How the Financial Markets Work
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A practical guide shows you how various securities are constructed, the risks they pose, how to value them, how they interrelate, and about the timing of their issuance
The Course Director specialises in capital markets, risk management, and international project finance. She has considerable professional experience with the oil and gas, power, transport, and telecom sectors. She has published articles in the business press and co-authored several self-study guides covering international project finance, trade and export finance, foreign exchange, and financial futures.
In the past few years global capital markets have undergone profound changes. Many market participants have disappeared or been restructured. Governments and Central Banks are playing an unprecedented policy role in reshaping the investment and financing landscape. Against this backdrop of change, an altered array of investment alternatives is emerging.
'How the Financial Markets Work' is the course that examines government debt issues, corporate securities and euro-markets and their startling changes in value since 2008 through the past year.
You will learn how various securities are constructed, the risks they pose, how to value them, how they interrelate, and about the timing of their issuance. The process of selling government and corporate securities is described step by step. You will learn how companies are valued, how their shares are distributed, and how returns on equity can be measured. The course also looks at securities where equity takes on characteristics of debt - or the reverse.
Various derivatives markets are explored, with the focus on ways in which futures, swaps and options may be combined with debt and equity to alter risk and return. A thorough explanation of credit derivatives, asset and mortgage-backed securities is provided.
Summary of course content
- Global short, medium and long term funding and investment alternatives
- Who are the investors and issuers?
- What role do hedge funds play?
- How is financial intermediation changing?
- Government securities and yield fundamentals; which have held up best?
- How are Central Banks and policy makers reshaping markets?
- Asset and mortgage-backed securities; applications, continuing concerns
- Changing role for credit rating agencies?
- Valuing debt and equity securities
- Convertibles and debt with warrants
- Listing and Trading on an Exchange
- Block Trades and “Dark Pools”
- Futures, forwards, swaps and options and their applications
- Understanding foreign exchange volatility
- What is the future of credit derivatives?
Active participation is encouraged to ensure understanding and reinforce concepts. You will be provided with complete lecture notes, cases, and selected readings to serve as a reference.
Who should attend this training course?
This course is suitable for those who want to gain an overall perspective on financial markets from banks, financial institutions and corporations, etc.
- Risk Managers
- Credit Managers
- Traders and Dealers
- Financial Consultants
- Financial and Treasury Managers
- Accountants and Auditors
- Lawyers and legal professionals
Themes: Overview of capital markets; government securities and money markets; role of rating agencies
Global capital markets: An overview
- Forces of change and the challenge of volatility in Asian markets
- Broadening the range of financing alternatives
Risk, return and expectations
- How financial markets determine price
- Efficient markets and rational expectations?
- The influence of rating agencies on country risk and other ratings
The major instruments and how they interrelate
- Money markets vs. Bonds and fixed income securities
- Equity markets
- Asset securitsation
- Derivative markets
Government securities and yield curves
- Widely traded sovereign instruments
- Discount and interest bearing securities
- Nominal and effective yields
Interpreting yield curves
- Liquidity and volatility
- Inflation and monetary policy
- "Riding the Yield Curve"
- Implied forward rates
Central banks and capital markets
- Central Banks and inflation
- Tools for policy implementation
- Watching Central Banks for rate movements
- Repos and reverse repos
- Dealer selection
- Examples of use
Short term funding and investment instruments in domestic and euro-markets
- Negotiable certificates of deposit
- Bankers acceptances
- Commercial paper
- Role of the rating agencies
- How do they differ from equity analysts?
- Asean rating agencies
- Underwriting process
Themes: Medium and long-term debt instruments; asset-backed securities
Intermediate funding and investment alternatives
- Bank leveraged loans/syndicated financing
- Primary and secondary markets
- Participations and assignments
- Bond markets
- Publicly traded securities
- Private placements (including U.S. Rule 144A)
- Asian capital markets: Underwriting and distribution
- Secondary markets for fixed income securities
- Calculating duration and modified duration
- Applications in asset liability management
- Modified duration
Workshop: Valuing securities with more than one coupon payment and calculating duration
- Establishing a special purpose vehicle that is bankruptcy remote
- Securitising credit card receivables
- Considering other consumer debt
- Mortgage-backed securites
- Fall-out from sub-prime securitisations?
Case study: Assessing credit risk in an asset-backed transaction
Debt/equity hybrids and uncommon equity
- Convertible debt and debt with warrants
- Valuing these instruments
- Convertible preferred stock
- Uncommon equity with imbedded options
Themes: Equity markets and share issuance; M&A topics; derivatives
- Issuers and investors
- Underwriting and distribution
- Listing decisions and stock exchanges
- Block Trades and Dark Pools
- Flash Trades
Determining stock price: Valuing common and preferred shares
- Popular multiples
- Various models for valuation
- Discounting Cash Flows (DCF)
- Using the Capital Asset Pricing Model (CAPM) and betas
Valuing companies for initial public offerings, acquisitions, divestiture, etc.
- Forecasting performance
- Using CAPM
- Weighted Average Cost of Capital (WACC)
Case study: Valuing an acquisition target
Derivative instruments: How they are derived traded and used
- Origins of the markets
- Identifying exposure to price risk
- Hedging vs. insurance products
- Symmetry and asymmetry of risk
Financial Futures and Forward Rate Agreements (FRA's)
- Futures market: Brokers, traders and the clearing corporation
- Margin requirements
- Survey of contracts
- Calculating tick values
- FRA's compared to futures
Introduction to swaps
- Product evolution
- Swap applications
- Terminology and quoting conventions
Workshop: Pricing interest rate swaps
- Calculating cash-flows, IRR's and settlements
- How intermediaries make a market
- Default risk
Themes: Interest rate options and other price volatility risk management; credit derivatives
Using interest rate options
- Caps floors and collars
- Option pricing considerations
Foreign exchange and international linkages
- Spot, forward and future foreign exchange markets
- How currencies are quoted
Exchange rate determination
- Balance of payments
- Central bank influences
- Purchasing power parity
- Markets, participants, and role of the intermediary
- Compared to foreign exchange forward contracts
- Combining swaps with other instruments for an all-in lower cost, or improved yield
- Default risk
- Definitions and types
- American and European options
- Hedging applications
Credit-Linked Swaps (CDS) and other derivatives
- Hedging against credit downgrade or loss
- Credit Default Swaps (CDS)
- Total Return Swaps (TRS)
- Credit put options
Self-test and wrap-up
The Course Director specialises in capital markets, risk management, and international project finance. She works with corporations, financial institutions, public agencies, law firms, and private equity investors. She has considerable professional experience with the oil and gas, power, transport, and telecom sectors.
She began her career at JP Morgan Chase Manhattan Bank, where she structured highly leveraged transactions and project financings and advised clients on foreign exchange and other price risk management strategies. She was responsible for a team of analysts responsible for evaluating the quality of the banks global loan portfolio as well as that of its newly acquired affiliates. In that role she had extensive experience with workout and distressed debt.
She has published articles in the business press and co-authored several self-study guides covering international project finance, trade and export finance, foreign exchange, and financial futures. The World Bank has published her articles on approaches to financial analysis in emerging markets.
From 2000 to 2007 she was a member of the Technical Advisory Panel (TAP) of the Public Private Infrastructure Advancement (PPIAF) managed by the World Bank. In 2006 and 2007 she was the TAPs chairperson. The fund provides technical assistance to emerging market governments in order to encourage private involvement in infrastructure development. She received an M.B.A. from INSEAD, the European Institute of Business Administration, in Fontainebleau, France. Her B.A. degree is from Princeton University.
Courses run by this instructor
4-5 Star Hotel in Singapore, Singapore,
All of our courses are held in 4 5 star hotels, chosen for their location, facilities and level of service. You can be assured of a comfortable, convenient learning environment throughout the duration of the course.
Due to the variation in delegate numbers, we will send confirmation of the venue to you approximately 2 weeks before the start of the course. Course fees include training facilities, documentation, lunches and refreshments for the duration of the programme. Delegates are responsible for arranging their own accommodation, however, a list of convenient hotels (many at specially negotiated rates) is available upon registration.
Interested in holding this course in-house? Please fill out your details and a member of our team will be in touch with more information.