Question

Discuss the process of valuation of fixed and variable securities

Answer 1

Fixed income analysis is the valuation of fixed income or debt securities, and the analysis of their interest rate risk, credit risk, and likely price behavior in hedging portfolios. The analyst might conclude to buy, sell, hold, hedge or stay out of the particular security.

Fixed income products are generally bonds issued by various government treasuries, companies or international organizations. Bond holders are usually entitled to coupon payments at periodic intervals until maturity. These coupon payments are generally fixed amounts (quoted as percentage of the bond's face value) or the coupons could float in relation to LIBOR or another reference rate.