Market Instruments: Equity and Fixed Income

Master 2023/2024

Type: Compulsory course (Financial Analyst)

Area of studies: Finance and Credit

Delivered by: HSE Banking Institute

Where: HSE Banking Institute

When: 1 year, 3, 4 module

Mode of studies: offline

Open to: students of one campus

Instructors: Авалян Хачатур Леваевич

Master’s programme: Financial Analyst

Language: English

ECTS credits: 6

Contact hours: 72

Full 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

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
Description of major equity valuation concepts and tools such as discounted cash flow models, multiple models and asset-based valuation models
Core features of debt securities: main bond classifications, participants and markets.
Bond markets: government vs corporate, primary vs secondary.
Bonds with embedded options.
Bonds’ yield measures and risks.
Par, spot and forward curve construction.
Market and credit risk: duration and credit spreads.
Fundamentals of credit risk analysis.
International investments. How to compare yields.

Assessment Elements

«Market Instrument: EQUITY MARKET» Mid-term exam
«Market Instrument: FIXED INCOME» Mid-term exam

Interim Assessment

2023/2024 4th module
0.5 * «Market Instrument: EQUITY MARKET» Mid-term exam + 0.5 * «Market Instrument: FIXED INCOME» Mid-term exam

Bibliography

Recommended Core Bibliography

Aswath Damodaran. (2016). Damodaran on Valuation : Security Analysis for Investment and Corporate Finance. Wiley.
Morvan, C., & J. Jenkins, W. (2017). Judgment Under Uncertainty : Heuristics and Biases. Milton: Macat Library. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1552188

Recommended Additional Bibliography

Pagdin, I., & Hardy, M. (2017). Investment and Portfolio Management : A Practical Introduction (Vol. 1st). London: Kogan Page. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1621031
Pinto, J. E. (2015). Equity Asset Valuation (Vol. Third edition). Hoboken, New Jersey: Wiley. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1083933

Course Syllabus