Financial Market Analysis

In this IMFx course you will learn, from hands-on demonstrations, how to price different types of bonds, how to calculate different measures of bond yields and how to compare them across different types of instruments. You will become familiar with the term structure of interest rates, a key ingredient in establishing benchmark rates used to price securities in the markets and a valuable tool for monetary policy design and diagnosis. You’ll gain an understanding of the firm fundamentals that can explain why a stock price may go up or down, or why it might be higher for one company in comparison to another, you will be able to apply these fundamentals at the economy-wide level to analyze valuations of the stock market as a whole. Finally, you will gain insight into investors’ decisions. You’ll explore the main criteria that an investor uses to determine how to construct the best possible portfolio of risky assets. You will also adopt the perspective of a policymaker interested in understanding how monetary policy affects the risk and return properties of financial investments. In short, the FMAx course is designed to provide a common language in finance, thus allowing you to interpret and analyze financial data. It will also provide you with a foundation upon which you can proceed to more advanced or policy-oriented training in areas in which macroeconomics and finance meet. Financial Market Analysis is offered by the IMF with financial support from the Government of Japan. 3b:T1c

• Identify different types of basic fixed–income securities and the markets in which they are traded.
• How to price a variety of financial assets: money market instruments, bonds, and equities.
• How to measure and compare different yield measures for financial assets.
• Relate differences in the valuation of single equities or markets with economic fundamentals.
• How to construct an optimal portfolio of risky assets using historical return data, and assess likely changes in its composition as a result of changes in macroeconomic conditions.
• How to assess the market risk of an investment by calculating its Value at Risk (VaR), Stressed VaR, and Expected Shortfall.

• Some basic knowledge of economics and macroeconomics in particular is recommended.