15. Case Studies and Practical Applications

In this section

• 15.1 Historical Bond Market Events
  • The Great Bond Massacre of 1994: Lessons in Interest Rate Risk and Portfolio Management
    Explore the events of the 1994 bond market sell-off, the Federal Reserve's rate hikes, and their impact on investors and financial institutions. Learn key lessons in interest rate risk and portfolio duration management.
  • Subprime Mortgage Crisis: Impact on Bonds and Fixed Income Markets
    Explore the Subprime Mortgage Crisis, its impact on mortgage-backed securities, and the resulting changes in risk management and regulatory practices.
  • European Sovereign Debt Crisis: Causes, Impacts, and Policy Responses
    Explore the European Sovereign Debt Crisis, its causes, impacts on bond yields, policy responses by the ECB and IMF, and effects on global fixed income markets.
• 15.2 Fixed Income Portfolio Management Examples
  • Immunization in Practice: Mastering Bonds and Fixed Income Securities
    Explore the practical application of immunization strategies in fixed income portfolio management with a detailed case study of a pension fund. Learn how to match asset duration with liability duration to protect against interest rate fluctuations.
  • Yield Curve Strategies and Outcomes
    Explore yield curve strategies such as the barbell strategy, their rationale, performance analysis, and lessons learned in fixed income portfolio management.
• 15.3 Credit Events and Restructurings
  • Corporate Defaults and Recovery Rates: Understanding the Impact on Bondholders
    Explore the complexities of corporate defaults and recovery rates, with detailed case studies of Lehman Brothers and Enron. Learn about the factors leading to defaults, the impact on bondholders, and the importance of credit analysis and diversification.
  • Municipal Bankruptcies (e.g., Detroit, Puerto Rico)
    Explore the complexities of municipal bankruptcies through the cases of Detroit and Puerto Rico, analyzing causes, restructuring processes, and implications for municipal bond investing.
• 15.4 Lessons Learned from Market Crises
  • Risk Management Failures in Fixed Income Securities
    Explore critical risk management failures in fixed income securities, examining themes such as excessive leverage, lack of diversification, and inadequate stress testing. Learn from past crises to strengthen future risk management practices.
  • Regulatory Responses and Reforms in Bond Markets
    Explore the regulatory responses and reforms in bond markets following financial crises, focusing on Basel III and the Dodd-Frank Act.