154-0573/01 – Capital Markets: Fixed Income (CMFI)

Gurantor department	Department of Finance	Credits	6
Subject guarantor	Ing. Martina Novotná, Ph.D.	Subject version guarantor	Ing. Martina Novotná, Ph.D.
Study level	undergraduate or graduate	Requirement	Compulsory
Year	2	Semester	winter
		Study language	English
Year of introduction	2024/2025	Year of cancellation
Intended for the faculties	EKF	Intended for study types	Bachelor

Instruction secured by
Login	Name	Tuitor	Teacher giving lectures
KOR21	Ing. Kateřina Kořená, Ph.D.
NOV33	Ing. Martina Novotná, Ph.D.

Extent of instruction for forms of study
Form of study	Way of compl.	Extent
Full-time	Credit and Examination	3+2

Subject aims expressed by acquired skills and competences

This course aims to provide an understanding of key concepts related to basic fixed-income securities. After completing the course, the students will be able to: • Define the basic features of a fixed-income security, • distinguish and describe different types of bonds, • explain how the primary and secondary markets work, • apply basic bond valuation procedures, • discuss the characteristics, benefits and risks of various types of asset-backed securities, • calculate bond yields and assess the interest-rate risk, • explain the essence and purpose of credit analysis.

Teaching methods

Lectures
Tutorials

Summary

This course offers a thorough understanding of fundamental fixed-income securities. The main emphasis is placed on the key concepts and methods involved in their valuation, equipping students with the necessary skills to make their analysis and informed decisions. Lectures aim to clarify the main principles and concepts, while seminars focus on applying acquired knowledge through case studies, practical exercises and independent tasks.

Compulsory literature:

BODIE, Zvi, Alex KANE and Alan J. MARCUS. Investments. 12th ed. New York: McGraw Hill, 2021. ISBN 978-1-260-57115-8. CFA Institute. Fixed income analysis. 5th ed. Hoboken: Wiley, 2022. CFA Institute investment series. ISBN 978-1119850540. FABOZZI, Frank J. and Francesco A. FABOZZI. Bond markets, analysis, and strategies. 10th ed. The MIT Press, 2021. Always learning. ISBN 978-0253337535.

Recommended literature:

MADURA, Jeff. Financial markets and institutions. 13th ed. Boston: Cengage, 2021. ISBN 978-0-357-13079-7. LAOPODIS, Nikiforos. Understanding investments: theories and strategies. 2nd ed. London: Routledge, Taylor & Francis Group, 2021. ISBN 978-1000074741. REILLY, Frank K., Keith C. BROWN and Sanford. J. LEEDS. Investment analysis and portfolio management. 11th ed. Boston: Cengage, 2019. ISBN 978-1305262997.

Way of continuous check of knowledge in the course of semester

Credit assessment (case study), elaboration and submission of a project, written exam

E-learning

Other requirements

There are no additional requirements for a student.

Prerequisities

Subject has no prerequisities.

Co-requisities

Subject has no co-requisities.

Subject syllabus:

1.Overview of fixed-income security • Basic features of fixed-income security (the issuer, maturity, par value, coupon rate), • legal, regulatory, and tax considerations of contractual agreements, • structure of bonds scheduled cash flow, coupon payment structures, • bonds with embedded options (callable, puttable, convertible bonds). 2. Fixed-income markets • Overview of global fixed-income markets (classification, fixed-income indexes), • primary and secondary bond markets (bond issue offerings, exchange and OTC markets), • bonds by different types of issuers (sovereign, non-sovereign, corporate bonds), • types of structured products and money market instruments. 3. Fixed-income valuation • Bond prices and the time value of money (calculation of a bond’s price), • conventions for quotes and calculations (flat price, accrued interest, full price) • relationships between the bond price and bond characteristics, • yield measures (current yield, yield to maturity). 4. Asset-backed securities • Basic concept of asset securitization (benefits, process, parties involved), • mortgage pass-through securities, collateralized mortgage obligations (CMO), • non-agency RMBS, non-mortgage asset-backed securities, • covered bonds and their comparison with other asset-backed securities. 5. Fixed-income risk and return • Sources of return and calculation of bond yields, • The effect of bond’s maturity, coupon and yield level on interest rate risk, • measures of interest rate risk (duration, convexity), • credit and liquidity risk. 6. Principles of credit analysis • Essentials of credit risk (credit-related risks, default probability), • Rating agencies and credit rating (their role in the debt markets), • purpose of credit analysis (the basic framework of credit analysis), • credit risk versus return.

Conditions for subject completion

Full-time form (validity from: 2024/2025 Winter semester)

Task name	Type of task	Max. number of points (act. for subtasks)	Min. number of points	Max. počet pokusů
Credit and Examination	Credit and Examination	100 (100)	51
Credit	Credit	45	23
Examination	Examination	55	28	3

Mandatory attendence participation: Participation in lectures and seminars is not mandatory.

Show history

Conditions for subject completion and attendance at the exercises within ISP: Participation in the seminars is not mandatory. The student must meet the requirements for completing the subject - credit (successful completion of the credit test), submission of the project and successful completion of the written exam. Attendance at lectures is optional.

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Occurrence in study plans

Academic year	Programme	Branch/spec.	Spec.	Zaměření	Form	Study language	Tut. centre	Year	W	S	Type of duty
2024/2025	(B0412EKF015) Financial and Accounting Advisory			FA	P	English	Ostrava	2			Compulsory	study plan

Occurrence in special blocks

Block name	Academic year	Form of study	Study language	Year	W	S	Type of block	Block owner

Assessment of instruction

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