Fixed Income Instruments

What is Fixed Income:

The global financial crisis taught us many things, not least
that the world has a voracious appetite for debt. Governments, firms, and
individuals took on a sea of debt – many ultimately drowned in it, while some
clung on thanks to unprecedented rescue operations.

Bonds are just one form of debt, but a crucial one. Largely
shunned in the past by the mainstream media, which focused more on equity
markets, the crisis catapulted fixed income markets onto the front pages. But
while the ordinary person may not have known about the influence of debt
markets on the global economy, the financial community was already well aware.
Bonds have long been a critical source of finance for governments,
corporations, and other borrowers. And the source of these borrowed funds is institutional
and individual investors who are attracted to bonds for their huge array of
risk and reward profiles.

It's no surprise, then, that the global debt securities
market is vast, estimated at around USD 100 trillion in terms of debt
outstanding (nearly double that of global stock market capitalization). The
scale and influence of the fixed income market are beyond dispute.

Why it is important:

The bond market may be intimidating to some people, but – as
this course will show – it doesn't have to be.

If you want to understand how the market works, then you
need to begin with the fundamental concept of a bond. Reduced to its most basic
level, a bond is merely a type of “IOU.” This rather banal statement lies at
the heart of all the various bond markets. If your knowledge of bonds is
limited, you’ll be glad to know that this definition is the starting point for
our course. But for those of you with more experience and knowledge, there’s
plenty in the course as well.