Fixed-Income Instrument Features
Refresher reading access
Overview
Fixed-income instruments, such as loans and bonds, are the most common means of financing. Fixed-income issuers include businesses, governments, and not-for-profits that promise to pay interest and repay borrowed principal to investors. Loans are commonly used between an individual or company and a bank. Bonds are more standardized fixed-income instruments designed to be more easily tradeable than loans and are commonly issued by larger companies, governments, and special purpose issuers. Bonds are a core holding for many investors, including mutual funds, pension plans, insurance companies, and central banks. This module introduces the features of fixed-income instruments and the legal contracts that govern them.
Learning outcomes
The candidate should be able to:
- describe the features of a fixed-income security;
- describe the contents of a bond indenture and contrast affirmative and negative covenants.
0.75 PL Credit
If you are a CFA Institute member don’t forget to record Professional Learning (PL) credit from reading this article.