FINANCIAL MARKET COURSES
Japanese Equity Market
Receivable Finance (New)
Lending - An Introduction
The Lending Cycle
Commodities - An Introduction (Revised)
Commodities - Trading (New)
Commodities - Livestock (New)
Commodities - Softs (New)
Primer – MiFID II/MiFIR (New)
Understanding Private Wealth Management Business
Private Wealth Management Products & Services
Primer – Smart Beta (New)
Available on iPad and Android tablets as well as desktop
Inverse FRNs (also called reverse or bull FRNs) grew in popularity in the 1980s and 1990s, in response to investors looking to profit from falls in short-term interest rates. This course examines the evolution and construction of inverse FRNs and closely-related structures, where the coupon being paid to investors is a hybrid of different components (such as a fixed part and a floating part). The course analyzes the motivations behind the purchase of such structures, as well as how the value of the structures can change.
On completion of this course, you will be able to:
• Identify the structure of an inverse/reverse FRN, and some of the more common variations
• Describe how the structure is derived from different component pieces
• Explain how the value of the structure (and hence the price to the investor) varies
Topic 1: Overview of Inverse FRNs
• What are Inverse FRNs?
• Why Buy an Inverse FRN?
• Inverse FRN Variations
o Step-Up Inverse FRN
o Fixed (Deferred) Inverse FRN
o Leveraged Inverse FRN
Topic 2: Constructing an Inverse FRN
• Splitting-Out a Fixed Rate Bond
• Delicate Balancing Acts
Topic 3: Inverse FRN Validation
• Introduction To Inverse FRN Valuation
• Inverse Floater ‘Liquidity’
ESTIMATED COMPLETED TIME
Capped & Collared FRNs
This course describes how capped and collared FRNs work and illustrates the payoffs on these instruments from the viewpoint of both the issuer and the investor.
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