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CFA Fixed Income Syllabus
Every chapter and topic of Fixed Income examined in CFA — 3 chapters, 6 topics, plus 51 flashcards written against it.
Fixed Income syllabus — full chapter and topic list
Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Fixed Income in CFA, not a summary of it.
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Fixed-Income Securities
2 topics- Bond Characteristics
- Yield Measures, Spot Rates, and Forward Rates
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Fixed-Income Markets
2 topics- Types of Fixed-Income Securities
- Issuers of Bonds
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Risk and Return Analysis
2 topics- Interest Rate Risk
- Credit Risk
Fixed Income flashcards for CFA
25 of 51 cards from the Fixed Income deck — real questions with worked answers.
What is a bond's par value (face value), and what is its typical meaning?
Par value is the principal amount the issuer agrees to repay the bondholder at maturity. It is the basis for computing coupon payments and is typically quoted as $1{,}000$ (or a percentage of par, i.e. $100$).
How is a bond's coupon payment calculated from its coupon rate and par value?
$\text{Coupon} = \text{Coupon Rate} \times \text{Par Value}$. For semiannual bonds each payment is $\frac{\text{Coupon Rate}}{2} \times \text{Par}$.
Define a bond's maturity (tenor).
Maturity is the length of time until the bond's principal is repaid and the bond ceases to exist. It determines the timing of the final cash flow and strongly affects interest rate risk.
What is the difference between a bond trading at a premium, at par, and at a discount?
Premium: price $>$ par, coupon rate $>$ market yield. Par: price $=$ par, coupon rate $=$ yield. Discount: price $<$ par, coupon rate $<$ market yield.
What is a zero-coupon (pure discount) bond?
A bond that pays no periodic coupons; it is issued at a discount to par and pays only the face value at maturity. Its return comes entirely from the difference between purchase price and par.
State the general price formula for a coupon bond.
$$P = \sum_{t=1}^{N} \frac{C}{(1+r)^{t}} + \frac{F}{(1+r)^{N}}$$ where $C$ is the periodic coupon, $F$ the face value, $r$ the periodic yield, and $N$ the number of periods.
What is the current yield of a bond?
$$\text{Current Yield} = \frac{\text{Annual Coupon}}{\text{Bond Price}}$$ It measures only the coupon income relative to price and ignores capital gains/losses and reinvestment.
Define yield to maturity (YTM).
YTM is the single internal rate of return that equates the present value of a bond's future cash flows to its current price, assuming the bond is held to maturity and all coupons are reinvested at the YTM.
List the three assumptions embedded in the yield to maturity measure.
1. The bond is held to maturity. 2. All coupon payments are reinvested at the YTM. 3. There is no default (all cash flows are received in full and on time).
What is yield to call (YTC)?
YTC is the internal rate of return earned if a callable bond is held until its first (or a specified) call date and redeemed at the call price rather than at maturity.
For a callable bond, what is the yield to worst?
Yield to worst is the lowest yield among the YTM and all possible yields to call/put dates. It represents the most conservative yield an investor might realize.
Define a spot rate.
A spot rate is the yield (discount rate) today on a single cash flow to be received at a specific future date, i.e. the yield on a zero-coupon bond maturing at that date.
How do you price a bond using spot rates?
$$P = \sum_{t=1}^{N} \frac{CF_{t}}{(1+z_{t})^{t}}$$ where $z_{t}$ is the spot rate applicable to the cash flow at time $t$. Each cash flow is discounted at its own maturity-specific spot rate.
Define a forward rate.
A forward rate is an interest rate agreed today for a loan or investment that begins at a future date and ends at a later date, implied by current spot rates.
Give the no-arbitrage relationship linking a two-period spot rate and forward rates.
$$(1+z_{2})^{2} = (1+z_{1})\,(1+f_{1,1})$$ where $z_{1}$ and $z_{2}$ are one- and two-period spot rates and $f_{1,1}$ is the one-period forward rate one period from now.
Solve for the one-period forward rate $f_{1,1}$ from spot rates $z_1$ and $z_2$.
$$f_{1,1} = \frac{(1+z_{2})^{2}}{(1+z_{1})} - 1$$
What is the relationship between the spot curve and the forward curve when the spot curve is upward sloping?
When the spot (zero) curve is upward sloping, forward rates lie above the spot rates; when it is downward sloping, forward rates lie below spot rates. Forward rates 'lead' the spot curve.
What is the bond-equivalent yield (BEY) for a semiannual-pay bond?
$$\text{BEY} = 2 \times \text{(semiannual YTM)}$$ It is the annualized yield stated on a simple (not compounded) semiannual basis, allowing comparison across bonds.
How do you convert a semiannual effective yield to an effective annual yield (EAY)?
$$\text{EAY} = \left(1 + \frac{i_{s}}{1}\right)^{2} - 1$$ where $i_{s}$ is the semiannual periodic rate; equivalently $(1+i_{s})^{2}-1$.
What distinguishes a floating-rate note (FRN) from a fixed-rate bond?
An FRN's coupon resets periodically based on a reference rate plus a quoted margin (e.g. reference $+ $ spread), so its coupon varies over time; a fixed-rate bond pays a constant coupon.
What is a step-up coupon bond?
A bond whose coupon rate increases by predetermined amounts at scheduled dates over the bond's life. Step-ups are often linked to call features or credit-rating triggers.
Define a deferred-coupon (split-coupon) bond.
A bond that pays no coupons for an initial period, then begins paying (often higher) coupons. Useful for issuers expecting low early cash flows, such as project financings.
What is a payment-in-kind (PIK) bond?
A bond that allows the issuer to pay coupons with additional bonds (or increased principal) rather than cash. PIK bonds are common among highly leveraged issuers with limited cash.
What is an index-linked (inflation-linked) bond?
A bond whose principal and/or coupon payments are adjusted for changes in a price index (e.g. CPI), protecting the investor's real return against inflation. Example: US TIPS.
Distinguish a callable bond from a putable bond.
Callable: the issuer has the right to redeem the bond early (benefits issuer, hurts investor). Putable: the investor has the right to sell the bond back to the issuer early (benefits investor).
Planning Fixed Income for CFA
Fixed Income is about 9% of the CFA syllabus by topic count — 6 of 68 topics, spread over 3 chapters. At roughly 45 minutes per topic plus 12 minutes per sub-topic, a first pass runs to about 5 hours.
The heaviest chapters are Fixed-Income Securities (2 topics), Fixed-Income Markets (2 topics), Risk and Return Analysis (2 topics) . Front-load those while your energy is high; the short chapters are better revision filler later.
Work top-down: read the chapter, then tick topics off individually rather than marking the whole chapter done. Sub-topics are where silent gaps hide.
Fixed Income (CFA) FAQ
What is in the CFA Fixed Income syllabus?
Fixed Income is split into 3 chapters — Fixed-Income Securities, Fixed-Income Markets and Risk and Return Analysis, containing 6 topics and 0 sub-topics in total.
How many chapters are there in Fixed Income for CFA?
3 chapters. Fixed Income accounts for about 9% of the topics in the whole CFA syllabus (6 of 68).
How long should I spend on Fixed Income for CFA?
Budget around 5 hours for a first pass through Fixed Income — about 45 minutes per topic plus 12 minutes per sub-topic across its 6 topics. Add revision cycles on top.
Are there flashcards for CFA Fixed Income?
Yes — a 51-card Fixed Income deck. Sample cards are printed on this page, and the full deck is free in the Examius app with spaced repetition scheduling.