Page 38 - FINAL CFA SLIDES DECEMBER 2018 DAY 14

LOS 51.a: Describe classifications of global fixed- Session Unit 14:
income markets., p.19 51. Fixed income markets: issuance, trading and funding

• Type of issuer: Government and government related bonds, corporate bonds, and structured finance

(securitized bonds).

• Credit quality: Standard & Poor’s (S&P), Moody’s, and Fitch all provide credit ratings on bonds.

• Original maturities: Securities with original maturities of one year or less are classified as money

market securities (e.g. U.S. Treasury bills, CDs (issued by banks); greater than one year are referred to
as capital market securities.
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• Coupon structure: floating-rate or fixed-rate bonds.

• Currency denomination: Price and returns determined by the interest rates in the bond’s currency. The

majority of bonds issued are denominated in either U.S. dollars or euros.

• Geography: National bond markets, foreign bonds, and Eurobonds; may also be classified as

developed markets or emerging markets.

• Indexing: the cash flows are based on an index ( index-linked bonds).

• Tax status: Exempt from income taxes; tax exempt bonds are sold with lower yields than taxable bonds

of similar risk and maturity, to reflect the impact of taxes on the after-tax yield of taxable bonds.