Course code BUS325

BUS325 Fixed Income Instruments

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Showing course contents for the educational year 2022 - 2023 .

Course responsible: Torun Fretheim
Teachers: Tom Erik Sønsteng Henriksen
ECTS credits: 10
Faculty: School of Economics and Business
Teaching language: EN, NO
(NO=norsk, EN=Engelsk)
Limits of class size:
Teaching exam periods:
This course starts in Autumn parallel. This course has teaching/evaluation in Autumn parallel. 
Course frequency: Once a year - autumn.
First time: Study year 2012-2013
Course contents:

The course will cover bonds, interest rate swaps and other fixed income instruments that are actively used in the Norwegian as well as international financial markets.

The students will study:

  • Why and how fixed income instruments are issued and traded at the market
  • Arbitrage free pricing of fixed income instruments with and without interest rate volatility
  • Methods to estimate credit risk
  • Valuation and risk assessment of fixed income instruments with options
  • Different theories behind the yield curve
  • Modelling of the yield curve.

In the course we will actively use and build spreadsheets (Excel) to analyze fixed income instruments.

Key words: government financing, private financing, hedging and investments, fixed income asset management, yield, duration, convexity, swap spreads, option adjusted spread, z-spread, credit spreads, credit risk, caps, floors, swaption, options, convertible loan, yield curve.

Learning outcome:


After completing the course, the student will have:

  • Knowledge about fixed income markets
  • Knowledge about different fixed income instruments
  • Knowledge about different pricing models for fixed income instruments, including arbitrage free pricing with and without interest rate volatility
  • Knowledge about risk and return in fixed income instruments
  • Knowledge about credit analysis and models for credit analysis
  • Knowledge about how options affect value and risk for issuer and buyer
  • Knowledge about the yield curve and modelling of the yield curve


After completing the course, the student can:

  • Analyze credit markets and the most important fixed income instruments
  • Perform valuation of fixed income instruments
  • Analyze interest rate risk
  • Analyze credit risk
  • Analyze bonds with options
  • Analyse the yield curve based on models for shape and volatility

General competence 

After completing the course:

  • The student can discuss professional issues within the subject area
  • The student has acquired an ability for reflection and critical thinking within the subject area
  • The student can contribute to problem solving related to financing, investing, credit analysis of companies, in addition to general and quantitative market analysis
Learning activities:
- lectures, assignments, self study, spreadsheets.
Teaching support:
The syllabus will be announced in Canvas at the beginning of the semester.

BUS220 Finance and Investments or equivalent.

Basic finance and statistics, basic knowledge of Excel.

Recommended prerequisites:
Mandatory activity:
Four out of five assignments must be accepted in order to present oneself for final exam.  Accepted assignments are valid for one year.
Final written exam, 3,5 hours (open book). Exam counts 100%. 
Nominal workload:
250 hours.
Entrance requirements:
The course is for master students enrolled in the following programs: Master in Business and Administration and Master in Economics. It is also open for other master programmes from NMBU with satisfactory competence.
Reduction of credits:
Type of course:
Lectures: 4 hours per week.
The course is in English if there are one or more international students. Incoming students can contact student advisors at the School of Economics and Business ( for admission to the course. 
External examiner will control the quality of syllabus, questions for the final examination, and principles for the assessment of the examination answers.
Allowed examination aids: C3 All types of calculators, all other aids – including digital aids
Examination details: One written exam: Letter grades