A fixed-income instrument is a contract between a borrower and an issuer to exchange cash flows in a predetermined and periodic (fixed) time frame. Cash flows at each period in time may be variable. Traditional securities of fixed income include loans, notes, bills and bonds. Non-traditional securities include interest rate derivatives, inflation derivatives, and credit derivatives.
Modeling tools are often used for determining the price, yield, and cash flow for many types of fixed-income securities, including mortgage-backed securities, corporate bonds, treasury bonds, municipal bonds, certificates of deposit, and treasury bills.
Common techniques for modeling and analyzing fixed-income instruments and markets include:
For more information about modeling fixed income, see Financial Instruments Toolbox™.