###### Discount Rate Selection in Relation to ...

When discounting cash flows analysts should use the discount rate that is consistent... **Read More**

*-b. Describe how zero-coupon rates (spot rates) may be obtained from the par curve by bootstrapping;*

*-d. Describe the strategy of riding the yield curve;*

*-e. Explain the swap rate curve and why and how market participants use it in valuation;*

*-f. Calculate and interpret the swap spread for a given maturity;*

*-j. Explain the maturity structure of yield volatilities and their effect on price volatility;*

*-a. Explain what is meant by arbitrage-free valuation of a fixed-income instrument;*

*-b. Calculate the arbitrage-free value of an option-free, fixed-rate coupon bond;*

*-c. Describe a binomial interest rate tree framework;*

*-h. Describe a Monte Carlo forward-rate simulation and its application;*

-i. *Describe time structure models and how they are used;*

*-a. Describe fixed-income securities with embedded options;*

*-c. Describe how the arbitrage-free framework can be used to value a bond with embedded options;*

*-d. Explain how interest rate volatility affects the value of a callable or putable bond;*

*-f. Calculate the value of a callable or putable bond from an interest rate tree;*

*-g. Explain the calculation and use of option-adjusted spreads;*

*-h. Explain how interest rate volatility affects option-adjusted spreads;*

*-i. Calculate and interpret the effective duration of a callable or putable bond;*

*-j. Compare effective durations of callable, putable, and straight bonds;*

*-l. Compare effective convexities of callable, putable, and straight bonds;*

*-m. Calculate the value of a capped or floored floating-rate bond;*

*-n. Describe defining features of a convertible bond;*

*-o. Calculate and interpret the components of a convertible bond’s value;*

*-p. Describe how a convertible bond is valued in an arbitrage-free framework;*

*-b. Explain credit scores and credit ratings;*

*-c. Calculate the expected return on a bond given transition in its credit rating;*

*-f. Interpret changes in a credit spread;*

*-b. Describe credit events and settlement protocols with respect to CDS;*

*-c. Explain the principles underlying and factors that influence the market’s pricing of CDS;*