Bloomberg Market Concepts - BMC | Complete Beginner's Guide

Bloomberg Market Concepts examination is a self-paced online course introducing finance fundamentals to aspiring finance professionals. In addition, there have been many courses and online and contact programs designed to make students and entry-level professionals acquainted with the basic principles of finance and better equipped to deal with professional challenges in finance.

This course by the Bloomberg Institute is a globally acknowledged institution engaged in disseminating information on various financial domains and helping professionals develop their skills and capabilities in the desired manner. Bloomberg Market Concepts is a specialized online course that focuses primarily on market concepts and is best suited for anyone willing to develop a market-oriented career.

In this article, we will elaborate on the outline, structure, and contents of this course and discuss potential benefits for the participants.

• Bloomberg Market Concept is a fast-paced e-learning course by Bloomberg completed within a week, and the participants are awarded a certificate of completion at the end.
• This course primarily includes 8 hours of video tutorials that utilize Bloomberg data, indices, analytics, and news stories to impart market essentials to the participants.
• The course material is divided into four modules dedicated to specific market sectors, and participants are presented with 120 assessment questions throughout the modules.
• Another major attraction of the course is that it introduces participants to the Bloomberg Terminal, which financial services firms often employ for displaying, reading, and interpreting financial data of various types.

What makes this course so popular and easy to administer is the kind of flexibility it offers. One can pursue and complete it through a Bloomberg Terminal at the university campus by multitasking at work or taking time to complete the course at home. However, it is strongly recommended not to take the procedure delicately and devote time to analyze the contents and master them to take full advantage of acquiring useful knowledge, skills, and capabilities.

You can access flash to view the online content. However, it is favorable to utilize a PC or laptop rather than a tablet or smartphone. Moreover, the learning material in videos is unconventional in that they explain while writing on the blackboard and illustrate the concepts. Instead, they utilize case studies, Bloomberg data, analytics, indices, and news stories to present the ideas and applications. Additionally, Pimm Fox and Monica Bertran of Bloomberg Institute are video narrators to make it easier for participants that understand and grasp the content and their concepts effortlessly.

One might wonder why Bloomberg depends on real-world case studies to illustrate the concepts included in the course. One of the primary reasons has been to make it more engaging and relevant to the participants. When they study significant real-life events like the Great Depression, Bretton-Woods, and the more recent global meltdown, memorizing the concepts becomes much easier in that context. Additionally, the knowledge of real-world scenarios can also help participants while appearing for interviews.

Source: Bloomberg Institute.

BMC consists of 4 primary modules:

1. Economic Indicators
2. Currencies
3. Fixed Income
4. Equities

As a beginner, gaining an insight into these market sectors can be immensely helpful and rewarding. However, it should not be considered a comprehensive treatment of any of these sectors in any case. The course content is more or less introductory, with enough information presented with real-world illustrations and graphics, which may help get going conveniently.

This course also introduces participants to the Bloomberg Terminal, which commonly employs financial services firms. With the course contents, participants are introduced to new Bloomberg Terminal functions at every step, helping retrieve, display, read, and interpret data on the terminal. That offers a kind of limited practical exposure to Bloomberg Terminal, which later can be accessible.

Each of these modules consists of several sub-modules and expects participants to acquire knowledge of at least one sub-module per class. Now, let us give a brief overview of each of the primary modules to understand readers about the learning course.

source: Bloomberg Institute

Brief Overview:

• The module helps understand the significance of primary economic indicators and how investors use them to understand their health.
• Helps to get the format in which economic indicators are published and analyze them.
• Acquire an understanding of good economic indicators.
• Techniques to study economic indicators.

Sub-Modules

Economic Indicators’ is divided into three sub-modules, namely:

1.   The Primary GDP

2.   Monitoring GDP

3.   Forecasting GDP

A brief outline of each of the sub-modules also be appropriate here:

#1 - The Primary GDP

Real GDP growth is an economic indicator of crucial significance for investors, apparently showing current and future growth prospects. Moreover, since GDP growth is cyclical, it helps investors understand where the economy stands in this cyclical growth.

#2 - Monitoring GDP

Despite its apparent significance, GDP figures represent the state of the economy ‘as it was a while ago, rather than its current status. That is known because GDP figures are calculated every quarter, and it needs time for authorities to come up with the exact model and announce it openly. Instead, monthly indicators, including PMI and non-farm payrolls, quickly reported, attract wider attention amongst investors. These are usually closely tied with GDP and can significantly impact.

#3- Forecasting GDP

Analysts often publish the likelihood of the performance of economic indicators. Though its nature is erroneous, these estimates are often based on simulated economic models, which provide a general overview of how the economy will likely perform quickly. Investors try to assess the economy's mood based on how pessimistic or optimistic are prevailing indicators plus the future assessments of leading experts. That helps them identify possible inflection points and base critical economic decisions on them.

Look at Top 10 Economic Indicators to Watch

Bloomberg Terminal Functions for Module I

source: Bloomberg Institute

Brief Overview:

• Provides an inside view of the history of currency markets and how they perform.
• Helps identify specific vital points which might drive the currency evaluation
• Banks and the banking sector played a role in sizeable ineffective management of inflation and deflation at their very source.
• Aims at developing an understanding of the role of currency markets in influencing the fortunes of businesses and investors and can do so to avoid currency-related risks.

Sub-Modules

#1 - Currency Market Mechanics

The Currency Market Mechanics sub-module introduces participants to the complex mechanics of currency markets and several interlinked currencies to allow FX trades. In previous times, any currency was solely pegged to the US Dollar for the kind of stability and liquidity it offers. In turn, the US Dollar was locked to gold at a specific price. However, since 1971, the US dollar suspended the gold conversion window, and the whole process has undergone a sea-change as many currencies have been free-floating. Instead, these currencies float in a matrix of pairs valued through a process known as triangular arbitrage. Nevertheless, nearly 85% of all currency trades still involve USD and are often employed as a significant currency to convert two less liquid currencies.

#2 - Currency Valuation

The currency valuation section helps understand the intricacies and efficiently allows the currency market to perform. As indicated, the direct link between paper currencies and gold was broken down in 1971. Therefore, all currency valuations are quoted purely as relative to other currencies. It has to be understood that all goods and services should cost almost the same in the long run, irrespective of the location. 

In the short run, these are influenced by three leading factors that gain interest to investors: -

• Sudden changes in interest rates.
• Sudden changes in inflation.
• Sudden changes in quantities of trade.

Due to all other things being equal, currencies with higher interest rates, lower inflation, and higher net exports tend to be attractive.

#3 - Central Banks and Currencies

Central banks and currencies sub-module deal with the role of central banks in managing national currencies. Participants can learn how central banks regulate short-term interest rates influencing currency valuation. Commonly, in developed economies, a goal of 2% inflation is set to control the risk of inflation and deflation. However, the latter can also be harmful since people lose interest in purchasing, affecting economic activity and growth.

#4 - Currency Risk

Nearly any business or investor involved in cross-border monetary transactions are affected by currency movements. Historical volatility and currency rate forecasts are considered for understanding the currency risk. In addition, it explains how such investors and businesses can enter into forwarding agreements to minimize or avoid the risk of currency-related losses.

Bloomberg Terminal Functions for Module 2

source: Bloomberg Institute

Brief Overview:

• This section is dedicated to understanding the history and dynamics of the bond market and become the biggest and most complex market in the world.
• Understanding that yields facilitate comparison across a diverse and complex bond market.
• Participants can learn about how central banks fix the interest rates.
• The bond valuation method is driven by interest rates and key factors, including creditworthiness and inflation.

Sub-Modules:

The Roots of the Bond Market:

This section introduces fixed income instruments and explains the representation of loan agreements where the borrower promises to pay fixed, pre-agreed repayments at a specific future date. Governments often issue bonds to secure public loans for various purposes that are secure and offer a higher level of liquidity. To compare the income from bonds, investors scrutinize their respective yields.

Bond Valuation Drivers:

This section helps understand the valuation of bonds and what fears and considerations influence investor decisions.

Central Bankers & Interest Rates:

This segment deals with the measures of bankers and their regulations that keep interest rates in check that have an expected impact on the bond market. Central banks usually monitor the current level of inflation and deflation and regulate interest rates and try to understand where investors think the interest rates are headed.

The Yield Curve & Why it Matters:

This section explains what the yield curve is and how it affects bond markets. The yield curve depicts the cost of borrowing for various periods. It describes when businesses or individuals borrow, the interest rates on loans are determined by the government borrowing rate.

Movements in the Yield Curve:

The movements in the yield curve deal with activities in the yield curve and mean for individuals, businesses, and governments. The left-hand end of the turn is based on the interest rates set by the central bank and is fixed. However, the right-hand end of the curve represents investors' beliefs about where interest rates will set off. Participants may learn to interpret the yield curve and study the intricacies of the bond market.

Also, see Bond Pricing.

Bloomberg Terminal Functions for Module 3

source: Bloomberg Institute

Brief Overview:

• Introduces participants to the fundamentals of equity markets and how they perform.
• Includes calculating equity index performance from the performance of specific stocks.
• Explains how and why equities are more volatile than bonds and why equity ownership is an attractive proposition.
• Explains the crucial role of industry and supply chain analysis in equity research.
• Elaborates on three types of relative valuation and future earnings growth in assessing real value.

Sub-Modules:

Introducing the Stock Market

This section explains how companies list themselves on the stock exchange through IPOs to raise money or sell their stakes. Companies may also be delisted if acquired, bankrupt, financial mismanagement, etc. In addition, how investors follow the stock market through indices that track selected stocks strongly influences investor decisions.

The Nature of Equities

The nature of the equities section delves into the spirit of equities. It explains the procedure of increasing the volatility of equities over bonds since they did not have any fixed income repayments, and their growth depends on the company's performance. Equity owners can benefit in two ways if the company profits and stock prices escalate through dividend payments.

Equity Research

This section deals with the complicated subject of equity research, which involves industry-level analysis before studying various financial projections, revenues, costs, and earnings to identify suitable stocks for investments.

Absolute Valuation:

It explains the role fundamental valuation plays in equity market investments. Total valuation tends to look for short-term tangible gains over long-term probabilistic gains, which can be difficult to rely on. It offers an exciting perspective on valuing stocks and deriving their value based on the more immediate performance of the company.

Relative Valuation:

Compared to the company's current historical valuation, relative valuation leads to somewhat subjective and intuitive results than objective ones. That is derived by multiplying the estimated earnings per share with what investors consider a fair P/E ratio.

Also, check out Price to Book Value.

Bloomberg Terminal Functions for Module 4

• For students, this online course costs only $149. At the same time, professionals are liable to pay $249.
• Ideally, it takes around 8 hours-12 hours to complete the course. It is recommended to dedicate sufficient time to understand the contents properly.

• Gaining familiarity with key market concepts.
• Becoming well-acquainted with the financial language employed in the industry.
• Learning with the help of real-world case studies to gain a practical understanding.
• Understanding key industry benchmarks for professionals.
• Mastering more than 70 Bloomberg Terminal functions to become industry-ready.
• Receiving a certificate of completion at the end of the course.

Below is the sample certificate you get after completing the Bloomberg Market Concept examination.

source: Bloomberg Institute

Bloomberg Market Concept is a fast-paced e-learning course by Bloomberg that offers flexibility to pursue exams whenever students desire. This exam provides a real-life case study based on learning about equities, currencies, fixed income, and economics. Additionally, it teaches Bloomberg Terminal functions essential for immediate jobs in Investment Banking, Equity Research, etc. 

Though, it is strongly recommended not to take the course insensitively. Instead, reserve dedicated time to scrutinize the contents and expertise to take full advantage of acquiring absolute valuation formulas, useful knowledge, skills, and capabilities.

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