IC211: FX and International Debt Markets

Module code: IC211

Module provider: ICMA Centre; Henley Business School

Credits: 20

Level: Level 2 (Intermediate)

When you'll be taught: Semester 2

Module convenor: Mrs Gail Rolland, email: xj904458@reading.ac.uk

Pre-requisite module(s): BEFORE TAKING THIS MODULE YOU MUST ( TAKE IC102 (Compulsory)

Co-requisite module(s):

Pre-requisite or Co-requisite module(s):

Module(s) excluded:

Placement information: na

Academic year: 2024/5

Available to visiting students: Yes

Talis reading list: No

Last updated: 28 May 2024

Overview

Module aims and purpose

This module focuses on foreign exchange and international debt markets.  The teaching approach is to ensure students have a good technical understanding of cashflow and cashflow valuation but also to cover the topics from a practical, real-world perspective.

The module builds on the topics covered in Introductory Finance and the skills being developed in Trading Simulation I and develops a deeper knowledge of the debt market and how markets will move and react to external events. The module aims to provide students with the ability:

• To identify the different structures found in the international debt markets
• To show appreciation of how these structures can achieve the aims of market participants
• To value vanilla debt securities and their interest rate risk  

The module is ideal for students that want to pursue a career in fixed income as they will be able to demonstrate a comprehensive knowledge of how the markets work and the value of these instruments for issuers and investors.

Module learning outcomes

By the end of the module, it is expected that students will be able to:

• identify key features of international debt products and markets and know how to price and hedge (control the risk of) traditional fixed income securities
• apply these pricing techniques in the formulation of trading and hedging strategies commonly used in today’s market
• acquire some understanding of the economics of interest rates and how bond markets behave in different economic circumstances
• Through trading sessions, in a simulated dealing environment, the students’ knowledge will be further enhanced by working with FX prices, to see influences on value, trading and managing risk.

Module content

1. Foreign exchange: spot and forward pricing; market characteristics and influences on values
2. Introduction to long and short-term debt market Instruments and core TVM maths
3. Bond pricing and yields: yield conventions and their impact
4. Duration and Convexity
5. Primary market issuance: Treasuries and corporate bonds; yield curves and trading strategies
6. Secondary market trading and market practice
7. Corporate bonds: determining risk and corporate bond pricing, role of credit ratings; issuance procedure

Structure

Teaching and learning methods

• Formal lectures, in which students are strongly encouraged to ask questions,
• Workshops, guiding students in solving a practical investment portfolio management task as a team,
• Seminars, in which students are encouraged to develop their analytical skills,
• Group work,
• Face-to-face/Online availability for student consultation.

Study hours

At least 34 hours of scheduled teaching and learning activities will be delivered in person, with the remaining hours for scheduled and self-scheduled teaching and learning activities delivered either in person or online. You will receive further details about how these hours will be delivered before the start of the module.

Please note the independent study hours above are notional numbers of hours; each student will approach studying in different ways. We would advise you to reflect on your learning and the number of hours you are allocating to these tasks.

Semester 1 The hours in this column may include hours during the Christmas holiday period.

Semester 2 The hours in this column may include hours during the Easter holiday period.

Summer The hours in this column will take place during the summer holidays and may be at the start and/or end of the module.

Assessment

Requirements for a pass

40% weighted average mark of individual and group assignments.

Summative assessment

Penalties for late submission of summative assessment

The Support Centres will apply the following penalties for work submitted late:

Assessments with numerical marks

• where the piece of work is submitted after the original deadline (or any formally agreed extension to the deadline): 10% of the total marks available for that piece of work will be deducted from the mark for each working day (or part thereof) following the deadline up to a total of three working days;
• the mark awarded due to the imposition of the penalty shall not fall below the threshold pass mark, namely 40% in the case of modules at Levels 4-6 (i.e. undergraduate modules for Parts 1-3) and 50% in the case of Level 7 modules offered as part of an Integrated Masters or taught postgraduate degree programme;
• where the piece of work is awarded a mark below the threshold pass mark prior to any penalty being imposed, and is submitted up to three working days after the original deadline (or any formally agreed extension to the deadline), no penalty shall be imposed;
• where the piece of work is submitted more than three working days after the original deadline (or any formally agreed extension to the deadline): a mark of zero will be recorded.

Assessments marked Pass/Fail

• where the piece of work is submitted within three working days of the deadline (or any formally agreed extension of the deadline): no penalty will be applied;
• where the piece of work is submitted more than three working days after the original deadline (or any formally agreed extension of the deadline): a grade of Fail will be awarded.

The University policy statement on penalties for late submission can be found at: https://www.reading.ac.uk/cqsd/-/media/project/functions/cqsd/documents/qap/penaltiesforlatesubmission.pdf

You are strongly advised to ensure that coursework is submitted by the relevant deadline. You should note that it is advisable to submit work in an unfinished state rather than to fail to submit any work.

Formative assessment

Formative assessment is any task or activity which creates feedback (or feedforward) for you about your learning, but which does not contribute towards your overall module mark.

Ongoing feedback throughout all lectures, seminars and workshops

Reassessment

Additional costs