At the end of this topic, candidates will be able to:

Define the money markets and interest rate capital markets
Describe the main features of the basic types of cash money market instrument in terms of whether or not they are transferable or secured; in which form they pay return (i.e. discount, interest or yield); how they are quoted; internationally recognised minimum and maximum terms; and the typical borrowers/issuers and lenders/investors that use each type
Outline generally accepted terminology to describe the cashflowsof each type of instrument and understand basic dealing terminology
Calculate present value and/or future value using the arithmetic techniques of discounting and/or compounding for a money market instrument terminated at maturity and/or for one that isrolled over at maturity
Calculate simple interest rates using basis conventions, identify the international day count and annual basis conventions for the currencies of the G20 countries
Identify same-day, next-day, spot and forward value dates, and maturities under the following business day, modified following business day, preceding business day conventions and end/end rule
Identify the conventional frequency and timing of payments for cash money market instruments, including those with an original term to maturity of more than one year
Calculate broken dates and rates through linear (straight line) interpolation
Define interest rate indices, their methodologies and outline themost internationally used benchmark indices in the rates’ markets.
Calculate interest rates and yields between the money market basis and bond basis in currencies for which there is a difference,and between annual and semi- annual compounding frequencies
Calculate the value of a discount-paying money market instrument from its discount rate (straight discount) and calculate a discount rate directly into a true yield
Describe the various shapes of a yield curve and basic changes in its shape using market terminology and outline how the shape of the curve can be explained by theories and hypothesis (market segmentation, liquidity preference and expectations)
Describe the main characteristics of bond instruments as fixed-income securities and their roles in the function of interest money markets
Distinguish between and define what is meant by domestic, foreign and euro currency (offshore) money and bond markets and describe the principal advantages of euro money market instruments
Distinguish coupon bonds, zero coupon bonds, covered bonds, sukuk bonds, junk bonds, bond indentures, callable bonds, convertible bonds and floating rate bonds
Identify and outline the main characteristics of Islamic money market instruments (mudharabah and murabahah)
Describe the differences and similarities of classic repos and sell/buy-backs in terms of their legal, economic and operational characteristicsIdentify and outline the main types of custody arrangements in repo
Calculate the value of each type of instrument (except bond instruments) using quoted prices, including the secondary market value of transferable instruments
Calculate the present and future cashflows of a repo given the value of the collateral and an agreed initial margin
Define haircuts and calculate the present and future cashflows of a repo given the value of the collateral and the usage of haircuts.
Define general collateral (GC) and specials
Describe and outline the main features of securities financing transactions (SFTs) using lending and borrowing of bonds or commodities, using margin lending and their main characteristics.
Identify the collateral types and their role in SFTs
Understand the main characteristics and objectives of short selling strategies
Describe what happens in a repo and other SFTs when income is paid on collateral during the term of the transaction, in an event of default and in the event of a failure by one party to deliver collateral
Describe the mechanics and explain the terminology of a forwardforward loan or deposit, and the interest rate risk created by these instruments
Calculate a forward-forward rate from two mismatched cash rates and a cash rate from a series of forward-forward rates for consecutive periods

ACI Dealing Certificate Training