Fixed Income Analysis for the Chartered Financial Analyst Program

Fabozzi succeeded writing a good book. In his preface, he shared his challenge of writing a book that CFA candidates could clearly understand. In his words, "this book has been the most difficult to write". It's clear he took the time to make sure readers would benefit from this material. I certainly came away with a better understanding of fixed income analysis. The book has 15 chapters, divided into two parts. The first part is considered "Level I" material and covers: 1) Features of Debt Securities 2) Risks Associated with Investing in Bonds 3) Overview of Bond Sectors and Instruments 4) Understanding Yield Spreads 5) Valuing Debt Securities 6) Yield Measures, Spot Rates and Forward Rates 7) Measuring Interest Rate Risk Chapter to chapter concepts seemed to fold together, unifying fundamentals of fixed income analysis and setting the stage very nicely for Level II studies. I wish I bought this book right from the start, but am glad I "backtracked" and read these initial chapters. They consistently provided much-needed detail that the Schweser books (great as they are) seemingly glossed over. Part II jumps around a lot more than Part I. Despite this,this book examines the term structure of interest rates, valuing bonds with embedded options (think "prepayment"), mortgage-backed securities and their valuation, and also asset-backed securities, interest rate derivatives and basic credit analysis. In a nutshell, some very practical stuff. I'm in the mortgage sector and learned a lot about this area of fixed income analysis. My only criticism is that the chapters on asset backed securities and credit analysis seemed to be a bit shallower compared to his other chapters. The best part of this book is the chapter end questions and answers. They provide practical opportunities to apply concepts covered in the chapter material. I really enjoyed going through the exercises. The answers were really additional instruction, providing more insight to the subject matter. A great book and a good read - I give it 4 1/2 stars.