Fixed-income securities include bonds and structured products (e.g. mortgage-backed securities and asset-backed securities) that promise interest payments and repayment of the amount borrowed. They also extend to all securities whose valuation and hedging are related to interest rates. In the sale of those securities by issuers to investors, credit ratings are critical in the assessment of the credit risk associated with such securities.
Pre-requisite: IBF505 Investment Theory and Applications or equivalent