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HU Credits:
3
Degree/Cycle:
2nd degree (Master)
Responsible Department:
Business Administration
Semester:
1st Semester
Teaching Languages:
Hebrew
Campus:
Mt. Scopus
Course/Module Coordinator:
Mr. YOSI LEVI
Coordinator Office Hours:
In the campus - Thursdey, 18:00-19:00, by appointment.
Or:
Via ZOOM, In other times, by appointment, as well.
Teaching Staff:
Mr. YOSI LEVI
Course/Module description:
Bonds or Fixed Income Securities are probably the most common security in financial markets. Bond is a security the cash flow derived from it defined, and in many cases known in advance. These enable a relatively good evaluation of bonds value. Nevertheless, bond pricing is a complicated process, based on advanced economic and financial engineering models. Since even in such process assumptions are required, the results could be different from one evaluation to another.
Short term interest rate, the time structure of interest rate, credit risk premium, liquidity, and other factors influence bond pricing. Yet, these factors are not stable and always there are different opinions regarding them. The way these factors' influence is taking into account in models and tools used in evaluating bonds, will discussed in the course.
Interrelationships between the bond market and other markets will also be discussed.
These are the main issues that will discussed in the course:
- Pricing of sovereign (governmental) bonds- Pricing of sovereign (governmental) bonds and corporate bonds, including bonds + option component;
- How interest fluctuations influence bonds' value and bond portfolios' value;
- The time structure of interest rates;
- Financial risks, and the way they expressed in corporate bond pricing and in bond portfolios managing.
Course/Module aims:
Understanding the bonds world and the way it conducts, including providing basics and advanced bond pricing and bond position managing tools.
Learning outcomes - On successful completion of this module, students should be able to:
1. Evaluate different types of bonds - sovereign bonds and corporate bonds.
2. Evaluate risks inherent in bonds and common ways to handle them.
3. Explain common bond investment strategies.
4. Understand and evaluate mutual effects between the bond market and other markets.
Attendance requirements(%):
80%
Teaching arrangement and method of instruction:
presentations, class discussions, assignments, competitive quizzes and finale exam.
Course/Module Content:
- Interest: Spot Rate, Forward Rate, Term Structure of Interest Rates.
- Different bond types' characteristics, including Zero Coupon Bond, Fix Interest Bond, Variable Interest Bond, Single Redemption, Installment Redemption, Linking, Double Options Bonds, Convertible Bonds, Early Redemption, Co-Co bond.
- Bond's Yield to Maturity.
- Yield Curve structure.
- Theories that explain the yield to maturity curve structure.
- Link between Yield Curve and Term Structure of Interest Rate.
- How fluctuations in interest rate influence bond value (Duration, Convexity).
- Credit risks (market risks, counterparty risks).
- Bond rating.
- Bonds derivatives.
- Hedging bonds' risks.
- Bond Derivatives.
- Securitization -Mortgage-Backed Bonds.
Required Reading:
Fixed Income Securities - Tools for Today's Markets, by Bruce Tuckman, John Wiley & Sons Inc. (2nd edition).
Additional Reading Material:
Bond Markets, Analysis and Strategies, by Frank J. Fabozzi, PEARSON (8th edition).
Grading Scheme :
Written / Oral / Practical Exam / Home Exam 75 %
Submission assignments during the semester: Exercises / Essays / Audits / Reports / Forum / Simulation / others 25 %
Additional information:
As aforesaid, PP presentations will be used during the lectures.
The presentations as other relevant matirials will upload to the course website before each lesson.
It is highly recommended to visit the course website frequently.
The assignments grade is a protect grade (if the final exam's grade will be higher than the assignments' grade, the final exam's grade will be the course's grade, otherwise the assignments' grade will be 25% of the course's grade and the final exam's grade will be 75% of the course's grade).
Students that will actively participate in class, and will show actively participating, knowledge and understanding in the competitive quizzes, could achieve up to 5 points bonus to the course's grade, upon the lecturer's discretion.
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