This lesson provides a detailed examination of the key instruments traded in the capital markets, including equities, fixed income securities, and derivatives.

5.1 Equities
Equities represent ownership in a company. Common stock gives shareholders voting rights and a claim on the company’s residual profits (dividends). The valuation of equities is a core skill in investment banking, with a focus on “the analysis and valuation of equity” and “commonly used models of securities valuation,” such as discounted cash flow (DCF) and comparable company analysis . The LSBF programme emphasizes that students will “analyse and apply concepts and techniques to the valuation of equity” .

5.2 Fixed Income Securities
Fixed income instruments are debt securities that pay a fixed or floating interest rate (coupon). Government bonds, corporate bonds, and money market instruments are all examples. The LSBF programme notes a key learning outcome is to “assess the use of fixed income securities in the investment process” . Valuation of bonds involves assessing credit risk, interest rate risk, and the yield curve .

5.3 Derivatives
Derivatives are financial contracts whose value is derived from an underlying asset, index, or rate. The Coursera specialization on investment banking identifies the analysis of “derivatives such as futures, options, swaps, and credit derivatives for risk management” as a key learning outcome . The LSBF programme includes a specific module on “Derivatives and Alternative Investments,” aiming to teach students how to “design hedging and speculative strategies” .