BUS325 Fixed Income Instruments

Credits (ECTS):10

Course responsible:Torun Fretheim

Campus / Online:Taught campus Ås

Teaching language:Norsk, engelsk

Course frequency:Annually, but not autumn 2023.

Nominal workload:250 hours.

Teaching and exam period:The course is not offered in the academic year 2023/2024. The course is next planned for autumn 2024.

About this course

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:

  1. Why and how fixed income instruments are issued and traded at the market
  2. Arbitrage free pricing of fixed income instruments with and without interest rate volatility
  3. Methods to estimate credit risk
  4. Valuation and risk assessment of fixed income instruments with options
  5. Different theories behind the yield curve
  6. 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
  • - lectures, assignments, self study, spreadsheets.
  • BUS220 Finance and Investments or equivalent.

    Basic finance and statistics, basic knowledge of Excel.

  • Final written exam, 3,5 hours (open book). Exam counts 100%.
  • External examiner will control the quality of syllabus, questions for the final examination, and principles for the assessment of the examination answers.
  • Four out of five assignments must be accepted in order to present oneself for final exam. Accepted assignments are valid for one year.
  • 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 (studieveileder-hh@nmbu.no) for admission to the course.
  • Lectures: 4 hours per week.
  • Letter grades
  • 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.