Category Archive : Fixed Income

Learn how ringfenced loans work, including SPVs, DSCR, non-recourse debt, security structures, cash flows, and their role in credit analysis.

Learn how time value decay affects option prices, why theta accelerates near expiration, how moneyness matters, and how volatility changes option decay.

Understand factoring arrangements, recourse and non-recourse structures, working capital benefits, and how trade receivables factoring scales into ABS markets.

Understand sinking fund provisions in bonds, how they reduce issuer risk, why they create reinvestment risk for investors, and their impact on bond pricing.

Learn what a Collateralized Bond Obligation is, how CBO tranches and payment waterfalls work, and understand its risks with simple numerical examples.

Learn what split ratings mean, why credit rating agencies disagree, and how different bond ratings affect yields, borrowing costs, investor demand and investment-grade eligibility.

Learn the Weighted Average Coupon Rate formula, calculation, examples, applications in bond portfolios and MBS, and the difference between WAC and WAM.

Learn how a pre-funding period works in solar asset-backed securities, why issuers use it, ramp-up risk, eligibility criteria, trustee accounts, and how it differs from a revolving period.

Learn the maturity effect in bonds, how duration changes as bonds age, pull to par, convexity, immunisation, and why long-term bonds are more sensitive to interest rate changes.

Learn what convertible bond arbitrage is, how it works, its strategy, examples, benefits, risks, and why hedge funds use this relative value investment approach.

Learn what a yield curve is, its types, how it works, why it matters in finance, and what normal, flat, and inverted yield curves indicate about the economy.

Learn what Yield to Maturity (YTM) is, how it is calculated, why it differs from coupon rate, and how investors use YTM to compare bond investments.

Learn what pari passu means in finance, how equal ranking of claims affects bondholders during default, and why claim priority matters in credit risk analysis.

Understand non investment grade bonds, why they offer higher yields, how credit spreads drive pricing, and what risks matter most in high yield bond analysis for CFA and FRM exams.

Learn what a fallen angel bond is, how credit downgrades affect price, yield spreads, and institutional selling pressure, and why this concept matters in fixed income analysis.

Understand the role of the originator in credit creation and securitisation, how underwriting, incentives, and risk retention shape loan quality and credit risk.

Accrued interest explained clearly, why bond buyers pay it, who earns it, and how it connects clean price, dirty price, and coupon timing.

Understand bond flat price, why bonds are quoted excluding accrued interest, and how flat price differs from dirty price in fixed income markets.