IC211-FX and International Debt Markets

Module Provider: ICMA Centre
Number of credits: 20 [10 ECTS credits]
Terms in which taught: Spring term module
Pre-requisites: IC102 Introductory Finance/Trading Simulation I
Non-modular pre-requisites:
Modules excluded:
Current from: 2022/3

Module Convenor: Mrs Gail Rolland
Email: xj904458@reading.ac.uk

Type of module:

Summary module description:

In this module students will study the international debt markets, equipping them with the tools to analyse and compare products and determine trading and hedging strategies.



There are two overall objectives of this unit. First, to develop an understanding of the products and practices of international money and bond market cash instruments and bond futures.   Second, to provide insight into how such instruments are commonly used in the implementation of trading, hedging and portfolio strategies. The emphasis is on quantitative techniques and practical examples rather than detailed knowledge of the institutional features of debt markets.


Assessable learning outcomes:

Students should 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 bonds

  • apply these techniques in the formulation of trading and hedging strategies commonly used in today’s market. 

Additional outcomes:

Although the emphasis is on pricing and hedging, students will gain some knowledge of the structure and characteristics of modern debt markets. In addition, students will gain some understanding of the economics of interest rates and how bond markets behave in different economic circumstances. 

Trading sessions in a simulated dealing environment will enhance the students’ knowledge by working with FX prices, to see influences on value, trading and managing risk.


Outline content:

Introduction to long and short-term debt market Instruments and core TVM maths

FX and Money markets

Bond pricing and yields: yield conventions and their impact

Treasury securities and the yield curve: fitting and interpreting the curves

Spot and forward yields

Duration and Convexity

Bond Futures: trading and hedging strategies

Corporate bonds: determining risk and corporate bond pricing, role of credit ratings; issuance procedure

Introduction to structured securities: bonds with embedded options and contingent cash flows


Global context:

Starting with the international foreign exchange market we will consider international uses and users of these markets.  In our consideration of debt markets we will reference a number of domestic markets and also the international bond market, designed to transcend domestic restrictions. 


Brief description of teaching and learning methods:

The core content will be covered via lecture which is then reinforced in the interactive seminars through exercises designed to allow practice of calculations and consider practical uses of the instruments covered in the module.

Contact hours:
  Autumn Spring Summer
Lectures 20
Seminars 9
Supervised time in studio/workshop 10
Guided independent study:      
    Wider reading (independent) 10
    Wider reading (directed) 61
    Exam revision/preparation 40
    Advance preparation for classes 10
    Preparation for seminars 10
    Revision and preparation 20
    Reflection 10
Total hours by term 0 200 0
Total hours for module 200

Summative Assessment Methods:
Method Percentage
Written exam 60
Practical skills assessment 10
Class test administered by School 30

Summative assessment- Examinations:

One 2-hour unseen written paper

The examination for this module will require a narrowly defined time window and is likely to be held in a dedicated exam venue.

Summative assessment- Coursework and in-class tests:

One 90-minute unseen 30 question MCQ to be taken in Weeks 26 - 28

Performance in the trading simulation will be used to award the 10% for practical skills.

Formative assessment methods:

Penalties for late submission:

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

  • 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 five working days;
  • where the piece of work is submitted more than five working days after the original deadline (or any formally agreed extension to the deadline): a mark of zero will be recorded.
The University policy statement on penalties for late submission can be found at: https://www.reading.ac.uk/cqsd/-/media/project/functions/cqsd/documents/cqsd-old-site-documents/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.

Assessment requirements for a pass:

A minimum mark of 40%

Reassessment arrangements:

Via re-examination in August/September of the same year

Additional Costs (specified where applicable):

Required textbooks £36

Last updated: 22 September 2022


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