About Fixed Income for the Level III CFA Exam

This forum contains discussion of Fixed Income for the Level III CFA exam.

  • Fixed Income is covered in Study Sessions 7 and 8
  • Fixed Income has an exam weight of 15-20%

Study Session 7

“This study session begins by explaining the role played by fixed-income securities in portfolios and then introduces the two primary types of fixed-income mandates (liability-based and total return). A model for decomposing expected bond returns, which identifies the driving forces behind expected returns, is presented. The effects of illiquidity, leverage, and taxes on fixed-income portfolios are discussed. Next, liability-driven and index-based strategies are examined in greater detail. Coverage includes approaches, risks, and challenges associated with both immunization of single and multiple liabilities and the indexation and laddering of a fixed-income portfolio.”
Source: CFA Institute

Study Session 8

“This study session covers yield curve and credit strategies for fixed-income portfolios. Fundamental concepts necessary for understanding yield curves and yield curve strategies are reviewed. Portfolio management strategies, which are based on the investor’s expectations regarding the level, slope, and curvature of the yield curve, are presented. Strategies used to construct and manage fixed-income credit portfolios follow. Coverage includes various credit spread measures, bottom-up and top-down approaches to credit strategies, and credit-related risks.”
Source: CFA Institute