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This page has corrections and other information regarding the Level I material in Fixed Income Analysis for the Chartered Financial Analyst Program. |
| Corrections: Chapter 2: Page 22, Line 8: add "a" before "bond" so the line reads "of a bond but..." Page 42 Fifth paragraph, line 7. There is a sentence that begins: "This a form of duration..." Add "is" after "this", so sentence now reads, "This is a form of duration..." Page 47, in the first line of the third full paragraph: Change "A popular tools used by managers...|" by changing "tools" to "tool" Page 48: Section A, 2nd paragraph, 3rd sentence, now end as follows: "...the bid prices obtained by dealers." Change "by" to "from" so now it reads: "the bid prices obtained from dealers." Chapter 3: General: Exhibit numbering correction for Chapter 3: Chapter 3 begins with Exhibit 4 rather than Exhibit 1. It is suggested you correct each of the exhibit numbers in Chapter 3 as follows:
The referencing to the exhibits in the text is correct once the above changes are made. (The error was due to a software glitch. The software automatically numbers the exhibits in each chapter starting with Exhibit 1. For some reason, the numbering of the exhibits in Chapter 3 was continued from the exhibit numbering in Chapter 2. The last exhibit in Chapter 2 was Exhibit 3, so Chapter 3 started with Exhibit 4.) Page 69, Second full paragraph beginning with: "The bids are then arranged...", third line from bottom of paragraph now reads: "who bid higher than the stop yield. Then each bidder who bid the stop yield will" change "higher" to "lower" so the line now reads: "who bid lower than the stop yield. Then each bidder who bid the stop yield will" Page 76, last line on page: change "ten" to "2,000" so the line reads: "value of all 2,000 loans is $200 million. Page 84, in the second paragraph under "B. Factors Considered in Assigning a Credit Rating" Change the sentence "The latter has a better position in the case of a bankruptcy for a given issuer." To: "Senior debtholders have a better position relative to subordinated debtholders in the case of a bankruptcy for a given issuer." Page 99, 3rd last bullet from the bottom "If escrowed with securities guaranteed by the U.S. government, refunded bonds...." Change the word "refunded" to "prefunded" The bullet now reads, "If escrowed with securities guaranteed by the U.S. government, prefunded bonds...." Chapter 4: Page 126, Lines 5 and 6 from the top Change "4/4/99" to "4/3/99" Page 134, 3rd last line from bottom "ing down their yield relative to issuers not as well know." Change last word from "know" to "known" the line now reads, "ing down their yield relative to issuers not as well known." Page 135 Exhibit 15 (typo error). In the exhibit "Columbia" should be changed to "Colombia". Page 137: The seventh bullet point now reads: "One factor that affects the liquidity of an issue (and therefore its yield spread) is the size of an issue – the larger the issue, the greater the liquidity relative to a smaller issue, and the higher the yield spread." Change as follows: "One factor that affects the liquidity of an issue (and therefore its yield spread) is the size of an issue – the larger the issue, the greater the liquidity relative to a smaller issue, and the greater the liquidity, the lower the yield spread." Page 143: The first word of the next-to-last line of Solution to 8.a should be "bond" instead of "bonds". That is, it should read "...given to the bondholder of a callable bond, whereas ... Chapter 5: Page 150, Practice Question 1a. Par value for the question was not mentioned. $100 should be assumed. Page 165: First paragraph, the fourth sentence should end with a question mark. That is, "What interest rate or yield can these Treasury strips be sold to investors?" Page 167, Second full paragraph beginning with "To illustrate this, ..." Line 7 now reads: "cated. By doing do, ...." Change "do" to "so" as follows: "cated. By doing so, ...." Page 167, last line of the third paragraph "... the arbitrage profit is no longer exists" should be"... the arbitrage profit no longer exists." Page 180: Answer to Practice Problem. The discount (interest) rate for Year 4 and Year 5 should be 0.04, not 0.05. The present value for both years is correct as shown. Chapter 6: Page 186 Last paragraph beginning with "A capital loss is generated ..." Line 2 now reads: "called, or is sold are less then the purchase price. For ....." Change "then" to "than" as follows: "called, or is sold are less than the purchase price. For ....." Page 213: In the third paragraph, at the end of the first line, replace "four" for "three". That is, "... proceeds at the end of three years, the two previous ..." Page 224: The first line of End of Chapter Question 23 has " a a", so delete one of the "a" and the line should read: "John Tinker is a junior...". Page 234: Fourth line from bottom of Solution to 23.c. should be changed to eliminate "be" so it reads: "few years to maturity and the coupon rate is low so that rates will have to move lower ..." Page 235: The second line of Solution to 24.c., after the comma, replace "than" for "then". That is, it should read: "... are Treasury rates, then the OAS ...." Page 241 Answer to Practice Question 8. Change last sentence from: "Therefore, the Z-spread is 100 basis." To "Therefore, the Z-spread is 125 basis points." Chapter 7: Page 244 Paragraph 2, Line 1 now reads: "The key to measuring the interest rate risk is the accuracy of the estimate is of" Delete the second "is" as follows: "The key to measuring the interest rate risk is the accuracy of the estimate of" Page 247: In the third paragraph, the eleventh line should read now reads "use to get an idea of how a portfolio or a even a single bond..." Delete the "a" before "even" so it reads: "use to get an idea of how a portfolio or even a single bond..." Page 253: At the end of footnote 2, delete the second "the" in the expression "in-the-the money" " Page 259 First paragraph, Line 6 Change: "approximate percentage change" To: "approximate percentage price change" Page 263, 2nd full paragraph, first sentence, "We know that if duration tells us...." Delete "if" The sentence now reads, "We know that duration tells us...." Page 268: At the end of Practice Question 3, the following sentence should be added so that you need not calculate the bond prices needed to answer the practice question: "(The relevant values can be found in Exhibit 4.)" Page 269: For Practice Question 4, part of the question asks for the "Actual percentage price change." It is not necessary to do the calculation. That information is available in Exhibit 6. Pages 271 and 272 Replace "PVPB" with "PVBP" in the following places Page 271: last line of page Page 271: Last line of the table Page 272: First and second lines in the paragraph before the table Page 276, the third summary point is missing the word "option" and the sentence should read "For a bond with an embedded option that exhibits ..." Page 279: The title of the last table now reads: "Percentage price based on an initial yield of 5%" Add "change" after price so that it now reads" "Percentage price change based on an initial yield of 5%" Page 281: The second line of Solution to 1, now reads: "... in the portfolio, it not true that ..." Add "is" so it now reads: "... in the portfolio, it is not true that ..." |
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