Undergraduate - UnitBFC2340 - Debt markets and fixed income securities

This unit entry is for students who completed this unit in 2014 only. For students planning to study the unit, please refer to the unit indexes in the the current edition of the Handbook. If you have any queries contact the managing faculty for your course or area of study.

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6 points, SCA Band 3, 0.125 EFTSL

Refer to the specific census and withdrawal dates for the semester(s) in which this unit is offered, or view unit timetables.

Level	Undergraduate
Faculty	Faculty of Business and Economics
Organisational Unit	Department of Banking and Finance
Offered	Clayton First semester 2014 (Day)

Synopsis

Topics covered in this unit include: an introduction to mathematics of finance, rates of interest, rates of discount, present and accumulated value of cash flows under fixed and variable rates of interest, equation of value, applications to debt and retirement income stream markets, in particular the Australian annuity, short-term money market and capital markets; factors affecting accumulation under the Superannuation Guarantee Scheme; economic factors affecting the yield curve, zero coupon bonds, zero coupon bond yield curve, pricing bonds, bond yields, callable bonds, effect of tax on yield, annuity bonds, hybrids, CGB futures and options on futures, interest rate risk management by immunisation, stochastic models for cash flows and stochastic rates of interest, calculation of moments of present values and accumulations, arbitrage-free asset pricing, hedging, optimal conversion of lump sum to a retirement income stream.

Outcomes

The learning goals associated with this unit are to:

describe conventions used in short term money and capital markets, and explain the implications for pricing of products in these markets
apply quantitative skills required for pricing and risk management associated with money, capital and retirement income stream markets
apply critical thinking, problem solving and presentation skills to individual and/or group activities dealing with debt markets and fixed income securities and demonstrate in an individual summative assessment task the acquisition of a comprehensive understanding of the topics covered by BFC2340.

Assessment

Within semester assessment: 20%
Examination: 80%

Chief examiner(s)

Dr Andrew Sanford

Workload requirements

Minimum total expected workload equals 144 hours per semester

Prerequisites

Students must have passed AFC2000, BFC2000, AFC1100 (pre 2009) or AFC2100 (pre 2009) before undertaking this unit.

Prohibitions

AFC2340