For any innovation, whether it is associated with equities, fixed income or commodities, what are the risks associated with the instrument? How do we price the innovation? What incentives does the innovation generate to the different parties associated in it's pricing and marketing? One of the many lessons from the credit crisis is the need to understand incentives.
This course is essential for any student who wants to enter the securities industry whether it is in the role of a trader or risk manager. This course is also essential for people wanting to go into corporate finance. As a manager you need to understand the limitations of the models and the types of risk inherent in these instruments.
Key Concepts Covered:
-Corporate bonds and credit default swaps
-Structural and reduced form models