Have always struggled with fixed income. Calculation stuff i seem fine on but looking if someone has a suggestions on qualitative stuff that should be looked at. I know its last minute but i figure the only thing i can do now is look at the most important stuff for fixed income. Anyone have suggestions ?
Please and Thank you
know the kinds of instruments and when they should be used… commercial paper, CMOs, MBSs, municipal bonds, T-bills, Revenue bonds, floating rate… so on
know risk type and which instruments are best fit… credit risk, reinvestment risk, defalt risk, liquidity risk and so on
understand yield curves and how certain things affect them (options, interest rate expectations)
understand the Z-spread in relation to the nominal spread. (Z-spread is basically a nominal spread that has been fixed to fit the yield curve… a Z-spread greater than the nominal spread indicates a positive yield curve)
Understand the option adjusted spread (Z-spread- OAS = option cost)
know how to work with forward rates and spot rates to derive specific rates. (Financial exam help 123 has a great article… magician’s blog)
This is actually one of my key focal points for the next two days. For some reason just cannot seem to get this! Frustrating!
Why, with a flat yield curve, will the G spread equal to the Z spread?
Thanks for the help!
I’m blushing here, guys.