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    CFA level 1 Fixed Income: CFA level 1, #3
    CFA level 1 Fixed Income: CFA level 1, #3
    CFA level 1 Fixed Income: CFA level 1, #3
    Ebook77 pages55 minutes

    CFA level 1 Fixed Income: CFA level 1, #3

    By M. Imran Ahsan

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    About this ebook

    If you want to learn CFA easily and with less time, you have the right book. If you think Fixed income is diffcult, just read this book. It will change your perception. 

    Many books are available in the market for the same purpose and they are good. The main quality of this book which distinguishes it from others is this book covers whole syllabus in very precise and comprehensive manner. This book makes difficult concepts easy and understandable.

     

    We believe in simplicity and conciseness. This book is a complete and a comprehensive guide with simple language. 

    You can learn the complete Fixed Income material in just one week with the help of this book.

    LanguageEnglish
    PublisherM. Imran Ahsan
    Release dateJun 2, 2020
    ISBN9781393120285
    CFA level 1 Fixed Income: CFA level 1, #3
    Author

    M. Imran Ahsan

    I am a PhD scholar and is a university lecturer for more than 11 years. I have been teaching Finance and Economics at various levels.  As an instructor I believe in simplicity, comprehensivity and in conciseness. I believe in smart kind of hard work. It means you should use your time efficiently to achieve optimal goals with limited time and efforts. 

    Read more from M. Imran Ahsan

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      Book preview

      CFA level 1 Fixed Income - M. Imran Ahsan

      Preface

      If you want to learn CFA easily and with less time, you have the right book.

      Many books are available in the market for the same purpose and they are good. The main quality of this book which distinguishes it from others is this book covers whole syllabus in very precise and comprehensive manner. As a university lecturer for past ten years, I know how to make difficult concepts easy and understandable.

      We started this series with the aim to provide cheapest but quality educational material and we will be providing more books like this in future.

      We believe in simplicity and conciseness. This book is a complete and a comprehensive guide with simple language. This is our fourth book in this series for CFA 2020.

      You can learn the complete Fixed Income material in just one week with the help of this book.

      We are open to suggestions and constructive critics.

      Ok it’s time to start reading and best of luck with your studies.

      Regards

      M. Imran Ahsan

      Ch.imranahsen@gmail.com

      What’s app 00923465006818

      READING 42: FIXED-INCOME SECURITIES: DEFINING ELEMENTS      Study Session 14

      LOS 42a: Describe basic features of a fixed-income security.   

      The most commonly referred fixed income security is bond so when we talk about fixed income security you can see it as bond. A bond is a debt instrument which promises to pay a certain amount of cash at specific intervals to the lender by issuer in future. The issuer of bond is the borrower while the purchaser of the bond is lender of funds.

      The value of a bond is mostly affected by two things, the interest rate and risk associated with the bond issuer. When interest rate rises the bond’s value goes down as the promised future cash inflows from that bond are discounted with higher discount rate now.

      The risk of default also affects the bond’s value. More the risk, lower the value of that bond. With higher default risk investors need more return in order to justify their investment.

      A bond has following features

      Name of the issuer of bond

      Maturity date

      Par value (principal value)

      Coupon rate (interest rate to be paid)

      Currency of payments

      Issuers of bond: Following can be the issuer of the bond

      Companies: The Financial and non financial companies issue bonds.

      Sovereign governments (countries): Countries also issue treasury bills and other types of bonds.

      Non sovereign governments (municipalities, states, provinces)

      Quasi government entities: Bonds issued by the government sponsored agencies and entities.

      Supranational entities: Global organizations like European Union, IMF etc.

      Maturity: It is the date mentioned on the face of bond on which the principal amount would be paid back. The period remaining in maturity is called tenor or term to maturity. Bonds with maturity of less than one year are called money market securities and bonds with maturity of more than one year are called capital market maturities.  Some bonds are issued with no maturity called perpetual bonds. In this type of bond the principal amount is never paid back but periodic payments are made forever.

      Par value: The principal amount that would be paid at maturity is called par value. It also has different names like face value, maturity value, and redemption value. Face value can be same or different than bond price. When bond is being traded or sold higher than par value it is called premium. When face value is higher than traded price it is called discount. Usually the price is written (for first issue) as a percentage of the face value.

      Coupon rate: Coupon rate is the annual percentage rate of the face value. A bond with face value of 100$ and coupon rate of 10% will be paying 10$ annually. Bonds can be annual, semiannual, quarterly paying. If the coupon rate is 10% in semiannual bond it would be paying 10%/2 = 5% after six months.

      Currency: The currency in which the bond is issued is also mentioned at bond’ face. A dual-currency-bond is a bond in which the interest is being paid in one currency while principal is to be paid in another currency. Currency-option-bond gives the lender an option to choose from two currencies.

      LOS 42b: Describe content of a bond indenture.

      LOS 42c: Compare affirmative and negative covenants and identify examples of

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