Fabozzi, The Handbook of Fixed Income Securities, 8th ed.

You thought War and Peace was daunting? The original edition of Tolstoy’s masterpiece was a mere 1,225 pages. The text of the eighth edition of The Handbook of Fixed Income Securities, edited by Frank J. Fabozzi with the assistance of Steven V. Mann (McGraw-Hill, 2012) is 1,810 pages long. When you add the thirty pages of front matter, you end up with a five-pound book.

The previous edition of this handbook was published seven years ago. To catch up with the changing times, this edition adds 31 new chapters and about 300 more pages. Subsequent handbooks will probably best be published as two-volume sets.

As you might well imagine, I did not read the book in its entirety before writing this review. But, having dipped into it, I consider reading the whole to be a worthwhile project. If I proceed at the rate of a couple of chapters a day, I will have devoured it in about a month and figure I will have a pretty solid understanding, at least on an elementary level, of the fixed income market.

The book is divided into ten parts: background, government securities and corporate debt obligations, securitized products, term structure of interest rates, valuation modeling, credit risk, multifactor risk models, bond portfolio management, derivatives, and performance evaluation and return attribution analysis. Although some of the authors of the 71 chapters are academics, most are practitioners.

The book is written for those who want a broad overview of the bond market without getting bogged down in the math on which the bond market depends. Investment professionals (especially those on the equity side whose knowledge of the bond market is weak), financial advisors, and individual investors could all profit from it. There may be more in this book than most people would ever want to know, but there is definitely a lot that they should know.