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Review
“The third edition of Inside the Yield Book builds on the previous editions with valuable insights into duration targeting. The authors convey their mathematically elegant findings with the same clarity and accessibility that characterized the writing of Leibowitz and Homer more than 40 years ago, before abstruse formulas began to permeate fixed-income analysis.”
—CFA Institute Book Review
From the Inside Flap
First published in 1972, and then updated in 2004, Inside the Yield Book is the widely-read classic volume that led to the modern science of bond analytics.
With the global nature of today's investment management process and the increasing complexity of financial instruments, we may seem far removed from the bond markets that authors Martin Leibowitz and Sidney Homer first wrote about over forty years ago, but the ability of this new Third Edition to explain complex relationships in the debt markets in a logical and often intuitive way remains unchanged.
Divided into three comprehensive parts, this new edition is filled with what many would consider some of the best information regarding bonds you'll ever find. It contains the complete original edition of Leibowitz and Homer's classic, which basically created the science of bond analysis through clear explanations of bond portfolio management and the math behind bond yields and prices. It also includes the 2004 updates to the classic, which developed a horizon-based approach to present-value and showed how these concepts could be generalized beyond bonds to become useful in the analysis of virtually any investment opportunity, including equities.
While the earlier editions of this reliable guide focused on a single bond that was continuously held either to maturity or to some specified horizon, many bond investments take the form of portfolios composed of multiple bond holdings and a continually changing bond composition. A completely new part of this Third Edition contains material coauthored by Martin Leibowitz, Anthony Bova, and Stanley Kogelman that reflects this reality. It provides valuable insights into the often-surprising return behavior exhibited by Duration Targeting (DT) portfolios—the most common form of bond management—over multi-year horizons. Engaging and informative, this new part addresses some practical concerns in this arena as it: develops a trendline-based zero coupon bond model of Duration Targeting; explores the relationship between yield volatility and return volatility; moves beyond theory and simulated returns to the recorded returns of actual Duration Targeted portfolios; analyzes the so-called "laddered portfolios" that commonly are used by individual investors; and much more.
Whether you're an institutional or individual investor, trader, or analyst, if you're looking to enhance your bond analysis skills, this authoritative work covers essential concepts and contains illustrative examples that will allow you to excel in today's challenging bond markets.
From the Back Cover
Praise for the Second Edition of Inside the Yield Book
The seminal book on bond analysis, now with new work on Duration Targeting
"It's pure pleasure to revisit this innovative and authoritative bedrock of modern bond analysis . . . the desciption of Wall Street's original 'rocket scientist' encountering Salomon Brothers' trading floor is worth the price of admission."
—John Lipsky, Chief Economist, JPMorgan Chase
"This book transformed the markets' understanding of bonds. The new material in this expanded edition extends those insights to equities and other investments—and the investment world is indebted anew to Sidney Homer and Martin Leibowitz."
—Frank J. Fabozzi, PhD, CFA, editor of the Journal of Portfolio Management and Professor in the Practice of Finance at Yale University's School of Management
"Inside the Yield Book may not be where it all began, but it certainly is where it all began to be understood. The clarity and elegance of language and thought is startling. The new material will not disappoint. This book will live forever!"
—Jack R. Meyer, President and CEO, Harvard Management Company
"Every participant in the fixed-income market needs to read and then reread this authoritative work."
—Laurence Fink, Chairman and CEO, BlackRock
"The new edition gives us the best of both worlds: the complete classic that helped launch a golden age for fixed-income investing, and completely new sections that show how relevant and essential its wisdom remains today."
—Lewis S. Ranieri, Chairman, Hyperion Partners
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