Secondary Measure of Risk\u003c\/li\u003e\n\u003cli\u003eVolatility of Interest Rates and Bond Pricing\u003c\/li\u003e\n\u003c\/ol\u003e\n\u003c\/li\u003e\n\u003cli\u003e\n\u003ch4\u003eCorporate Bonds - \u003cspan style=\"color: #ff0000;\"\u003e12 minutes\u003c\/span\u003e\n\u003c\/h4\u003e\n\u003col\u003e\n\u003cli\u003eNon-Government Bonds and Credit Ratings\u003c\/li\u003e\n\u003cli\u003eLevels of Risk\u003c\/li\u003e\n\u003cli\u003eExample: Moody's Baa Bond Minus US 10-Year Treasury Yield\u003c\/li\u003e\n\u003cli\u003eDecomposition of Corporate Bond Yields\u003c\/li\u003e\n\u003c\/ol\u003e\n\u003c\/li\u003e\n\u003cli\u003e\n\u003ch4\u003eThe Subprime Crisis - \u003cspan style=\"color: #ff0000;\"\u003e25 minutes\u003c\/span\u003e\n\u003c\/h4\u003e\n\u003col\u003e\n\u003cli\u003eDisintermediation and Desecuritization\u003c\/li\u003e\n\u003cli\u003eCombining Risky Bonds into One Portfolio\u003c\/li\u003e\n\u003cli\u003eNew Prices of Bonds When Combined into One Portfolio\u003c\/li\u003e\n\u003cli\u003eWhy Bonds are Combined\u003c\/li\u003e\n\u003cli\u003eAssuming Perfectly Correlated Defaults\u003c\/li\u003e\n\u003c\/ol\u003e\n\u003c\/li\u003e\n\u003cli\u003e\n\u003ch4\u003eWrap-up - \u003cspan style=\"color: #ff0000;\"\u003e2 minutes\u003c\/span\u003e\n\u003c\/h4\u003e\n\u003col\u003e\n\u003cli\u003eWhat do you know now?\u003c\/li\u003e\n\u003c\/ol\u003e\n\u003c\/li\u003e\n\u003c\/ol\u003e","brand":"MIT Open Courseware","offers":[{"title":"Default Title","offer_id":6928752769,"sku":"","price":0.0,"currency_code":"GBP","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0817\/1429\/products\/4Xzwt6ySyKJq5DoSTTTW.jpeg?v=1443621468","url":"https:\/\/piers-test-store.myshopify.com\/products\/financial-theory-fixed-income-securities","provider":"The Test Store","version":"1.0","type":"link"}