2024/2025
Market Instruments: Equity and Fixed Income
Type:
Mago-Lego
Delivered by:
HSE Banking Institute
When:
3, 4 module
Open to:
students of one campus
Instructors:
Авалян Хачатур Леваевич
Language:
English
ECTS credits:
6
Course Syllabus
Abstract
Equity market is a specialized course aiming to give the attendees the general notion of equity market’s main concepts as well as main questions of modern finance theory. The course is in line with Chartered Financial Analyst (CFA) programme material Level 1 and 2 and equity market courses of leading US MBA programmes. The course is important for any manager or specialist working with financial instruments, providing practical knowledge of risks and returns. It is also useful for private investors, helping build adequate strategy and comprehend the risks. For CFA students the program provides a compact review of material from Securities Markets chapters. Besides classic finance theory, the course devotes attention to behavioral finance and other studies of financial markets inefficiency that gain appreciation in US and European finance programs.This course is designed to introduce to students the fundamental issues of the financial markets particularly make them familiar with debt securities. The course focuses on both theoretical issues as well as practical assignments. Additionally, it covers main features and peculiarities of Russian bond market.
Learning Objectives
- The goal of the course is to give the attendees the general notion of equity market’s main concepts and segments, of the risks of investing in stocks and methods of determining fair value, as well as discuss main questions of modern finance theory The course is based on the analysis of fixed income markets and instruments. Students will learn how to classify instruments, understand the approaches to value fixed income instruments and what are the key risk associated with investing into bonds and how they could be quantified and mitigated. The course will heavily rely on real world examples and will give a wide scope of how the global and Russian bond markets operate, what are the key drivers and challenges, who are the key investors and what are the factors influencing their decision. Additionally, students will learn realworld examples of bond deals structuring based on Russian Debt Capital Markets practice. Separately will be covered technics of how investment banks operate in the fixed markets, what departments are involved and their roles
Expected Learning Outcomes
- The course is focused on analysis and description of bonds markets mechanics. Students will learn how the fixed instruments are priced, what are the risks associated with investing in bonds and how to measure and hedge them; how macro factors influence bond markets. Course would provide understanding how markets operate in real world. Additionally, students would get familiar with main fixed income Bloomberg functions and be able to debug basic Bloomberg calculations via MS Excel
- The attendees of the course will obtain the skills necessary for fundamental valuation of stocks (analysis of cash flows, company, industry) and for risk estimation, especially in marginal cases
- The goal of the course is to make students familiar with the main fixed income terminology and classifications, basic risk and return concepts; provide an overview of government and corporate markets in real world; make students comfortable in solving practical exercises
- The attendees of the course will obtain the skills necessary for fundamental valuation of stocks (analysis of cash flows, company, industry) and for risk estimation.
- The course is based on the analysis of fixed income markets and instruments. Students will learn how to classify instruments, understand the approaches to value fixed income instruments and what are the key risk associated with investing into bonds and how they could be quantified and mitigated.
- The course will heavily rely on real world examples and will give a wide scope of how the global and Russian bond markets operate, what are the key drivers and challenges, who are the key investors and what are the factors influencing their decision.
- Students will learn real-world examples of bond deals structuring based on Russian Debt Capital Markets practice. Separately will be covered technics of how investment banks operate in the fixed markets, what departments are involved and their roles.
Course Contents
- Description of stock instruments, market structure, participants.
- Description, calculation and interpretation of security market indexes
- Discussion of market efficiency and related concepts, including their importance to investment practitioners
- Evaluation of a company’s business model, its operational profitability drivers, including pricing power
- Industry and competitive analysis
- Description of major equity valuation concepts and tools such as discounted cash flow models, multiple models and asset-based valuation models
- Investment banking industry structure
- Fixed-income securitization, asset-backed (ABS) and mortgage-backed (MBS) securities
- Interest rate risk and return, durations, and convexity; Credit risk analysis
- Bond valuation: prices and yields, YTM; Yield and yield spread measures; The term structure of interest rates, yield curve
- Bond markets for corporate and government issuers
- Fixed-income issuance and trading
- Fixed-income types
- Fixed-income instrument features
Assessment Elements
- «Market Instrument: EQUITY MARKET» GradeFinal grade for this part: Mid-term written open-book exam -40%, final exam –60%.
- «Market Instrument: FIXED INCOME» GradeGrade for this part consits of: Midterm – 30% Final Exam – 70%. Final exam consists of multiple-choice questions (CFA exam format).
Interim Assessment
- 2024/2025 4th module0.5 * «Market Instrument: EQUITY MARKET» Grade + 0.5 * «Market Instrument: FIXED INCOME» Grade
Bibliography
Recommended Core Bibliography
- Equity asset valuation : workbook, Stowe, J. D., 2008
- Equity asset valuation, Stowe, J. D., 2007
- Fixed income markets and their derivatives, Sundaresan, S., 2009
- The handbook of fixed income securities, , 2005
Recommended Additional Bibliography
- Global investments, Solnik, B., 2009
- Investments, Sharpe, W. F., 1999