1.1.a describe thestructure of the CFAInstitute Professional

Conduct Program and theprocess for the

enforcement of the Codeand Standards

1.1.b state the sixcomponents of the Codeof Ethics and the seven

Standards ofProfessional Conduct

Ethics 1.1.c explain theethical responsibilities

required by the Code andStandards, including the

sub-sections of eachStandard

Ethics 1.2.a demonstratethe application of the Codeof Ethics and Standards of

Professional Conduct tosituations involving issues

of professional integrity

Ethics 1.2.b distinguishbetween conduct thatconforms to the Codeand Standards and

conduct that violates theCode and Standards

Ethics 1.2.c recommendpractices and procedures

designed to preventviolations of the Code ofEthics and Standards of

Professional Conduct

Ethics 1.3.a explain whythe GIPS standards werecreated, what parties theGIPS standards apply to,and who is served by the

standards

Ethics 1.3.b explainthe construction and

purpose ofcomposites in

performance reporting

Ethics 1.3.cexplain the

requirementsfor verification

Ethics 1.4.a describethe key features of theGIPS standards andthe fundamentals of

compliance

Ethics 1.4.b describethe scope of the GIPSstandards with respectto an investment firmsdefinition and historical

performance record

Ethics 1.4.c 1.4.c explain how theGIPS standards are implemented incountries with existing standards forperformance reporting and describethe appropriate response when the

GIPS standards and localregulations conflict .

Ethics 1.4.ddescribe the ninemajor sections of

the GIPSstandards

Quantitative 2.5.ainterpret interest ratesas required rates of

return, discount rates,or opportunity costs

Quantitative 2.5.b explainan interest rate as the sumof a real risk-free rate, and

premiums thatcompensate investors forbearing distinct types of

risk

Quantitative 2.5.ccalculate and interpret theeffective annual rate, giventhe stated annual interestrate and the frequency of

compounding

Quantitative 2.5.dsolve time value ofmoney problems fordifferent frequencies

of compounding

Quantitative 2.5.e calculate andinterpret the future value (FV)and present value (PV) of a

single sum of money, anordinary annuity, an annuity

due, a perpetuity (PV only), anda series of unequal cash flows

Quantitative 2.5.fdemonstrate the use ofa time line in modelingand solving time value

of money problems

Quantitative 2.6.acalculate and interpretthe net present value(NPV) and the internal

rate of return (IRR) of aninvestment

Quantitative 2.6.bcontrast the NPV rule to

the IRR rule, andidentify problems

associated with the IRRrule

Quantitative 2.6.ccalculate and

interpret a holdingperiod return (total

return)

Quantitative 2.6.d calculate andcompare the moneyweightedand time-weighted rates of

return of a portfolio andevaluate the performance of

portfolios based on thesemeasures

Quantitative 2.6.e calculate andinterpret the bank discountyield, holding period yield,effective annual yield, and

money market yield for U.S.Treasury bills and other money

market instruments

Quantitative 2.6.fconvert among holdingperiod yields, money

market yields, effectiveannual yields, and bond

equivalent yields

Quantitative 2.7.a distinguishbetween descriptive statistics

and inferential statistics,between a population and a

sample, and among the typesof measurement scales

Quantitative 2.7.bdefine a parameter,a sample statistic,and a frequency

distribution

Quantitative 2.7.ccalculate and interpret

relative frequencies andcumulative relative

frequencies, given afrequency distribution

Quantitative 2.7.ddescribe the propertiesof a data set presented

as a histogram or afrequency polygon

Quantitative 2.7.e calculate andinterpret measures of central

tendency, including thepopulation mean, samplemean, arithmetic mean,

weighted average or mean,geometric mean, harmonicmean, median, and mode

Quantitative 2.7.fcalculate and

interpret quartiles,quintiles, deciles,and percentiles

Quantitative 2.7.gcalculate and interpret 1) a

range and a meanabsolute deviation and 2)the variance and standarddeviation of a population

and of a sample

Quantitative 2.7.h calculateand interpret the proportion ofobservations falling within a

specified number of standarddeviations of the mean using

Chebyshevs inequality

Quantitative 2.7.icalculate and interpret

the coefficient ofvariation and the

Sharpe ratio

Quantitative 2.7.jexplain skewness and

the meaning of apositively or negatively

skewed returndistribution

Quantitative 2.7.k describethe relative locations of themean, median, and mode

for a unimodal,nonsymmetrical

distribution

Quantitative 2.7.lexplain measures

of sampleskewness and

kurtosis

Quantitative 2.7.mcompare the use of

arithmetic andgeometric means whenanalyzing investment

returns

Quantitative 2.8.a definea random variable, an

outcome, an event,mutually exclusive

events, and exhaustiveevents

Quantitative 2.8.b statethe two defining

properties of probabilityand distinguish amongempirical, subjective,

and a priori probabilities

Quantitative 2.8.cstate the probabilityof an event in terms

of odds for andagainst the event

Quantitative 2.8.ddistinguish betweenunconditional and

conditionalprobabilities

Quantitative 2.8.eexplain the

multiplication,addition, and totalprobability rules

Quantitative 2.8.f calculate andinterpret 1) the joint probability of

two events, 2) the probability that atleast one of two events will occur,given the probability of each and

the joint probability of the twoevents, and 3) a joint probability ofany number of independent events

Quantitative 2.8.gdistinguish between

dependent andindependent events

Quantitative 2.8.hcalculate and interpret

an unconditionalprobability using thetotal probability rule

Quantitative 2.8.iexplain the use of

conditional expectationin investmentapplications

Quantitative 2.8.jexplain the use of a

tree diagram torepresent an

investment problem

Quantitative 2.8.kcalculate and

interpretcovariance and

correlation

Quantitative 2.8.l calculateand interpret the expected

value, variance, andstandard deviation of arandom variable and ofreturns on a portfolio

Quantitative 2.8.mcalculate and

interpret covariancegiven a joint

probability function

Quantitative 2.8.ncalculate and

interpret an updatedprobability usingBayes formula

Quantitative 2.8.o identify themost appropriate method tosolve a particular counting

problem, and solve countingproblems using factorial,

combination, and permutationconcepts

Quantitative 3.9.a define aprobability distribution and

distinguish betweendiscrete and continuous

random variables and theirprobability functions

Quantitative 3.9.bdescribe the set of

possible outcomes ofa specified discrete

random variable

Quantitative 3.9.cinterpret acumulativedistribution

function

Quantitative 3.9.dcalculate and interpret

probabilities for arandom variable, given

its cumulativedistribution function

Quantitative 3.9.e definea discrete uniformrandom variable, aBernoulli random

variable, and a binomialrandom variable

Quantitative 3.9.fcalculate and interpretprobabilities given the

discrete uniform and thebinomial distribution

functions

Quantitative 3.9.gconstruct a

binomial tree todescribe stock

price movement

Quantitative3.9.h calculateand interprettracking error

Quantitative 3.9.i definethe continuous uniform

distribution and calculateand interpret probabilities,given a continuous uniform

distribution

Quantitative 3.9.jexplain the keyproperties of the

normal distribution

Quantitative 3.9.k distinguishbetween a univariate and amultivariate distribution, andexplain the role of correlation

in the multivariate normaldistribution

Quantitative 3.9.ldetermine the

probability that anormally distributedrandom variable lies

inside a given interval

Quantitative 3.9.m define thestandard normal distribution,explain how to standardize a

random variable, and calculateand interpret probabilities usingthe standard normal distribution

Quantitative 3.9.n defineshortfall risk, calculate

the safetyfirst ratio, andselect an optimal

portfolio using Royssafety-first criterion

Quantitative 3.9.o explainthe relationship between

normal and lognormaldistributions and why thelognormal distribution is

used to model asset prices

Quantitative 3.9.p distinguishbetween discretely and

continuously compoundedrates of return, and calculateand interpret a continuouslycompounded rate of return,

given a specific holding periodreturn

Quantitative 3.9.qexplain Monte Carlo

simulation and describeits applications andlimitations Wording

Change

Quantitative 3.9.rcompare MonteCarlo simulation

and historicalsimulation

Quantitative 3.10.adefine simple

random samplingand a sampling

distribution

Quantitative3.10.b explainsampling error

Quantitative 3.10.cdistinguish betweensimple random andstratified random

sampling

Quantitative 3.10.ddistinguish between

time-series andcross-sectional data

Quantitative 3.10.eexplain the centrallimit theorem and

its importance

Quantitative 3.10.fcalculate andinterpret the

standard error ofthe sample mean

Quantitative 3.10.gidentify and

describe desirableproperties of an

estimator

Quantitative 3.10.hdistinguish between apoint estimate and aconfidence interval

estimate of a populationparameter

Quantitative 3.10.idescribe properties ofStudents tdistribution

and calculate andinterpret its degrees of

freedom

Quantitative 3.10.j calculate andinterpret a confidence interval for apopulation mean, given a normal

distribution with 1) a knownpopulation variance, 2) an unknown

population variance, or 3) anunknown variance and a large

sample size

Quantitative 3.10.k describe theissues regarding selection ofthe appropriate sample size,

datamining bias, sampleselection bias, survivorshipbias, look-ahead bias, and

time-period bias

Quantitative 3.11.a definea hypothesis, describe the

steps of hypothesistesting, and describe andinterpret the choice of the

null and alternativehypotheses

Quantitative 3.11.bdistinguish

between one-tailedand twotailed tests

of hypotheses

Quantitative 3.11.c explaina test statistic, Type I and

Type II errors, asignificance level, and how

significance levels areused in hypothesis testing

Quantitative 3.11.dexplain a decision rule,the power of a test, and

the relation betweenconfidence intervals and

hypothesis tests

Quantitative 3.11.edistinguish between

a statistical resultand an economically

meaningful result

Quantitative 3.11.fexplain and interpret

the p-value as itrelates to hypothesis

testing

Quantitative 3.11.g identify theappropriate test statistic and

interpret the results for a hypothesistest concerning the populationmean of both large and small

samples when the population isnormally or approximately

distributed and the variance is 1)known or 2) unknown

Quantitative 3.11.h identify theappropriate test statistic and

interpret the results for a hypothesistest concerning the equality of thepopulation means of two at least

approximately normally distributedpopulations, based on independentrandom samples with 1) equal or 2)

unequal assumed variances

Quantitative 3.11.i identifythe appropriate test

statistic and interpret theresults for a hypothesis

test concerning the meandifference of two normally

distributed populations

Quantitative 3.11.j identify theappropriate test statistic and

interpret the results for a hypothesistest concerning 1) the variance of anormally distributed population, and2) the equality of the variances of

two normally distributed populationsbased on two independent random

samples

Quantitative 3.11.kdistinguish between

parametric andnonparametric tests and

describe situations in whichthe use of nonparametrictests may be appropriate

Quantitative 3.12.aexplain principles of

technical analysis, itsapplications, and its

underlying assumptions

Quantitative 3.12.bdescribe the

construction of differenttypes of technical

analysis charts andinterpret them

Quantitative 3.12.bdescribe the

construction of differenttypes of technical

analysis charts andinterpret them

Quantitative3.12.d describecommon chart

patterns

Quantitative 3.12.edescribe commontechnical analysis

indicators (price-based,momentum oscillators,sentiment, and flow of

funds)

Quantitative 3.12.fexplain how

technical analystsuse cycles

Quantitative 3.12.gdescribe the key tenetsof Elliott Wave Theoryand the importance of

Fibonacci numbers

Quantitative 3.12.hdescribe intermarketanalysis as it relatesto technical analysisand asset allocation

Economics 4.13.adistinguish

among types ofmarkets

Economics 4.13.bexplain theprinciples ofdemand and

supply

Economics 4.13.cdescribe causes of

shifts in and movementsalong demand and

supply curves

Economics 4.13.ddescribe the process

of aggregatingdemand and supply

curves

Economics 4.13.edescribe the concept ofequilibrium (partial and

general), and mechanismsby which markets achieve

equilibrium

Economics 4.13.fdistinguish between stable

and unstable equilibria,including price bubbles,and identify instances of

such equilibria

Economics 4.13.g calculateand interpret individual and

aggregate demand, andinverse demand and supply

functions, and interpretindividual and aggregate

demand and supply curves

Economics 4.13.hcalculate and interpretthe amount of excess

demand or excesssupply associated with a

non-equilibrium price

Economics 4.13.idescribe types of

auctions and calculatethe winning price(s) of

an auction

Economics 4.13.jcalculate and interpret

consumer surplus,producer surplus, and

total surplus

Economics 4.13.kdescribe how

government regulationand intervention affect

demand and supply

Economics 4.13.l forecastthe effect of the

introduction and theremoval of a market

interference (e.g., a pricefloor or ceiling) on price

and quantity

Economics 4.13.mcalculate and interpret

price, income, andcross-price elasticities of

demand and describefactors that affect each

measure

Economics 4.14.adescribe consumerchoice theory and

utility theory

Economics 4.14.bdescribe the use ofindifference curves,

opportunity sets, andbudget constraints in

decision making

Economics 4.14.ccalculate and

interpret a budgetconstraint

Economics 4.14.ddetermine a consumers

equilibrium bundle ofgoods based on utility

analysis

Economics4.14.e comparesubstitution andincome effects

Economics 4.14.fdistinguish between

normal goods and inferiorgoods, and explain Giffengoods and Veblen goods

in this context

Economics 4.15.acalculate, interpret, and

compare accountingprofit, economic profit,

normal profit, andeconomic rent

Economics 4.15.bcalculate and interpret

and compare total,average, and marginal

revenue

Economics4.15.c describea firms factorsof production

Economics 4.15.dcalculate and interpret

total, average,marginal, fixed, and

variable costs

Economics 4.15.edetermine and

describe breakevenand shutdown points

of production

Economics 4.15.fdescribe approaches

to determining theprofit-maximizing level

of output

Economics 4.15.gdescribe how

economies of scaleand diseconomies of

scale affect costs

Economics 4.15.hdistinguish

between short-runand longrun profit

maximization

Economics 4.15.idistinguish amongdecreasing-cost,

constant-cost, andincreasing-cost industriesand describe the long-run

supply of each

Economics 4.15.jcalculate and interpret

total, marginal, andaverage product of

labor

Economics 4.15.k describethe phenomenon ofdiminishing marginal

returns and calculate andinterpret the

profit-maximizingutilization level of an input

Economics 4.15.ldetermine the

optimal combinationof resources thatminimizes cost

Economics 4.16.adescribe characteristicsof perfect competition,

monopolisticcompetition, oligopoly,

and pure monopoly

Economics 4.16.b explainrelationships between

price, marginal revenue,marginal cost, economic

profit, and the elasticity ofdemand under each

market structure

Economics 4.16.cdescribe a firmssupply function

under each marketstructure

Economics 4.16.ddescribe and determine

the optimal price andoutput for firms undereach market structure

Economics 4.16.eexplain factors

affecting long-runequilibrium under

each market structure

Economics 4.16.fdescribe pricingstrategy undereach market

structure

Economics 4.16.gdescribe the use and

limitations ofconcentration measures

in identifying marketstructure

Economics 4.16.hidentify the type ofmarket structure

within which a firmoperates

Economics 5.17.acalculate and explain

gross domestic product(GDP) using

expenditure and incomeapproaches

Economics 5.17.bcompare the

sum-of-value-added andvalue-of-final-output

methods of calculatingGDP

Economics 5.17.ccompare nominal and

real GDP andcalculate and interpret

the GDP deflator

Economics 5.17.dcompare GDP, national

income, personalincome, and personal

disposable income

Economics 5.17.eexplain the fundamental

relationship amongsaving, investment, thefiscal balance, and the

trade balance

Economics 5.17.fexplain the IS and LMcurves and how they

combine to generate theaggregate demand

curve

Economics 5.17.gexplain the

aggregate supplycurve in the shortrun and long run

Economics 5.17.hexplain causes of

movements along andshifts in aggregate

demand and supplycurves

Economics 5.17.i describehow fluctuations in

aggregate demand andaggregate supply causeshort-run changes in the

economy and the businesscycle

Economics 5.17.j distinguishbetween the following types of

macroeconomic equilibria:long-run full employment,

short-run recessionary gap,short-run inflationary gap, and

short-run stagflation New

Economics 5.17.jexplain how a short-run

macroeconomicequilibrium may occur ata level above or below

full employment

Economics 5.17.kanalyze the effect ofcombined changes inaggregate supply and

demand on theeconomy

Economics 5.17.ldescribe sources,measurement, and

sustainability ofeconomic growth

Economics 5.17.mdescribe the production

function approach toanalyzing the sources of

economic growth

Economics 5.17.ndistinguish between inputgrowth and growth of total

factor productivity ascomponents of economic

growth

Economics 5.18.adescribe the

business cycleand its phases

Economics 5.18.bdescribe how resource

use, housing sectoractivity, and external tradesector activity vary as aneconomy moves through

the business cycle

Economics5.18.c describetheories of thebusiness cycle

Economics 5.18.ddescribe types of

unemployment andmeasures of

unemployment

Economics 5.18.eexplain inflation,hyperinflation,

disinflation, anddeflation

Economics 5.18.fexplain the

construction ofindices used to

measure inflation

Economics 5.18.gcompare inflation

measures,including their uses

and limitations

Economics 5.18.hdistinguish

between cost-pushand demand-pull

inflation

Economics 5.18.idescribe economic

indicators,including their uses

and limitations

Economics5.19.a comparemonetary andfiscal policy

Economics 5.19.bdescribe functionsand definitions of

money

Economics5.19.c explain

the moneycreation process

Economics 5.19.ddescribe theoriesof the demand for

and supply ofmoney

Economics5.19.e describe

the Fishereffect

Economics 5.19.fdescribe roles

and objectives ofcentral banks

Economics 5.19.gcontrast the costsof expected and

unexpectedinflation

Economics 5.19.hdescribe tools

used to implementmonetary policy

Economics 5.19.idescribe the

monetarytransmission

mechanism New

14 Economics5.19.i describe

qualities ofeffective central

banks

Economics 5.19.j explainthe relationships between

monetary policy andeconomic growth, inflation,

interest, and exchangerates

Economics 5.19.kcontrast the use of

inflation, interest rate,and exchange ratetargeting by central

banks

5.19.l contrast the useof inflation, interestrate, and exchange

rate targeting bycentral banks

Economics 5.19.mdetermine whethera monetary policyis expansionary or

contractionary

Economics5.19.n describe

limitations ofmonetary policy

Economics 5.19.odescribe roles

and objectives offiscal policy

Economics 5.19.pdescribe tools of fiscalpolicy, including their

advantages anddisadvantages

Economics 5.19.qdescribe the argumentsabout whether the size

of a national debtrelative to GDP matters

Economics 5.19.rexplain the

implementation of fiscalpolicy and difficulties of

implementation

Economics 5.19.sdetermine whether

a fiscal policy isexpansionary orcontractionary

Economics 5.19.texplain the

interaction ofmonetary andfiscal policy

Economics 6.20.acompare gross

domestic productand gross national

product

Economics 6.20.bdescribe benefits

and costs ofinternational trade

Economics 6.20.cdistinguish between

comparativeadvantage and

absolute advantage

Economics 6.20.d explainthe Ricardian and

HeckscherOhlin modelsof trade and the source(s)of comparative advantage

in each model

Economics 6.20.ecompare types oftrade and capital

restrictions and theireconomic implications

Economics 6.20.fexplain motivations for

and advantages oftrading blocs, commonmarkets, and economic

unions

Economics 6.20.gdescribe common

objectives of capitalrestrictions imposedby governments New

6.20.h describe thebalance ofpayments

accounts includingtheir components

6.20.i explain howdecisions by

consumers, firms, andgovernments affect thebalance of payments

6.20.j describe functions andobjectives of the internationalorganizations that facilitatetrade, including the World

Bank, the InternationalMonetary Fund, and the World

Trade Organization

Economics 6.21.a definean exchange rate, and

distinguish betweennominal and real

exchange rates and spotand forward exchange

rates

Economics 6.21.bdescribe functionsof and participants

in the foreignexchange market

Economics 6.21.ccalculate and interpretthe percentage changein a currency relative to

another currency

Economics 6.21.dcalculate and

interpret currencycrossrates

Economics 6.21.e convertforward quotations

expressed on a pointsbasis or in percentageterms into an outright

forward quotation

Economics 6.21.fexplain the arbitragerelationship betweenspot rates, forward

rates, and interest rates

Economics 6.21.gcalculate and

interpret a forwarddiscount orpremium

Economics 6.21.hcalculate and interpret

the forward rateconsistent with the spotrate and the interest rate

in each currency

Economics6.21.i describeexchange rate

regimes

Economics 6.21.jexplain the effects ofexchange rates on

countries internationaltrade and capital flows

6.21.j explain theeffects of exchangerates on countriesinternational tradeand capital flows

Financial Reporting7.22.a describe the

roles of financialreporting and financial

statement analysis

Financial Reporting 7.22.b describethe roles of the key financial

statements (statement of financialposition, statement of

comprehensive income, statementof changes in equity, and statement

of cash flows) in evaluating acompanys performance and

financial position

Financial Reporting 7.22.c describethe importance of financial

statement notes and supplementaryinformationincluding disclosuresof accounting policies, methods,

and estimates andmanagements commentary

Financial Reporting 7.22.ddescribe the objective of

audits of financialstatements, the types of

audit reports, and theimportance of effective

internal controls

Financial Reporting 7.22.eidentify and describe

information sources thatanalysts use in financial

statement analysis besidesannual financial statements and

supplementary information

Financial Reporting7.22.f describe the

steps in the financialstatement analysis

framework

Financial Reporting 7.23.aexplain the relationship of

financial statementelements and accounts,

and classify accounts intothe financial statement

elements

Financial Reporting7.23.b explain the

accounting equationin its basic and

expanded forms

Financial Reporting 7.23.cdescribe the process of

recording businesstransactions using an

accounting system basedon the accounting

equation

Financial Reporting7.23.d describe the

need for accruals andother adjustments inpreparing financial

statements

Financial Reporting 7.23.edescribe the relationships

among the incomestatement, balance sheet,statement of cash flows,and statement of owners

equity

17 FinancialReporting 7.23.fdescribe the flow

of information in anaccounting system

Financial Reporting7.23.g describe the use

of the results of theaccounting process in

security analysis

Financial Reporting 7.24.adescribe the objective offinancial statements and

the importance of financialreporting standards insecurity analysis and

valuation

Financial Reporting 7.24.b describeroles and desirable attributes of

financial reporting standard-settingbodies and regulatory authorities inestablishing and enforcing reportingstandards, and describe the role of

the International Organization ofSecurities Commissions

Financial Reporting 7.24.cdescribe the status of globalconvergence of accounting

standards and ongoingbarriers to developing oneuniversally accepted set of

financial reporting standards

Financial Reporting 7.24.d describethe International Accounting

Standards Boards conceptualframework, including the objectiveand qualitative characteristics of

financial statements, requiredreporting elements, and constraints

and assumptions in preparingfinancial statements

Financial Reporting 7.24.edescribe general

requirements for financialstatements under

International FinancialReporting Standards

(IFRS) Wording Change

Financial Reporting 7.24.fcompare key concepts of

financial reporting standardsunder IFRS and US generally

accepted accounting principles(US GAAP) reporting systems

Wording Change

Financial Reporting 7.24.gidentify characteristics of a

coherent financialreporting framework andthe barriers to creating

such a framework

18 Financial Reporting 7.24.hdescribe implications for

financial analysis of differingfinancial reporting systems andthe importance of monitoring

developments in financialreporting standards

Financial Reporting7.24.i analyze

company disclosuresof significant

accounting policies

Financial Reporting 8.25.adescribe the componentsof the income statement

and alternativepresentation formats of

that statement

Financial Reporting 8.25.b describegeneral principles of revenue recognitionand accrual accounting, specific revenue

recognition applications (includingaccounting for long-term contracts,

installment sales, barter transactions,gross and net reporting of revenue), and

implications of revenue recognitionprinciples for financial analysis

Financial Reporting8.25.c calculate revenue

given information thatmight influence thechoice of revenue

recognition method

Financial Reporting 8.25.ddescribe general principles ofexpense recognition, specific

expense recognitionapplications, and implications ofexpense recognition choices for

financial analysis

Financial Reporting 8.25.edescribe the financial reporting

treatment and analysis ofnon-recurring items (including

discontinued operations,extraordinary items, unusual orinfrequent items) and changes

in accounting standards

Financial Reporting8.25.f distinguish

between the operatingand non-operatingcomponents of theincome statemen

19 Financial Reporting 8.25.gdescribe how earnings per share is

calculated and calculate andinterpret a companys earnings per

share (both basic and dilutedearnings per share) for both simple

and complex capital structures

Financial Reporting 8.25.hdistinguish between

dilutive and antidilutivesecurities, and describe

the implications of each forthe earnings per share

calculation

Financial Reporting8.25.i convert

income statementsto commonsize

income statements

Financial Reporting 8.25.jevaluate a companysfinancial performanceusing common-size

income statements andfinancial ratios based on

the income statement

Financial Reporting8.25.k describe,

calculate, and interpretcomprehensive income

Financial Reporting8.25.l describe other

comprehensive income,and identify major types

of items included in it

Financial Reporting8.26.a describe the

elements of thebalance sheet: assets,liabilities, and equity

Financial Reporting8.26.b describe usesand limitations of the

balance sheet infinancial analysis

Financial Reporting8.26.c describe

alternative formatsof balance sheet

presentation

Financial Reporting8.26.d distinguish

between current andnoncurrent assets, andcurrent and noncurrent

liabilities

Financial Reporting8.26.e describe different

types of assets andliabilities and the

measurement bases ofeach

Financial Reporting8.26.f describe the

components ofshareholders equity

Financial Reporting 8.26.gconvert balance sheets to

common-size balancesheets and interpretcommonsize balance

sheets Separation

Financial Reporting 8.26.hconvert balance sheets to

common-size balancesheets and interpretcommonsize balance

sheets Separation

20 FinancialReporting 8.26.i

calculate andinterpret liquidity

and solvency ratios

Financial Reporting 8.27.acompare cash flows fromoperating, investing, and

financing activities and classifycash flow items as relating toone of those three categories

given a description of the items

Financial Reporting8.27.b describe hownon-cash investing

and financingactivities are reported

Financial Reporting 8.27.ccontrast cash flow statementsprepared under International

Financial Reporting Standards(IFRS) and U.S. generally

accepted accounting principles(U.S. GAAP)

Financial Reporting 8.27.ddistinguish between the direct

and indirect methods ofpresenting cash from

operating activities anddescribe arguments in favor

of each method

Financial Reporting8.27.e describe how thecash flow statement islinked to the incomestatement and the

balance sheet

Financial Reporting 8.27.fdescribe the steps in thepreparation of direct and

indirect cash flow statements,including how cash flows canbe computed using income

statement and balance sheetdata

FinancialReporting 8.27.g

convert cash flowsfrom the indirect to

direct method

Financial Reporting8.27.h analyze and

interpret both reportedand common-size

cash flow statements

Financial Reporting 8.27.icalculate and interpret freecash flow to the firm, freecash flow to equity, and

performance and coveragecash flow ratios

Financial Reporting8.28.a describe tools

and techniques used infinancial analysis,

including their uses andlimitations

Financial Reporting8.28.b classify,

calculate, and interpretactivity, liquidity,

solvency, profitability,and valuation ratios

Financial Reporting8.28.c describe

relationships amongratios and evaluate acompany using ratio

analysis

Financial Reporting 8.28.ddemonstrate the

application of DuPontanalysis of return on

equity, and calculate andinterpret effects of

changes in its components

Financial Reporting8.28.e calculate andinterpret ratios used

in equity analysisand credit analysis

Financial Reporting8.28.f explain therequirements for

segment reporting, andcalculate and interpret

segment ratios

Financial Reporting8.28.g describe how

ratio analysis and othertechniques can be usedto model and forecast

earnings

Financial Reporting 9.29.adistinguish between costsincluded in inventories and

costs recognised asexpenses in the period inwhich they are incurred sp

Financial Reporting9.29.b describe

different inventoryvaluation methods

(cost formulas)

Financial Reporting 9.29.ccalculate cost of sales and

ending inventory using differentinventory valuation methodsand explain the effect of theinventory valuation method

choice on gross profit

Financial Reporting 9.29.dcalculate and compare

cost of sales, gross profit,and ending inventory using

perpetual and periodicinventory systems

Financial Reporting9.29.e compare cost ofsales, ending inventory,and gross profit using

different inventoryvaluation methods

Financial Reporting9.29.f describe themeasurement of

inventory at the lower ofcost and net realisable

value

Financial Reporting9.29.g describe thefinancial statementpresentation of and

disclosures relating toinventories

Financial Reporting9.29.h calculate andinterpret ratios usedto evaluate inventory

management

22 Financial Reporting9.30.a distinguish betweencosts that are capitalized

and costs that areexpensed in the period inwhich they are incurred

Financial Reporting 9.30.b9.30.b compare the financial

reporting of the followingtypes of intangible assets:

purchased, internallydeveloped, acquired in a

business combination

Financial Reporting 9.30.c describethe different depreciation methodsfor property, plant, and equipment,

the effect of the choice ofdepreciation method on the

financial statements, and the effectsof assumptions concerning useful

life and residual value ondepreciation expense

FinancialReporting 9.30.d

calculatedepreciation

expense

Financial Reporting 9.30.e describethe different amortization methods

for intangible assets with finite lives,the effect of the choice of

amortization method on thefinancial statements, and the effects

of assumptions concerning usefullife and residual value on

amortization expense

FinancialReporting 9.30.f

calculateamortization

expense

FinancialReporting 9.30.g

describe therevaluation model

Financial Reporting9.30.h explain the

impairment of property,plant, and equipmentand intangible assets

Financial Reporting9.30.i explain thederecognition of

property, plant, andequipment and

intangible assets

Financial Reporting 9.30.jdescribe the financial

statement presentation ofand disclosures relating to

property, plant, andequipment and intangible

assets

Financial Reporting9.30.k compare thefinancial reporting of

investment property withthat of property, plant,

and equipment

Financial Reporting 9.31.a describethe differences between accounting

profit and taxable income, anddefine key terms, including deferredtax assets, deferred tax liabilities,

valuation allowance, taxes payable,and income tax expense

Financial Reporting 9.31.bexplain how deferred taxliabilities and assets are

created and the factors thatdetermine how a companysdeferred tax liabilities and

assets should be treated for thepurposes of financial analysis

Financial Reporting9.31.c calculate the

tax base of acompanys assets

and liabilities

Financial Reporting 9.31.dcalculate income tax expense,income taxes payable, deferred

tax assets, and deferred taxliabilities, and calculate and

interpret the adjustment to thefinancial statements related to

a change in the income tax rate

Financial Reporting9.31.e evaluate theimpact of tax rate

changes on acompanys financial

statements and ratios

Financial Reporting 9.31.fdistinguish between

temporary and permanentdifferences in pre-tax

accounting income andtaxable income

Financial Reporting 9.31.gdescribe the valuation

allowance for deferred taxassetswhen it is

required and what impactit has on financial

statements

FinancialReporting 9.31.h

compare acompanys

deferred tax items

Financial Reporting 9.31.ianalyze disclosures relating to

deferred tax items and theeffective tax rate reconciliation,

and explain how informationincluded in these disclosuresaffects a companys financial

statements and financial ratios

24 Financial Reporting 9.31.jidentify the key provisions of anddifferences between income taxaccounting under InternationalFinancial Reporting Standards

(IFRS) and US generally acceptedaccounting principles (GAAP)

Wording Change

Financial Reporting9.32.a determine the

initial recognition, initialmeasurement and

subsequentmeasurement of bonds

Financial Reporting 9.32.bdescribe the effectiveinterest method and

calculate interest expense,amortisation of bond

discounts/premiums, andinterest payments

FinancialReporting 9.32.c

explain thederecognition of

debt

FinancialReporting 9.32.d

describe the role ofdebt covenants in

protecting creditors

Financial Reporting9.32.e describe thefinancial statementpresentation of and

disclosures relating todebt

Financial Reporting9.32.f explain

motivations for leasingassets instead ofpurchasing themWording Change

Financial Reporting 9.32.gdistinguish between afinance lease and an

operating lease from theperspectives of the lessor

and the lessee

Financial Reporting 9.32.hdetermine the initialrecognition, initial

measurement, andsubsequent measurement

of finance leases

Financial Reporting9.32.i compare thedisclosures relating

to finance andoperating leases

Financial Reporting9.32.j compare thepresentation and

disclosure of definedcontribution and defined

benefit pension plans

25 Financial Reporting10.33.a distinguish between

financial reporting quality andquality of reported results

(including quality of earnings,cash flow, and balance sheet

items) New

Financial Reporting10.33.b describe a

spectrum forassessing financial

reporting quality New

Financial Reporting10.33.c distinguish

between conservativeand aggressiveaccounting New

10.33.d describemotivations that mightcause management toissue financial reports

that are not high qualityWording Change

Financial Reporting10.33.e describe

conditions that areconducive to issuinglow-quality, or evenfraudulent, financialreports Separation

Financial Reporting 10.33.fdescribe mechanisms that

discipline financialreporting quality and the

potential limitations ofthose mechanisms New

Financial Reporting10.33.g describe

presentation choices,including non-GAAP

measures, that could beused to influence an

analysts opinion New

Financial Reporting 10.33.hdescribe accounting methods(choices and estimates) that

could be used to manageearnings, cash flow, andbalance sheet items New

Financial Reporting 10.33.idescribe accountingwarning signs and

methods for detectingmanipulation of

information in financialreports Wording Change

Financial Reporting10.34.a evaluate a

companys past financialperformance and explainhow a companys strategy

is reflected in pastfinancial performance

Financial Reporting10.34.b forecast acompanys future

net income and cashflow

Financial Reporting10.34.c describe the role

of financial statementanalysis in assessing the

credit quality of a potentialdebt investment

Financial Reporting10.34.d describe the

use of financialstatement analysis inscreening for potential

equity investments

Financial Reporting 10.34.eexplain appropriate analystadjustments to a companys

financial statements tofacilitate comparison with

another company

Corporate Finance 11.35.adescribe the capital

budgeting process anddistinguish among thevarious categories of

capital projects WordingChange

Corporate Finance11.35.b describe the

basic principles ofcapital budgetingWording Change

Corporate Finance 11.35.cexplain how the evaluation

and selection of capitalprojects is affected by

mutually exclusive projects,project sequencing, and

capital rationing

Corporate Finance 11.35.dcalculate and interpret net

present value (NPV), internalrate of return (IRR), paybackperiod, discounted paybackperiod, and profitability index(PI) of a single capital project

Wording Change

Corporate Finance 11.35.e explainthe NPV profile, compare the NPVand IRR methods when evaluating

independent and mutually exclusiveprojects, and describe the problems

associated with each of theevaluation methods

27 Corporate Finance11.35.f describe

expected relationsamong an investmentsNPV, company value,

and share price

Corporate Finance11.36.a calculate andinterpret the weightedaverage cost of capital(WACC) of a company

Corporate Finance11.36.b describe howtaxes affect the cost ofcapital from different

capital sources

Corporate Finance 11.36.cdescribe the use of target

capital structure in estimatingWACC and how target capital

structure weights may bedetermined Wording Change

Corporate Finance 11.36.dexplain how the marginal

cost of capital and theinvestment opportunityschedule are used todetermine the optimal

capital budget

Corporate Finance 11.36.eexplain the marginal cost

of capitals role indetermining the net

present value of a project

Corporate Finance 11.36.fcalculate and interpret thecost of debt capital using

the yield-to-maturityapproach and the

debt-rating approach

Corporate Finance11.36.g calculate andinterpret the cost of

noncallable,nonconvertible preferred

stock

Corporate Finance 11.36.hcalculate and interpret the cost

of equity capital using thecapital asset pricing model

approach, the dividenddiscount model approach, and

the bondyield- plusrisk-premium approach

Corporate Finance11.36.i calculateand interpret thebeta and cost of

capital for a project

Corporate Finance11.36.j describe uses ofcountry risk premiums in

estimating the cost ofequity Corporate

Finance 11.36.k describethe marginal cost of capital

schedule, explain why itmay be upwardsloping

with respect to additionalcapital, and calculate andinterpret its break-points

Corporate Finance11.36.l explain and

demonstrate thecorrect treatmentof flotation costs

Corporate Finance 11.37.adefine and explain

leverage, business risk,sales risk, operating risk,

and financial risk, andclassify a risk Wording

Change

Corporate FinanceFinance 11.37.c analyze

the effect of financialleverage on a companysnet income and return on

equity Wording

Corporate Finance11.37.d calculate thebreakeven quantity of

sales and determine thecompanys net incomeat various sales levels

Corporate Finance11.37.e calculateand interpret the

operating breakevenquantity of sales

Corporate 11.38.a describe regularcash dividends, extra dividends,

liquidating dividends, stockdividends, stock splits, and reversestock splits, including their expectedeffect on shareholders wealth and

a companys financial ratiosWording Change

Corporate Finance 11.38.bdescribe dividend paymentchronology, including the

significance of declaration,holder-of-record,

ex-dividend, and paymentdates

Corporate Finance11.38.c compareshare repurchase

methods

Corporate Finance 11.38.dcalculate and compare the

effect of a share repurchase onearnings per share when 1) therepurchase is financed with thecompanys excess cash and 2)

the company uses debt tofinance the repurchase

Corporate Finance11.38.e calculate the

effect of a sharerepurchase on book

value per share

Corporate Finance 11.38.fexplain why a cash dividendand a share repurchase of

the same amount areequivalent in terms of theeffect on shareholders

wealth, all else being equal

29 Corporate Finance11.39.a describe primaryand secondary sources ofliquidity and factors thatinfluence a companys

liquidity position

Corporate Finance11.39.b compare acompanys liquidity

measures with thoseof peer companies

Corporate Finance 11.39.cevaluate working capital

effectiveness of a companybased on its operating and

cash conversion cycles, andcompare the companys

effectiveness with that of peercompanies

Corporate Finance11.39.d describe howdifferent types of cash

flows affect a companysnet daily cash position

Corporate Finance 11.39.ecalculate and interpret

comparable yields on varioussecurities, compare portfolioreturns against a standardbenchmark, and evaluate a

companys short-terminvestment policy guidelines

Corporate Finance 11.39.fevaluate a companys

management of accountsreceivable, inventory, and

accounts payable overtime and compared to peer

companies

Corporate Finance 11.39.gevaluate the choices of

short-term fundingavailable to a company

and recommend afinancing method

CorporateFinance 11.40.adefine corporate

governance

Corporate Finance 11.40.b describepractices related to board and

committee independence,experience, compensation, external

consultants, and frequency ofelections, and determine whetherthey are supportive of shareowner

protection

Corporate Finance 11.40.cdescribe board

independence and explainthe importance of

independent boardmembers in corporate

governance

Corporate Finance 11.40.didentify factors that an

analyst should considerwhen evaluating the

qualifications of boardmembers

30 Corporate Finance 11.40.edescribe responsibilities of the

audit, compensation, andnominations committees andidentify factors an investor

should consider whenevaluating the quality of each

committee

Corporate Finance11.40.f describe

provisions that shouldbe included in a strong

corporate code of ethicsWording Change

Corporate Finance 11.40.gevaluate, from a shareownersperspective, company policies

related to voting rules,shareowner sponsored

proposals, common stockclasses, and takeover defenses

Portfolio Managementinvesting 12.41.a

describe the portfolioapproach to investing

Portfolio Management12.41.b describe types

of investors anddistinctive

characteristics andneeds of each

Portfolio Management12.41.c describe

defined contributionand defined benefit

pension plans

Portfolio Management12.41.d describe thesteps in the portfolio

management process

Portfolio Management12.41.e describe mutual

funds and comparethem with other pooled

investment products

Portfolio Management12.42.a calculate andinterpret major return

measures and describetheir appropriate uses

Portfolio Management12.42.b describe

characteristics of themajor asset classes that

investors consider informing portfolios

Portfolio Management12.42.c calculate andinterpret the mean,

variance, and covariance(or correlation) of asset

returns based on historicaldata

Portfolio Management12.42.d explain risk

aversion and itsimplications for

portfolio selection

Portfolio Management12.42.e calculate and

interpret portfoliostandard deviation

31 Portfolio 12.42.fdescribe the effect on a

portfolios risk ofinvesting in assets thatare less than perfectly

correlated

Portfolio Management12.42.g describe and interpret

the minimumvariance andefficient frontiers of risky

assets and the globalminimum-variance portfolio

Portfolio Management12.42.h discuss the

selection of an optimalportfolio, given an

investors utility (or riskaversion) and the capital

allocation line

Portfolio Management12.43.a describe the

implications ofcombining a risk-free

asset with a portfolio ofrisky assets

Portfolio Management12.43.b explain the

capital allocation line(CAL) and the capital

market line (CML)

Portfolio Management12.43.c explain systematic

and nonsystematic risk,including why an investor

should not expect to receiveadditional return for bearing

nonsystematic risk

Portfolio Management12.43.d explain return

generating models(including the marketmodel) and their uses

PortfolioManagement

12.43.e calculateand interpret beta

Portfolio Management12.43.f explain the capital

asset pricing model(CAPM), including itsassumptions, and the

security market line (SML)

Portfolio Management12.43.g calculate andinterpret the expected

return of an assetusing the CAPM

Portfolio Management12.43.h describe and

demonstrateapplications of the

CAPM and the SML

Portfolio Management12.44.a describe thereasons for a written

investment policystatement (IPS)

PortfolioManagement

12.44.b describe themajor components

of an IPS

Portfolio Management12.44.c describe riskand return objectivesand how they may bedeveloped for a client

32 Portfolio Management12.44.d distinguish

between the willingnessand the ability (capacity) to

take risk in analyzing aninvestors financial risk

tolerance

Portfolio Management 12.44.edescribe the investment

constraints of liquidity, timehorizon, tax concerns, legaland regulatory factors, and

unique circumstances and theirimplications for the choice of

portfolio assets

Portfolio Management12.44.f explain the

specification of assetclasses in relation to

asset allocation

Portfolio Management12.44.g describe theprinciples of portfolio

construction and the roleof asset allocation in

relation to the IPS WordingChange

Equity 13.45.aexplain the mainfunctions of thefinancial system

Equity 13.45.bdescribe

classifications ofassets and

markets

Equity 13.45.c describe themajor types of securities,

currencies, contracts,commodities, and real assets

that trade in organized markets,including their distinguishing

characteristics and majorsubtypes

Equity 13.45.d describetypes of financial

intermediaries andservices that they

provide

Equity 13.45.ecompare positions

an investor cantake in an asset

Equity 13.45.f calculateand interpret the leverageratio, the rate of return ona margin transaction, andthe security price at whichthe investor would receive

a margin call

Equity Equity13.45.h compare

market orderswith limit orders

Equity 13.45.i defineprimary and secondary

markets and explainhow secondary marketssupport primary markets

33 Equity 13.45.j describehow securities, contracts,and currencies are traded

in quote-driven,order-driven, and brokered

markets

Equity 13.45.kdescribe

characteristics of awellfunctioningfinancial system

Equity 13.45.ldescribe

objectives ofmarket regulation

Equity 13.46.adescribe a

security marketindex

Equity 13.46.bcalculate and interpretthe value, price return,and total return of an

index

Equity 13.46.cdescribe the choicesand issues in index

construction andmanagement

Equity 13.46.dcompare the

different weightingmethods used in

index construction

Equity 13.46.ecalculate and analyzethe value and returnof an index given itsweighting method

Equity 13.46.fdescribe

rebalancing andreconstitution of an

index

Equity 13.46.gdescribe uses

of securitymarket indices

Equity 13.46.hdescribe types

of equityindices

Equity 13.46.idescribe typesof fixed-income

indices

Equity 13.46.jdescribe indices

representingalternative

investments

13.46.kcompare types

of securitymarket indices

Equity 13.47.a describemarket efficiency and

related concepts,including theirimportance to

investment practitioners

Equity 13.47.bdistinguish

between marketvalue and intrinsic

value

Equity 13.47.cexplain factors thataffect a markets

efficiency

Equity 13.47.dcontrast weak-form,semi-strong-form,and strong-formmarket efficiency

Equity 13.47.e explain theimplications of each form of

market efficiency forfundamental analysis, technical

analysis, and the choicebetween active and passive

portfolio management

Equity 13.47.fdescribe

selected marketanomalies

34 Equity 13.47.gcontrast the behavioralfinance view of investor

behavior to that oftraditional finance

Equity 14.48.adescribe

characteristics oftypes of equity

securities

Equity 14.48.b describedifferences in voting

rights and otherownership

characteristics amongdifferent equity classes

Equity 14.48.cdistinguish

between publicand private equity

securities

Equity 14.48.ddescribe methods

for investing innondomestic

equity securities

Equity 14.48.ecompare the risk andreturn characteristicsof different types of

equity securities

Equity 14.48.fexplain the role ofequity securities inthe financing of acompanys assets

Equity 14.48.gdistinguish between

the market valueand book value ofequity securities

Equity 14.48.h comparea companys cost of

equity, its (accounting)return on equity, and

investors required ratesof return

Equity 14.49.a explainuses of industry analysis

and the relation ofindustry analysis tocompany analysis

Equity 14.49.b comparemethods by which companies

can be grouped, currentindustry classification systems,and classify a company, given

a description of its activities andthe classification system

Equity 14.49.c explain thefactors that affect the sensitivityof a company to the business

cycle and the uses andlimitations of industry and

company descriptors such asgrowth, defensive, and

cyclical

Equity 14.49.d explainhow peer group as

used in equity valuationrelates to a companysindustry classification

Wording Change

Equity 35 Equity14.49.f describethe principles of

strategic analysisof an industry

Equity 14.49.g explain theeffects of barriers to entry,

industry concentration,industry capacity, and

market share stability onpricing power and return

on capital

Equity 14.49.h describe productand industry life cycle models,

classify an industry as to life cyclephase (embryonic, growth,

shakeout, maturity, and decline),and describe limitations of the

life-cycle concept in forecastingindustry performance

Equity 14.49.i comparecharacteristics of

representative industriesfrom the various

economic sectors

Equity 14.49.j describedemographic,

governmental, social, andtechnological influences

on industry growth,profitability, and risk Equity

Equity 14.49.kdescribe the elements

that should becovered in a thorough

company analysis

Equity 14.50.a evaluatewhether a security, givenits current market priceand a value estimate, isovervalued, fairly valued,

or undervalued by themarket

Equity 14.50.bdescribe majorcategories of

equity valuationmodels

Equity 14.50.c explain therationale for using present

value models to valueequity and describe thedividend discount and

freecash- flow-to-equitymodels

Equity 14.50.dcalculate the intrinsic

value of a noncallable,non-convertiblepreferred stock

Equity 14.50.e calculate andinterpret the intrinsic value of

an equity security based on theGordon (constant) growth

dividend discount model or atwo-stage dividend discount

model, as appropriate

36 Equity 14.50.fidentify companies for

which the constantgrowth or a multistage

dividend discount modelis appropriate

Equity 14.50.g explain therationale for using price

multiples to value equity anddistinguish between multiplesbased on comparables versus

multiples based onfundamentals

Equity 14.50.h calculateand interpret the following

multiples: price toearnings, price to an

estimate of operating cashflow, price to sales, and

price to book value

Equity 14.50.idescribe enterprisevalue multiples and

their use in estimatingequity value

Equity 14.50.jdescribe asset-basedvaluation models andtheir use in estimating

equity value

Equity 14.50.kexplain advantagesand disadvantagesof each category of

valuation model

Fixed Income15.51.a describethe basic featuresof a fixedincome

security

Fixed Income15.51.b describe

functions of a bondindenture Fixed

Income

15.51.c compareaffirmative and

negative covenantsand identify

examples of each

Fixed Income 15.51.ddescribe how legal,regulatory, and tax

considerations affect theissuance and trading offixed-income securities

Fixed Income 15.51.f describecontingency provisions

affecting the timing and/ornature of cash flows of

fixed-income securities andidentify whether such

provisions benefit the borroweror the lender

Fixed Income15.52.a describeclassifications of

global fixedincomemarkets

Fixed Income 15.52.bdescribe the use of

interbank offered ratesas reference rates in

floating-rate debt

Fixed Income 15.52.cdescribe mechanismsavailable for issuing

bonds in primarymarkets

37 Fixed Income15.52.d describe

secondary marketsfor bonds

Fixed Income 15.52.edescribe securities issued by

sovereign governments,non-sovereign governments,government agencies, and

supranational entities

Fixed Income15.52.f describe

types of debtissued by

corporations

Fixed Income15.52.g describe

short-term fundingalternatives

available to banks

Fixed Income 15.52.hdescribe repurchase

agreements (repos) andtheir importance to

investors who borrowshort term

Fixed Income15.53.a calculate abonds price givena market discount

rate

Fixed Income 15.53.bidentify the relationshipsamong a bonds price,coupon rate, maturity,and market discount

rate (yield-to-maturity)

Fixed Income15.53.c define spotrates and calculatethe price of a bond

using spot rates

Fixed Income 15.53.ddescribe and calculatethe flat price, accruedinterest, and the full

price of a bond

Fixed Income 15.53.ddescribe and calculatethe flat price, accruedinterest, and the full

price of a bond

Fixed Income 15.53.fcalculate and interpret

yield measures forfixed-rate bonds,

floating-rate notes, andmoney market instruments

Fixed Income 15.53.gdefine and compare thespot curve, yield curveon coupon bonds, par

curve, and forwardcurve

Fixed Income 15.53.hdefine forward rates andcalculate spot rates from

forward rates, forwardrates from spot rates, andthe price of a bond using

forward rates

Fixed Income15.53.i compare,

calculate, andinterpret yield

spread measures

Fixed Income 15.54.aexplain benefits ofsecuritization foreconomies and

financial markets New

38 Fixed Income 15.54.bdescribe the securitization

process, including theparties to the process, the

roles they play, and thelegal structures involved

New

Fixed Income 15.54.cdescribe types andcharacteristics of

residential mortgageloans that are typically

securitized New

Fixed Income 15.54.ddescribe types and

characteristics of residentialmortgage-backed securities,and explain the cash flowsand credit risk for each type

New

Fixed Income 15.54.e explainthe motivation for creatingsecuritized structures with

multiple tranches (e.g.,collateralized mortgage

obligations), and thecharacteristics and risks ofsecuritized structures New

Fixed Income 15.54.fdescribe the

characteristics and risksof commercial

mortgage-backedsecurities New

Fixed Income 15.54.gdescribe types andcharacteristics of

non-mortgage asset-backedsecurities, including the cashflows and credit risk of each

type New

Fixed Income 15.54.hdescribe collateralized

debt obligations,including their cashflows and credit risk

New

Fixed Income 16.55.acalculate and interpretthe sources of returnfrom investing in a

fixed-rate bond

Fixed Income 16.55.bdefine, calculate, andinterpret Macaulay,

modified, andeffective durations

Fixed Income 16.55.cexplain why effectiveduration is the most

appropriate measure ofinterest rate risk for bonds

with embedded options

Fixed Income 16.55.d definekey rate duration and

describe the key use of keyrate durations in measuringthe sensitivity of bonds to

changes in the shape of thebenchmark yield curve New

39 Fixed Income16.55.e explain how a

bonds maturity, coupon,embedded options, and

yield level affect itsinterest rate risk

Fixed Income 16.55.fcalculate the duration

of a portfolio andexplain the limitationsof portfolio duration

Fixed Income 16.55.gcalculate and interpret

the money duration of abond and price value of

a basis point (PVBP)

Fixed Income 16.55.hcalculate and interpretapproximate convexity

and distinguish betweenapproximate and

effective convexity

Fixed Income 16.55.iestimate the percentage

price change of a bond fora specified change inyield, given the bonds

approximate duration andconvexity

Fixed Income 16.55.jdescribe how the term

structure of yieldvolatility affects the

interest rate risk of abond

Fixed Income 16.55.kdescribe the

relationships among abonds holding period

return, its duration, andthe investment horizon

16.55.l explain how changesin credit spread and liquidityaffect yield-to-maturity of abond and how duration and

convexity can be used toestimate the price effect of

the changes

Fixed Income 16.56.adescribe credit riskand credit-related

risks affectingcorporate bonds

Fixed Income 16.56.bdescribe seniority rankings

of corporate debt andexplain the potential

violation of the priority ofclaims in a bankruptcy

proceeding

Fixed Income 16.56.cdistinguish between

corporate issuer creditratings and issue creditratings and describe therating agency practice of

notching

Fixed Income16.56.d explain

risks in relying onratings from credit

rating agencies

Fixed Income16.56.e explain the

components oftraditional credit

analysis

40 Fixed Income16.56.f calculate and

interpret financialratios used in credit

analysis

Fixed Income 16.56.gevaluate the credit qualityof a corporate bond issuerand a bond of that issuer,given key financial ratios

of the issuer and theindustry

Fixed Income 16.56.hdescribe factors that

influence the level andvolatility of yield

spreads

Fixed Income16.56.i calculatethe return impact

of spread changes

Fixed Income 16.56.jexplain special

considerations whenevaluating the credit of

high yield, sovereign, andmunicipal debt issuers and

issues

Derivatives 17.57.adefine a derivative, and

distinguish betweenexchange-traded and

over-thecounterderivatives

Derivatives 17.57.bcontrast forward

commitments withcontingent claims

Derivatives 17.57.c defineforward contracts, futurescontracts, options (callsand puts), swaps, andcredit derivatives, andcompare their basic

characteristics

Derivatives 17.57.ddescribe purposes of,

and controversiesrelated to, derivative

markets

Derivatives 17.57.eexplain arbitrage and

the role it plays indetermining prices and

promoting marketefficiency

Derivatives 17.58.aexplain how the

concepts of arbitrage,replication, and risk

neutrality are used inpricing derivatives New

Derivatives 17.58.bdistinguish betweenvalue and price of

forward and futurescontracts New

Derivatives 17.58.c explainhow the value and price of

a forward contract aredetermined at expiration,

during the life of thecontract, and at initiation

New

41 Derivatives 17.58.d describemonetary and nonmonetary

benefits and costs associatedwith holding the underlyingasset, and explain how they

affect the value and price of aforward contract New

Derivatives 17.58.edefine a forwardrate agreementand describe its

uses New

Derivatives 17.58.fexplain whyforward and

futures prices differNew

Derivatives 17.58.gexplain how swap

contracts are similar tobut different from aseries of forwardcontracts New

Derivatives 17.58.hdistinguish

between the valueand price of swaps

New

Derivatives 17.58.iexplain how the

value of a Europeanoption is determined

at expiration New

Derivatives 17.58.jexplain the exercisevalue, time value,and moneyness of

an option New

Derivatives 17.58.k identifythe factors that determinethe value of an option, and

explain how each factoraffects the value of an

option New

Derivatives 17.58.lexplain putcall

parity for Europeanoptions New

Derivatives17.58.m explainputcallforward

parity for Europeanoptions New

Derivatives 17.58.nexplain how the value ofan option is determined

using a one-periodbinomial model New

Derivatives 17.58.oexplain under whichcircumstances the

values of European andAmerican options differ

New

44 Derivatives 17.59.a determinethe value at expiration, the profit,maximum profit, maximum loss,breakeven underlying price at

expiration, and payoff graph of thestrategies of buying and selling

calls and puts and determine thepotential outcomes for investors

using these strategies

Derivatives 17.59.b determine thevalue at expiration, profit, maximum

profit, maximum loss, breakevenunderlying price at expiration, and

payoff graph of a covered callstrategy and a protective putstrategy, and explain the risk

management application of eachstrategy

AlternativeInvestments 18.60.acompare alternative

investments withtraditional investments

AlternativeInvestments 18.60.bdescribe categories

of alternativeinvestments

Alternative Investments18.60.c describe

potential benefits ofalternative investments

in the context of portfoliomanagement

Alternative Investments 18.60.ddescribe hedge funds, private

equity, real estate, commodities,and other alternative investments,including, as applicable, strategies,sub-categories, potential benefitsand risks, fee structures, and due

diligence

Alternative Investments18.60.e describe issues in

valuing, and calculatingreturns on, hedge funds,

private equity, real estate,and commodities

Alternative Investments18.60.f describe, calculate,and interpret management

and incentive fees andnetof- fees returns to

hedge funds

Alternative Investmentsinvestments 18.60.g

describe riskmanagement of

alternative investments