Fixed Income Fundamentals from edX

In this Fixed Income Fundamentals course, we will explore the basic products and players in fixed income markets. We will introduce key bond features such as par value, coupon, yield curves, and credit spreads. Then, we will calculate the price of a bond using discounted cash flows and the relationship between a bond’s price and its yield. Clean prices, dirty prices, accrued interest, and day count are other fixed income topics discussed in this online course. Finally, we will explore bond risk measures, including Macaulay duration, modified duration, dollar duration, and convexity. We will then calculate the price sensitivity to yield changes using these risk measures.

This course uses real market data and examples of the most common Refinitiv screens for bonds. A wide range of exercises and real-life case studies are incorporated in the course to directly apply your knowledge on the job. This online course can be taken on demand from anywhere in the world.

What's inside

Learning objectives

Upon completing this course, you will be able to:
Define the key concepts of the basic fixed income instrument – bonds
Explain who buys bonds, who issues bonds, and the bond market
Examine the concepts of yield, coupon, and day count

Discuss the yield curve, credit spreads, and what they represent
Calculate the price of a bond and explain the relationship between price and yield
Measure the yield sensitivity of a bond by using duration and convexity

Upon completing this course, you will be able to:
Define the key concepts of the basic fixed income instrument – bonds
Explain who buys bonds, who issues bonds, and the bond market
Examine the concepts of yield, coupon, and day count
Discuss the yield curve, credit spreads, and what they represent
Calculate the price of a bond and explain the relationship between price and yield
Measure the yield sensitivity of a bond by using duration and convexity

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Explores bond risk measures like Macaulay duration and convexity, which are essential for portfolio management and risk assessment in the financial industry

Uses real market data and examples of Refinitiv screens, which allows learners to gain practical experience with industry-standard tools

Covers key bond features such as par value, coupon, and yield curves, which builds a strong foundation for understanding fixed income markets

Incorporates real-life case studies, which allows learners to directly apply their knowledge to on-the-job scenarios and enhance their practical skills

Examines the concepts of yield, coupon, and day count, which are fundamental for understanding bond pricing and valuation

Presented by CFI Education, a provider of financial analyst training and certification programs, which may enhance career prospects

Reviews summary

Solid introduction to fixed income

According to learners, this course provides a solid foundation and a clear introduction to the world of fixed income. Many found the explanations of key concepts like bond pricing, yield curves, and duration to be particularly helpful and easy to understand. Students appreciate the focus on fundamental topics and how they are presented in a structured manner. While many found it suitable for beginners, some more experienced learners noted it covers primarily introductory material and may require additional study for advanced topics, suggesting it's best positioned as a starting point in fixed income studies. Overall, reviews indicate a largely positive learning experience.

Uses real-world examples and cases.

"The real-life case studies really helped in applying the theoretical concepts learned."

"Using examples from Refinitiv screens was a nice touch and relevant for practice."

"The practical exercises helped solidify the concepts."

Key concepts like duration are explained well.

"The explanation of duration and convexity was particularly clear and helpful."

"Complex topics were broken down effectively into understandable parts."

"I appreciated how the instructor simplified what seemed like complicated ideas."

Ideal starting point for those new to fixed income.

"This is an excellent course if you are completely new to fixed income securities."

"Great first step into understanding bonds and related concepts. Highly recommended for beginners."

"I had no prior knowledge of fixed income, and this course provided a perfect entry point."

Provides a strong base for beginners in fixed income.

"The course really helped solidify my understanding of the basic concepts of fixed income instruments."

"It covers all the fundamental topics necessary to get started in bond markets."

"As a beginner, I found the explanations of yields, coupons, and duration very clear and easy to follow."

Focuses on basics; not for advanced learners.

"While a good intro, it doesn't go into much depth on complex strategies or market nuances."

"It's 'fundamentals' for a reason. If you have some background, this might be too basic."

"I was hoping for a bit more detail on specific market applications, but it stayed at a foundational level."

Activities

Be better prepared before your course. Deepen your understanding during and after it. Supplement your coursework and achieve mastery of the topics covered in Fixed Income Fundamentals with these activities:

Review Basic Financial Accounting

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Reviewing basic financial accounting principles will help you understand how bonds are valued and how companies manage their debt.

Browse courses on Financial Accounting

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Review the accounting equation and its components.
Practice analyzing financial statements.

Read "Fixed Income Securities: Tools for Today's Markets"

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Reading this book will provide a deeper understanding of the concepts covered in the course and help you develop a more sophisticated understanding of fixed income markets.

View Fixed Income Securities: Tools for Today's... on Amazon

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Read the chapters related to bond valuation and risk management.
Work through the examples and exercises in the book.

Bond Pricing Calculations

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Practice calculating bond prices using different methods to reinforce your understanding of the relationship between price and yield.

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Find online bond calculators or create your own spreadsheet.
Calculate the price of bonds with varying coupon rates and maturities.
Analyze how changes in yield affect the bond price.

Three other activities

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Build a Yield Curve Visualization

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Create a visualization of the yield curve using real market data to better understand its shape and movements.

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Gather historical yield curve data from a financial data provider.
Use a data visualization tool to create a chart of the yield curve.
Analyze the changes in the yield curve over time.

Review "The Handbook of Fixed Income Securities"

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Referencing this handbook will provide a comprehensive understanding of fixed income securities and help you stay up-to-date on the latest developments in the market.

View Network Models in Finance: Expanding the Tools... on Amazon

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Consult the handbook for detailed explanations of specific concepts.
Use the handbook as a reference for understanding complex fixed income instruments.

Analyze a Corporate Bond

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Start a project to analyze a specific corporate bond, including its credit rating, yield, and risk factors.

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Select a corporate bond to analyze.
Research the company's financial health and credit rating.
Calculate the bond's yield to maturity and other relevant metrics.
Assess the bond's risk factors and potential returns.

Career center

Learners who complete Fixed Income Fundamentals will develop knowledge and skills that may be useful to these careers:

Fixed Income Analyst

A Fixed Income Analyst researches and analyzes fixed income securities, such as bonds, to assess their risk and potential return. This role involves interpreting market data, building financial models, and providing recommendations to portfolio managers or traders. Because this course covers the fundamentals of fixed income instruments, including bond features like par value, coupon, and yield, it helps build a solid foundation for anyone interested in becoming a Fixed Income Analyst. Understanding topics such as calculating bond prices using discounted cash flows, the relationship between bond price and yield, and bond risk measures like duration and convexity are essential skills for this role. This course's use of real market data and examples, and its exercises, further enhance a learner's readiness.

See salaries and explore the career path for Fixed Income Analyst

Credit Analyst

A Credit Analyst evaluates the creditworthiness of borrowers, which is crucial in fixed income markets as it relates to the likelihood of bond issuers fulfilling their obligations. This role involves assessing credit spreads, understanding yield curves, and analyzing risk factors. This course's focus on fixed income fundamentals and its explanation of credit spreads, along with its discussion of bond risk measures, makes it particularly helpful for a Credit Analyst. The coverage of bond pricing, along with concepts such as clean and dirty prices, also is important for a role that performs in depth analysis of fixed income instruments. For someone seeking to enter this field, it is a valuable way to develop a grasp of core concepts.

See salaries and explore the career path for Credit Analyst

Investment Banking Analyst

An Investment Banking Analyst supports senior bankers in originating and executing transactions, including those involving fixed-income securities. The role requires a solid understanding of bond valuation and pricing. This course on Fixed Income Fundamentals is directly relevant, as it covers key concepts like par value, coupon, yield, and the calculation of bond prices. An Investment Banking Analyst will also benefit by learning about how yields impact bond prices, along with risk measures such as duration, which form the basis of financial analysis. The inclusion of real market data and examples further enhances the practicality of this material for this role.

See salaries and explore the career path for Investment Banking Analyst

Treasury Analyst

A Treasury Analyst manages an organization's cash flow and financial risk, and frequently deals with fixed income instruments. Understanding key bond features and risk measures as covered in this course is useful because it provides the basis for working with an organization's debt portfolio. This course's focus on bond pricing, yield, and duration help build a strong foundation for a Treasury Analyst. This role requires an understanding of how bonds relate to an organization's larger financial strategy. A Treasury Analyst will need to evaluate the impact of interest rate changes on bond investments.

See salaries and explore the career path for Treasury Analyst

Financial Risk Analyst

A Financial Risk Analyst identifies and mitigates financial risks, including market, credit, and operational risks. Understanding bond risk measures such as duration and convexity, as covered in this course, is highly pertinent, as this directly impacts risk assessments related to fixed income portfolios. This role requires a firm grasp of how factors like yield changes affect bond prices, and this course covers this topic in detail. Also relevant is the course's coverage of calculating bond prices and the components of those calculations. This course may be useful in building the foundations for a role as a Financial Risk Analyst.

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Quantitative Analyst

A Quantitative Analyst, often called a quant, develops mathematical models for financial analysis. Working in fixed income requires a deep understanding of bond price sensitivity to yield changes, which is the focus of this course. The course's sections on duration and convexity provide a framework to understand how quantitative models work. Using duration and convexity, a Quantitative Analyst can understand how to model the price sensitivity of bonds. This role requires advanced degrees in quantitative fields. This course may be useful for those who want to use financial modeling in the context of fixed-income.

See salaries and explore the career path for Quantitative Analyst

Hedge Fund Analyst

A Hedge Fund Analyst conducts financial research and analysis for a hedge fund, often focusing on specific sectors, including fixed income. This role requires a sophisticated understanding of various investment instruments. This course, with its coverage of fixed income fundamentals such as bond pricing, yield curves, and risk measures like duration and convexity, may be helpful. A Hedge Fund Analyst may use this information to inform investment decisions and to assess potential risks. The course's focus on real market data and examples provides a practical perspective.

See salaries and explore the career path for Hedge Fund Analyst

Portfolio Manager

A Portfolio Manager is responsible for making investment decisions and managing a portfolio of assets, often including a significant allocation to fixed income. Understanding the nuances of bond pricing, yield curves, and risk measures like duration and convexity are vital to success in this role. This course on Fixed Income Fundamentals covers these topics, which are critical for a Portfolio Manager who will need to understand the calculations behind bond pricing, as well as the impact of yield changes. In this role you must understand how bonds fit within the broader investment strategy. This course may be useful, as it explores these concepts in depth and provides real market data and examples.

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Financial Advisor

A Financial Advisor provides financial advice to clients, often including recommendations involving fixed income investments. A grasp of the fundamental principles of bonds, as covered in this course, helps provide sound financial advice to clients. The concepts of yield, coupon, and understanding bond pricing are all essential for this role because when evaluating whether to recommend fixed income, calculating bond prices is critical. Although this course does not cover the entire scope of a Financial Advisor role, it may help improve financial literacy and the ability to evaluate fixed income securities.

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Actuary

An Actuary uses statistical models to evaluate risk and pricing in the areas of insurance and investment management, often including fixed income investments. While the role is focused on risk assessment, an understanding of the bond market and its valuation is critical to understanding the impact of interest rates for long-term investments. This course's focus on bond pricing, yield curves, and risk measures such as duration is useful for an Actuary. This course may be helpful for understanding the mechanisms of fixed income and to integrate those into actuarial work.

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Commercial Lending Officer

A Commercial Lending Officer evaluates loan applications and manages commercial loan portfolios, which may involve some exposure to fixed income within the context of commercial finance. This course's focus on bond basics may be helpful to understand the basics of fixed income and to enhance the understanding of business finance, since the principles are applicable beyond personal finance. A deeper understanding of yield, the relationship between price and yield, and duration, can improve decision-making when evaluating fixed-income securities. While not central to a Commercial Lending Officer's role, it may provide helpful financial background.

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Financial Planner

A Financial Planner helps clients manage their finances, which may include advising about the role fixed income can play in a comprehensive financial plan. This role requires knowledge of financial products, including bonds, and an understanding of key concepts such as yield and duration. This course may be helpful for those who want to expand their financial product literacy. While not central to this role, it may improve the understanding of one category of financial products

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Real Estate Investment Analyst

A Real Estate Investment Analyst evaluates real estate investments, which may involve analyzing fixed income components within real estate debt. While this role is primarily focused on real estate, understanding the fundamentals of fixed income can be useful for those in this role. This course's discussion of bond pricing and the impact of changing interest rates may be useful for making decisions regarding real estate debt. This course may help improve financial knowledge but is not central to this role.

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Data Analyst

A Data Analyst collects, processes, and performs statistical analysis of data. This role requires strong analytical skills. While this course is about fixed income, the course's use of real-market data provides an opportunity to practice data analysis, and may be useful in this context. The course's focus on key concepts of fixed income could be helpful for a Data Analyst working in the financial sector. Learning about bond price and yield calculations may be valuable for those in a data analysis role.

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Financial Controller

A Financial Controller is responsible for the preparation of financial statements and financial reporting for an organization. While this role is primarily focused on accounting and reporting, understanding the basics of financial instruments, such as bonds, can be useful for someone in this role. This course may be helpful for those who want to expand their understanding of fixed income. This course may be helpful, but it is not central to the role of Financial Controller.

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Fixed Income Fundamentals

What's inside

Learning objectives

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Reviews summary

Solid introduction to fixed income

Activities

Career center

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