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Inflation-Linked Instruments

Courses In This Course

Index-linked securities were first launched in the UK way back in 1981. However, it wasn’t until the US and French governments introduced inflation-linked bond issuance programs in the late 1990s that it marked the emergence of these products into the mainstream and out of the niche market they had previously occupied. Soon after, the inflation derivatives market also began to develop with that the result that there now exists a truly global market in inflation-linked products.

Objectives

In this course, you will explore:

The development, structures and uses of various inflation-linked products, including index-linked bonds and inflation swaps, futures and options

The pricing of these inflation-linked instruments

Learner Profile

This course is designed for:

New recruits to banking and financial organizations

Trainee dealers and traders

Operations and support staff

Sales and marketing executives

Finance and accounting staff

IT staff

Compliance and regulatory staff

  •    INFLATION-LINKED INSTRUMENTS - AN

       INTRODUCTION

    Overview

    Inflation-linked instruments are securities and derivatives used by entities such as banks, corporates and sovereigns to protect their assets and liabilities against the risk of inflation. Inflation-linked securities (linkers) are bonds that pay investors a fixed rate plus an amount tied to an inflation index, thus protecting the investor's return against inflation. Inflation derivatives have many uses including transferring inflation risk, optimizing market timing, hedging portfolios, creating synthetic securities and conducting arbitrage. Most inflation derivatives are in the form of inflation swaps in which one counterparty pays a fixed rate in exchange for a payment tied to an inflation index. Other types of inflation derivative are inflation options and inflation futures.

     

    In this course, we will look at how the market for inflation derivatives developed out of the index-linked security market. We will also discuss the structures and uses of various inflation derivative instruments.

    Course Duration

    60 mins

    Prerequisite Knowledge

    Swaps - An Introduction

    Bonds - An Introduction

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  •    INFLATION-LINKED INSTRUMENTS - PRICING

    Overview

    Inflation-linked instruments (linkers) are used by entities such as banks, corporates and sovereigns to protect their assets and liabilities against the risk of inflation. Linkers pay investors a fixed rate plus an amount tied to an inflation index, thus protecting the investor's return against inflation. Inflation derivatives have many uses including transferring inflation risk, optimizing market timing, hedging portfolios, creating synthetic securities and conducting arbitrage.

     

    In this course, you will learn how to price an index-linked bond and measure the sensitivity of the prices of these bonds to changes in real and nominal yields. You will also learn how to build an inflation curve in order to price inflation swaps, and how to value an inflation option.

    Course Duration

    60 mins

    Prerequisite Knowledge

    Inflation-Linked Instruments - An Introduction

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