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This pathway will walk us through the basics of banks, starting with some of the different types and their main functions, then starting to look at the regulation faced by the banks, both before and after the Global Financial Crisis.

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Greenwashing is the act of distributing false information about something being more environmentally friendly than it actually is.

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Tackling the Cost of Living Crisis

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In the first video of this two-part video series, Elisa introduces us to sustainability. She begins by looking at the difference between sustainability and corporate social responsibility, two terms that can be easily confused.

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Banking Essentials - Part I

This pathway will walk us through the basics of banks, starting with some of the different types and their main functions, then starting to look at the regulation faced by the banks, both before and after the Global Financial Crisis.

Greenwashing

Greenwashing is the act of distributing false information about something being more environmentally friendly than it actually is.

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Plans & Membership

Our Platform

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+1,000 expert presented, on-demand video modules

Learning analytics

Keep track of learning progress with our comprehensive data

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Build, scale and manage your organisation’s learning

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Featured Content

More featured content

Tackling the Cost of Living Crisis

In this video, Max discusses the cost-of-living crisis currently enveloping the UK. He examines its impact on households as well as the overall economy.

CSR and Sustainability in Financial Services

In the first video of this two-part video series, Elisa introduces us to sustainability. She begins by looking at the difference between sustainability and corporate social responsibility, two terms that can be easily confused.

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Pricing Sterling Bonds

Pricing Sterling Bonds

Nigel Owen

20 years: Debt capital markets

In this third part of the series of how to price a bond, Nigel outlines the process of pricing a Sterling denominated bond for the theoretical issuer, XYZ Corporation, using the building blocks outlined in the introductory video. In this example, XYZ has chosen to issue a 30-year bond.

In this third part of the series of how to price a bond, Nigel outlines the process of pricing a Sterling denominated bond for the theoretical issuer, XYZ Corporation, using the building blocks outlined in the introductory video. In this example, XYZ has chosen to issue a 30-year bond.

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Pricing Sterling Bonds

8 mins 22 secs

Overview

A bond represents a series of cash-flows. Investors buying bonds acquire rights to receive those cash-flows at a series of dates – the interest payments during the life of the bond (the coupons) and return of the money at maturity (redemption). For new bonds, buyers and sellers need to agree a price and a yield (discount rate) to arrive at a present value, or price, at which they can transact. The yield is a component of the risk-free rate plus a risk premium (a credit spread). The choice of benchmark hinges on the currency of issue and the conventions that apply to bonds issued in that currency.

Key learning objectives:

  • Understand how a bond yield is reflected in the bond price

  • Identify the convention used in the sterling bond market for coupon payments

  • Understand how a bond’s yield to maturity is calculated in the sterling bond market

  • Describe the Gilt benchmark rules for sterling bond issues

  • Describe the coupon rounding convention in sterling

  • Understand the day-count convention for sterling and its uses

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Summary
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Expert
Nigel Owen

Nigel Owen

Nigel spent nearly 20 years in debt capital markets. During this time, he worked for The Royal Bank of Scotland, Royal Bank of Canada, and National Australia Bank. Nigel has moved across various teams including treasury, private placement, origination, and syndicate. He currently works for the National Australia Bank to run the new issuance desk in Europe.

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