The key Fixed Income formulas and decision rules for 2026, module by module. Fixed Income is 11-14% of the Level I exam.
Free to read, no sign-up. A revision companion to use alongside your curriculum or prep provider. The full sheet (22 concepts, 17 formulas, 4 decision rules) is in the study dashboard.
The ones to know cold before exam day.
Where: y = YTM per period
Open the lessonWhere: y = YTM, m = compounding periods per year
Open the lessonWhere: PD = probability of default, LGD = loss given default, EAD = exposure at default
Open the lessonKey concepts and formulas from each of the 5 Fixed Income modules. Open a module for its lesson page, or the dashboard for the full sheet.
Issuer, maturity, par value, coupon rate, coupon frequency, currency, seniority.
Current yield = Annual coupon/Price. YTM = IRR of all cash flows. YTC = yield if called at first call date.
Where: Simple yield measure, ignores capital gains/losses
Where: C = coupon, r = yield per period, n = periods
Full sheet: 4 concepts · 2 formulas · 1 decision rules
Bullet: principal paid at maturity. Amortizing: principal paid gradually (e.g., mortgages). Partially amortizing: balloon payment.
Coupon = Reference rate + Spread. Resets periodically. Price stays near par at reset dates.
Where: Resets at reference rate intervals
Where: Value if converted to equity
Full sheet: 4 concepts · 3 formulas
PV of future cash flows discounted at YTM. Premium: coupon > YTM. Discount: coupon < YTM. Par: coupon = YTM.
Yields on zero-coupon bonds. Used to discount each cash flow at the appropriate maturity rate.
Where: y = YTM per period
Where: St = spot rate for maturity t
Full sheet: 4 concepts · 4 formulas · 1 decision rules
Measure of bond price sensitivity to yield changes. Higher duration = more price volatility. Approximate % price change for 1% yield change.
Weighted average time to receive cash flows. In years. Duration of zero-coupon = maturity.
Where: y = YTM, m = compounding periods per year
Where: First-order approximation
Full sheet: 5 concepts · 5 formulas · 1 decision rules
Default risk (probability of default), Loss severity (loss given default), Recovery rate (1 - loss severity). Expected loss = PD × LGD.
Yield premium over risk-free rate for credit risk. Wider spread = higher perceived risk. Spreads widen in economic downturns.
Where: PD = probability of default, LGD = loss given default, EAD = exposure at default
Where: Percentage of exposure lost
Full sheet: 5 concepts · 3 formulas · 1 decision rules
Start with the free module, then add your own notes to every Fixed Income cheat sheet in the dashboard.