Corporate Financial Training

In this lecture we explain what a convertible bond is, why they are issued, who issues them, how generally speculative they are, and what the terms are about used to describe them. These terms include conversion ratio, conversion value, conversion percentage, conversion premium, and so on.

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In this final one of our bond duration and convexity lectures, we apply the lessons learned in the previous lecture to start calculating convexity and using it to make more accurate price predictions for bond price changes, whenever interest rates change.

The full YouTube playlist of Securities Investment 101 lecture videos can be found by clicking here.

Please read our disclaimer.

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Modified Duration, Lecture 023, Securities Investment 101

December 5, 2013

We conclude our lectures on ‘Duration’, before we move on to ‘Convexity’, with an explanation of ‘Modified Duration’ and its importance in predicting how individual bond prices will change on specific interest rate changes. In passing, we cover the ‘MDURATION’ Excel function, and also dabble a little in different coupon payment frequencies, such as Annual, […]

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The Importance of Macaulay’s Duration, Lecture 022, Securities Investment 101

November 29, 2013

In this lecture we discuss the importance of Macaulay’s Duration, particularly to anyone holding large bond portfolios. In passing, we show how and why zero coupon bonds have a duration identical to their maturities, and why the anticipated directional moves of interest rates are so critical to bond traders and pension fund managers. We also […]

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Money Market Yields, Lecture 019, Securities Investment 101

July 4, 2013

The money markets are concerned with very liquid securities investment products based upon cash-flows, with usually less than one year to maturity and without associated coupons. Typical investment products include government treasury bills, certificates of deposit, commercial paper, and short-term zero-coupon bonds. Although investment yields are often lower than long-term bonds and other equity-based investments, […]

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Inter Bank Offer Rates, Lecture 018, Securities Investment 101

July 1, 2013

In this lecture we discuss what inter-bank offer rates are, where they originated, and how they are typically calculated on a daily business-day basis. Although providing a ‘generic’ description of how they work, and mentioning several of the major international alternatives, we also provide information on one of the major inter-bank offer rates (as of […]

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Generating a Yield Curve with the Nelson-Siegel-Svensson Method, Excel Library

June 28, 2013

In this Excel Library video, we take a limited amount of bond yield information, and then extrapolate and interpolate from this a good-fitting yield curve which covers all the ‘potential’ rates in-between. We do this using the Nelson-Siegel-Svensson method, via the Excel data tool, Solver, and minimise residual error squares to create a believable yield […]

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The Riskless Yield Curve & Credit Spreads, Lecture 017, Securities Investment 101

June 24, 2013

In today’s lecture, we examine the ‘special’ yield curve known as the ‘riskless’ yield curve and how we define it and its terms. Once we have this special yield curve defined, we then talk about credit spreads, which are essentially the difference in yields between bonds of the same maturity, particularly as compared to the […]

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The Inverted Yield Curve, Lecture 016, Securities Investment 101

June 19, 2013

In this lecture we describe the inverted yield curve and how it differs from the normal yield curve. Before we get to that, we explain the strategy of ‘riding the yield curve’ and then why the inverted yield curve is such a dangerous thing when riding the yield curve. We explain why the inverted yield […]

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