Debt & Money Markets: Concepts, Instruments, Risks and Derivatives (edX)

In this course, part of the Professional Certificate program Risk Management in Banking and Financial Markets, we will examine the structure and functioning of money markets (short-term financial markets) as well as debt markets, the manifestation and impact of interest rate risks in those markets and how are they managed/mitigated.

The first part of this course will examine in detail money markets (short-term financial markets) such as call money markets, T-bills markets, repo markets, etc. that make up the ecosystem to effectively manage money supply (liquidity) and ensure stability of the financial system in the short-term.
The second part of this course will look at debt markets, the underlying theories such as time value of money, bond pricing and bond valuation, as well as the structure and functioning of debt markets including corporate bond market, government securities (T- bond) market and mortgages market.
Interest rate and inflation together are the most significant macro-economic variables that impact global financial markets, particularly debt markets, even more so given the free flow of capital across countries and the consequent emergence of globally interconnected financial systems. As a result, managing interest rate risks and its consequent impact on the riskiness and volatility of instruments traded in the money and debt markets have become exponentially more complex.
This course will address the tools and techniques to manage the heightened level of interest rate risks. It will also look at derivative products such as futures, swaps and options and their role in not only helping institutions to hedge against those risks but also to speculate and make additional profits where possible.

What you'll learn
In this course, we will examine:

• Money markets (Short-term financial markets), such as call money markets, treasury-bills markets and REPO markets
• The financial instruments traded in these markets and the underlying market mechanisms
• The theories governing debt markets including time value of money, bond pricing and bond valuation
• The nature, composition, structure and functioning of debt markets covering government securities (treasury-bonds), corporate bonds and mortgages
• The risks in investing in the instruments traded in these debt markets, the pricing and trading aspects as well as the regulatory and market mechanisms governing these markets

We will also cover in detail:

• Interest rate risk and its impact on the riskiness and volatility of instruments traded in money and debt markets
• Address the tools and techniques to manage the heightened level and complexity of interest rate risks
• Derivative products such as futures, swaps & options and their role in not only helping institutions to hedge against interest rate risks but also to speculate and make additional profits where possible