As the name implies, Valuation & Analysis of Fixed Income Investments is a technically oriented module that goes through various tools and methods used not only to compute bond valuations, but to compute, interpret, and understand other analytical tools such as duration, various yields relating to bonds, understanding convertible bonds and how they are valued, etc. The methods of evaluating risk, return, volatility, and valuation are critical components to understanding bonds, and how and where to appropriately utilize them in various client portfolios.

7–1 Explain factors that affect the price and yield of fixed-income securities.
7–2 Calculate the price, compound return, yield-to-maturity, yield-to-call, and taxable-equivalent yield, of fixed-income securities.
7–3 Understand the concept of duration, and calculate change in price using duration.
7–4 Analyze the relationships among bond ratings, yields, maturities, and durations to determine comparative price volatility.
7–5 Assess how changes in variables affect bond risk and price volatility.
7–6 Evaluate investor profiles to recommend appropriate fixed-income securities for purchase.
7–7 Calculate the conversion value, investment value, investment premium, conversion premium, and downside risk of convertible securities.
7–8 Analyze the relationships among conversion value, investment value, and market value of convertible securities.

Author: Craig Kinnunen, MS, CFP®

Craig Kinnunen, MS, CFP® is an associate professor at the College for Financial Planning. Prior to joining the College, Craig enjoyed a long and successful career in personal financial planning and wealth management. Craig’s enthusiasm for financial planning extends beyond the classroom, as he also spends time providing pro bono financial education and individual financial counseling to members of the Colorado National Guard. Craig earned a bachelor of science degree in accounting from Northern Michigan University and followed that up with a master of science degree in finance from the University of Colorado in Denver. You can contact Craig at craig.kinnunen@cffp.edu.

Complexity Level: Advanced