PART TWO
SELECTED CASH AND DERIVATIVE INSTRUMENTS
Part Two discusses selected instruments traded in the debt capital markets. The products—hybrid securities, mortgage-backed bonds, and callable bonds—have been chosen to give the reader an idea of the variety available in the market. Also described are index-linked bonds and a structured product known as a collateralized debt obligation (CDO). Some of the techniques for analyzing these more complex products are explained.
This part also considers the primary fixed-income derivative instruments. These are not securities in the cash markets and are fixed-income derivatives (or interest rate derivatives) in the synthetic markets.
The products discussed include interest rate swaps, options, and credit ...