Chapter 2: Key Features of Fixed-Income Securities

In this section

• Bond Indentures and Covenants (Affirmative vs. Negative)
  Bond Indentures and Covenants (Affirmative vs. Negative) (CFA Level 1): Purpose of Bond Indentures, Key Parties and Document Flow, and Affirmative Covenants. Key definitions, formulas, and exam tips.
• Principal Amount, Coupon Structure, and Maturity
  Principal Amount, Coupon Structure, and Maturity (CFA Level 1): Concept of Principal Amount, Types of Coupon Structures, and Fixed-Rate Coupons. Key definitions, formulas, and exam tips.
• Embedded Options and Contingency Provisions
  Embedded Options and Contingency Provisions (CFA Level 1): Types of Embedded Options, Call Options, and Put Options. Key definitions, formulas, and exam tips.
• Legal, Regulatory, and Tax Considerations
  Legal, Regulatory, and Tax Considerations (CFA Level 1): Legal Environment, Legal Framework and Contract Enforceability, and Hierarchy of Claims and Bankruptcy. Key definitions, formulas, and exam tips.
• Bonds with ESG Features (Green, Social, and Sustainability-Linked)
  Bonds with ESG Features (Green, Social, and Sustainability-Linked) (CFA Level 1): Key Concepts & Definitions, Green Bonds, and Social Bonds. Key definitions, formulas, and exam tips.
• Sukuk and Other Sharia-Compliant Structures
  Sukuk and Other Sharia-Compliant Structures (CFA Level 1): Essence of Sharia Compliance, Common Sukuk Structures, and Other Sharia-Compliant Arrangements. Key definitions, formulas, and exam tips.
• Stripped Securities and Zero-Coupon Bonds
  Stripped Securities and Zero-Coupon Bonds (CFA Level 1): Stripped Securities: Concept and Characteristics, Transforming a Bond into Strips, and Zero-Coupon Bonds: A Deep Dive. Key definitions, formulas, and exam tips.
• Variable-Rate and Perpetual Bonds
  Variable-Rate and Perpetual Bonds (CFA Level 1): Variable-Rate (Floating-Rate) Bonds, Key Characteristics, and Reference Rates and Spread. Key definitions, formulas, and exam tips.
• Dual-Currency and Multicurrency Bond Structures
  Dual-Currency and Multicurrency Bond Structures (CFA Level 1): Dual-Currency Bonds, Why Dual-Currency?, and Diagram of a Dual-Currency Bond. Key definitions, formulas, and exam tips.
• Panda, Samurai, Masala, and Other Local Currency Bond Types
  Panda, Samurai, Masala, and Other Local Currency Bond Types (CFA Level 1): Why Local Currency Matters, Key Features of Local Currency Bond Types, and Panda Bonds. Key definitions, formulas, and exam tips.
• Payment-in-Kind (PIK) and Toggle Bonds
  Payment-in-Kind (PIK) and Toggle Bonds (CFA Level 1): Defining Payment-in-Kind Bonds, Key Characteristics, and Quick Anecdote. Key definitions, formulas, and exam tips.
• Negative Coupon Bonds and Zero-Floor Provisions
  Negative Coupon Bonds and Zero-Floor Provisions (CFA Level 1): Drivers Behind Negative Coupon Structures, Mechanics of a Negative Coupon, and Zero-Floor Provisions. Key definitions, formulas, and exam tips.
• IFRS vs. US GAAP for Bond Classifications and Disclosures
  IFRS vs. US GAAP for Bond Classifications and Disclosures (CFA Level 1): Key Concepts in Classification, Amortized Cost, and Fair Value Through Other Comprehensive Income (FVOCI). Key definitions, formulas, and exam tips.
• Real-World ESG Bond Issuances and Regulatory Frameworks
  Real-World ESG Bond Issuances and Regulatory Frameworks (CFA Level 1): Rise of ESG Bonds, Key Regulatory Frameworks, and Sustainable Finance Disclosure Regulation (SFDR). Key definitions, formulas, and exam tips.
• The Role of Guarantors and Bond Insurance in Security Features
  The Role of Guarantors and Bond Insurance in Security Features (CFA Level 1): Understanding Bond Insurance and Key Concepts. Key definitions, formulas, and exam tips.
• Greenwashing Risks and Mitigation in ESG Bond Markets
  Greenwashing Risks and Mitigation in ESG Bond Markets (CFA Level 1): Defining Greenwashing, Why Does Greenwashing Arise?, and Major Risks to Investors. Key definitions, formulas, and exam tips.