Fixed Income Securities Market & Credit Risk Valuations

In our previous article, we had mentioned about Fixed Income Securities Market: Introduction, Example, Market & Other Factors. In this article, we will discuss about Fixed Income Mathematics, Valuations topics of Bonds or Fixed Income Securities, Calculations for Fixed Income Securities and how the market for Fixed Income Securities works?, but the focus will be more of credit market-related topics.
Let's start with the fundamentals:

Issuance Or Origination (Creation) Of Debt Securities Fixed Income Securities: the process of issuance of Fixed Income Securities, underwriters distributors and all the parties involved.

 --Underwriting/Distribution of New Issue

 --Pricing (Setting the Offering Yields) of New Issues

Market Pricing Of Credit The Treasury Yield Curve And Credit Or Sector Spreads Fixed Income Securities:

 --Yield Curves and how they are used to price Fixed Income Securities

 --Yield Curves Theory and usages in Fixed Income Securities

 --The Fed (Federal Reserve System) and Interest Rates and how the risk free rate affects the pricing and trading of Fixed Income Securities

Credit Risk: Measurement, Mitigation And Investment Considerations Fixed Income Securities:

 --Measuring or Quantifying Credit (Default) Risk

 --Use and significance of Credit Ratings

 --How to Mitigate or Minimize the Credit Risk

 --Penny Stocks vis a vis Junk bonds - Features of so called High Yield Securities

Bond Prices And Yields Fixed Income Securities:

 --Bond Quotations and how to read and understand them

 --Bond Prices

Quantifying And Managing Interest Rate (Price) Risk Fixed Income Securities:

 --Yield to Maturity (YTM): Factors Determining Sensitivity of Price to Change in YTM

 --Quantifying Price Sensitivity to Changes In Market Yields

 --Callable Bonds

 --Applications of duration

Debt Retirement Bond Redemptions Fixed Income Securities:

 --Scheduled repayment of principal

 --Early Retirement Of Principal

 --Other Debt Retirement-Related Issues

Fixed Income Securities Mathematics: Bond Mathematics, Calculations, Valuations & Examples

In this article, we will discuss about Fixed Income Mathematics, Valuations topics of Bonds or Fixed Income Securities, Calculations for Fixed Income Securities and how the market for Fixed Income Securities works?
Let's start with the basics:
Fundamental or Basic Concepts of Fixed Income Mathematics:

- The difference between Interest Rates, Yields and Rates of Return Compared

- Interest Rate Calculation Conventions - Simple Interest Versus Compound Interest

- Time Value of Money - The basic of Bond pricing - Present Values and Future Values

Fixed Income Market Pricing and Yield Conventions:

- Pricing Coupon and Zero Coupon Bonds

- Day Count Conventions

- Accrued Interest

- Pricing Money Market Instruments

Yield Curves and their uses:

- Types of Yield Curves and their Constructions

- Applications of Yield Curves to Fixed Income Pricing and Analysis

Mortgaged Backed Securities:

- Pass Through Security Pricing and Yield Conventions

- Quantifying Prepayment Speed


Fixed Income Futures:

- T-Note and T-Bond Futures Contracts

- Eurodollar and T-Bill Futures

While attending such a course which involves calculations and mathematics, one should always have a calculator available

Fixed Income Trade Lifecycle: Introduction, Example, Process & Functions

In this article, we will explain the Fixed Income Trade Lifecycle. All topics, examples, introductions, steps and processes involved in Fixed Income Trade Lifecycle are explained.

Related: Fixed Income Securities Market: Introduction & Example
-- Fixed Income Products of Fixed income Market : What makes up a particular market? It's the assets that are traded (bought or sold) in that market. Hence, a good starting point for Fixed income Market Introduction will be the Fixed income Security types. Let's begin with the introduction of the assets traded in the Fixed Income Security Markets. Here is the list:

-- US Government Fixed Income Securities

-- Municipal Fixed Income Securities

-- Corporate Fixed Income Securities

-- MBS Fixed Income Securities

-- CMO Fixed Income Securities

-- ABS Fixed Income Securities

-- Participant of Fixed income Market :

-- Buy-side Fixed Income Market Participants: These are the typical big investors, which may include Insurance Companies, Investment firms, Portfolio Management companies, func houses, etc.

-- Sell-side Fixed Income Market Participants: These are the typical market makers. They act as broker dealers and maintain required liquidity in the market.

-- Industry Utilities Fixed Income Market Participants

-- Industry Service Organizations Fixed Income Market Participants

-- Fixed income Markets : Different products are traded differently. For e.g. though these is a lot of online shopping, but people still prefer to purchase fresh vegetables from the farmers in the local vegetable market. Similarly, most of the Fixed Income Securities being the OTC (Over the Counter) Securitites, are having different kinds of markets for them.

-- Marketplaces for Trading Fixed Income Market

-- Electronic Trading for Fixed Income Market

-- Telephonic Trading for Fixed Income Market

-- Inter-dealer Brokers Trading for Fixed Income Market, where trading is done between 2 brokers or dealers

-- Order Processing & Execution of Fixed income Market :

-- Order Receipt & acknowledgement

-- Routing to the clearing & settlement agency

-- Middle Office Functions of Fixed income Market :

-- Trade Entry into the system for enrichment and validatiopns

-- Trade Reporting to counterparty, custodian, regulators, etc.

-- Inventory Management - involves book keeping, margin requirements, etc.

-- Confirmation/Affirmation - Instructions sent electronically or snail mail for confirmation of trades and acknowledgements.

-- Trade Comparison in Fixed income Market :

-- Real Time Trade Matching

-- Industry Utility

-- Processing of Trade

-- Clearance Function in Fixed income Market :

-- Trade Guarantee

-- Central Counterparty

-- Novation

-- Industry Utility

-- Settlement in Fixed income Market :

-- Environments

-- Exchange of Value

-- Federal Reserve/Clearing Banks

-- Depository Trust Company

-- Fail Control & Financing Opportunities in Fixed income Market :

-- Fails

-- Financing

-- Securities Borrow/Loan

-- Inventory Control in Fixed income Market :

-- Depository Trust Company

-- Federal Reserve/Clearing Banks

-- Physical Securities

-- Stock Record in Fixed income Market :

-- Books & Records

-- Income or Money Collection & Income Distribution in Fixed income Market :

-- Interest

-- Principal Repayments

-- Corporate Action Processing of Fixed income Securities Market :

-- Types of Events

-- Event Processes

-- Trends Identifiers of Fixed income Market Trading:

-- Fixed Income Trading – On an Exchange?

-- The Impact of Credit Rating Agency Optimism

Fixed Income Securities Market: Introduction, Example, Market Participants & Types of Fixed Income Securities

In this article, we will discuss about Fixed Income Securities Market, The types of Fixed Income Securities, The Market Participants for Fixed Income Securities and how the market for Fixed Income Securities workds?

-- Participants of the Fixed Income Securities: :
? Investors of the Fixed Income Securities: These may be long term or short term investors and may inlcude retail investors (small amount investments) to large investors (million-billion dollar amount investments)

? Issuers of the Fixed Income Securities: The banks, organizations, governments who actually issue new Fixed Income Securities

? Sell-side of the Fixed Income Securities: These are broker dealers who make the markets and fulfill the demands of

? Service Organizations of the Fixed Income Securities:

-- Bond Concepts or Fixed Income Securities Concepts: There are certain concepts on which any product is based, same goes for the financial products. The Fixed Income Securities are based on the concepts of Interest Rates(heavily) and minutely on other factors like inflation, other macro-economic factors, etc.

? Interest Rates

o Conventional Yield Measures

? Ratings

? Term

? Yield Curves

-- Fixed Income Securities : In this section, we cover the basic types and characteristics of the Fixed Income Securities.

? Types & Characteristics of Fixed Income Securities

o Government securities

? Treasury bills

? Notes

? Bonds

? Treasury Inflation Protected Securities (TIPS, I- bonds)

? Agency securities

o Mortgage backed securities

? Agency

? Non-conforming

o Asset backed securities

? CMO

? Cash Flow

o Credit card receivables: Not for individuals, but this is for the banks issuing the credit cards and have an outstanding receivable from the credit card holders.

o Auto loans:

o Receivables:

o State and local government

? General obligation;

? Revenue

o Corporate bonds

? General obligation

? Indentures

-- Trading MarketPlaces:

? Traditional Exchanges

? Over the Counter

? Electronic Markets

? Quotes

-- Risks/Reward:

? Risks

o Default

o Interest Rate

o Inflation

o Liquidity

? Rewards

o Capital Gains

o Interest Income

o Entitlements

? Remedies in the Event of Default