Capital Markets

Indicative content

1. Capital market and its instruments
Bond market - characteristics and legislation. Bond issuance. Forms of bond yields. Advantages and disadvantages of investing in bonds.
2. Forms of bonds
Government, municipal, bank and corporate bonds. Government bond issuance and yield of bonds. Municipal bonds and their forms. Mortgage bonds - covered bonds in the Slovak Republic. Corporate bonds and their breakdown.
3. Credit risk - insolvency risk and its measurement - rating
Rating criteria at the macro level - political, economic, social criteria. Investment and non - investment grade bonds. Micro-level rating and its criteria. Risk free rate for bonds and risk spreads at the level of government and corporate bonds. Risk of default on bonds and the problem of so-called junk bonds.
4. Price and yield of bonds.
Determination of the objective price of a bond with a fixed coupon. Influence of coupon size, required yield and maturity on the bond price. Aliquot interest income from bond trading. Calculation of yield on bonds. Yield for the duration of the holding. Comparison of different forms of profitability. Yield curves.
5. Risk measurement - change of interest rates - duration, convexity
Price and reinvestment risk. Bond duration and its importance for the investor. Use of modified duration in the management and immunization of the bond portfolio. Bond convexity - the effect of the required yield, life and coupon on the bond price. Bond liquidity problems - rolling effect.
6. Innovations in the bond market
Variable coupon bonds (FRNs and their types). Pricing and yield determination for variable coupon bonds. Convertible bonds and their specifics. The price of a convertible bond and its relation to the stock price. Specifics of option bonds and methods of their valuation.
7. Trading on the bond market.
Bond indices and their construction. Use of derivatives in trading on the bond market - hedging and speculative forms of trading. The role of the ESM in bond markets in Europe.
8. Stock as an equity securities
Characteristics of the stock as an investment instrument. Publicly traded companies, issuance of shares and their listing on the stock exchange. Types of shares - common and preferred - their basic characteristics, advantages and disadvantages of individual types for the investor.
9. Stock market indices
Index as a measurement of the development of stock markets. Basic types of stock indices, calculation methods and their functions. The most important world indices - their development and importance in world stock markets.
10. Analyses on stock markets - fundamental analysis
Fundamental analysis and its application in the capital market. Macroeconomic analysis - macroeconomic factors and their relationship to stock markets. Fundamental analysis at industry level. Industry structure and impact on the stock price. Creditworthiness indicators, stock price and return calculations. Use of different types of models in the stock market.
11. Technical analysis
Basic assumptions in technical analysis. Technical analysis indicators. Short-term and long-term trends and the so-called waves on capital markets, bullish and bearish trend on stock markets, Eliot waves, basic characteristics and the role of indicators of technical analysis.
12. Psychological analysis
Psychological analysis and its application in capital markets. Theoretical background and the most important strategies. Speculative bubbles in the stock markets. Theory of efficient markets, its degrees and anomalies in stock markets.
13. Trading on capital markets
Types of trades on stock markets and their specifics. Spot trades. Futures trades. Speculative trades. Hedging on the stock markets.