Cfa Loschanges1 New

8/16/2019 Cfa Loschanges1 New

http://slidepdf.com/reader/full/cfa-loschanges1-new 1/51

"""#$%&&'()&*+,-.'(%(*-#*+/

!"# %&'&( ) * %+, !-./0&1 23)2 * 23)4

Topic LOS Level I – 2012 LOS Level I – 2013 Compared

Ethics 1.1.a

describe the structure of the CFAInstitute Professional Conduct Program

and the process for the enforcement of

the Code and Standards 1.1.a

describe the structure of the CFAInstitute Professional Conduct Program

and the process for the enforcement of

the Code and Standards

Ethics 1.1.b

state the six components of the Code ofEthics and the seven Standards of

Professional Conduct 1.1.b

state the six components of the Code ofEthics and the seven Standards of

Professional Conduct

Ethics 1.1.c

explain the ethical responsibilities

required by the Code and Standards,

including the multiple sub-sections ofeach Standard 1.1.c

explain the ethical responsibilities

required by the Code and Standards,

including the sub-sections of eachStandard

WordingChange

Ethics 1.2.a

demonstrate and explain the application

of the Code of Ethics and Standards of

Professional Conduct to situations

involving issues of professional integrity 1.2.a

demonstrate the application of the Code

of Ethics and Standards of Professional

Conduct to situations involving issues of

professional integrity

Wording

Change

Ethics 1.2.b

distinguish between conduct that

conforms to the Code and Standardsand conduct that violates the Code and

Standards 1.2.b

distinguish between conduct that

conforms to the Code and Standardsand conduct that violates the Code and

Standards

Ethics 1.2.c

recommend practices and procedures

designed to prevent violations of theCode of Ethics and Standards of

Professional Conduct 1.2.c

recommend practices and procedures

designed to prevent violations of theCode of Ethics and Standards of

Professional Conduct

Ethics 1.3.a

explain why the GIPS standards werecreated, what parties the GIPS

standards apply to, and who is servedby the standards 1.3.a

explain why the GIPS standards werecreated, what parties the GIPS

standards apply to, and who is servedby the standards

Ethics 1.3.b

explain the construction and purpose of

composites in performance reporting 1.3.b

explain the construction and purpose of

composites in performance reporting

Ethics 1.3.c explain the requirements for verification 1.3.c explain the requirements for verification



"""#$%&&'()&*+,-.'(%(*-#*+/

Ethics 1.4.a

describe the key characteristics of theGIPS standards and the fundamentals of

compliance 1.4.a

describe the key features of the GIPSstandards and the fundamentals of

compliance

Ethics 1.4.b

describe the scope of the GIPSstandards with respect to an investment

firm’s definition and historical

performance record 1.4.b

describe the scope of the GIPSstandards with respect to an

investment firm’s definition and

historical performance record

Ethics 1.4.c

explain how the GIPS standards areimplemented in countries with existing

standards for performance reporting anddescribe the appropriate response when

the GIPS standards and local regulations

conflict 1.4.c

explain how the GIPS standards areimplemented in countries with existing

standards for performance reportingand describe the appropriate response

when the GIPS standards and local

regulations conflict

Ethics 1.4.d

characterize the nine major sections of

the GIPS standards 1.4.d

describe the nine major sections of the

GIPS standards

Wording

Change

Quantitative 2.5.a

interpret interest rates as required rates

of return, discount rates, or opportunitycosts 2.5.a

interpret interest rates as required

rates of return, discount rates, oropportunity costs

Quantitative 2.5.b

explain an interest rate as the sum of areal risk-free rate, expected inflation,and premiums that compensate

investors for distinct types of risk 2.5.b

explain an interest rate as the sum of areal risk-free rate, and premiums thatcompensate investors for bearing

distinct types of risk

Wording

Change

Quantitative 2.5.c

calculate and interpret the effectiveannual rate, given the stated annual

interest rate and the frequency of

compounding 2.5.c

calculate and interpret the effectiveannual rate, given the stated annual

interest rate and the frequency of

compounding

Quantitative 2.5.d

solve time value of money problems for

different frequencies of compounding 2.5.d

solve time value of money problems for

different frequencies of compounding

Quantitative 2.5.e

calculate and interpret the future value

(FV) and present value (PV) of a single

sum of money, an ordinary annuity, anannuity due, a perpetuity (PV only), and

a series of unequal cash flows 2.5.e

calculate and interpret the future value

(FV) and present value (PV) of a single

sum of money, an ordinary annuity, anannuity due, a perpetuity (PV only),

and a series of unequal cash flows

Quantitative 2.5.f

demonstrate the use of a time line in

modeling and solving time value ofmoney problems. 2.5.f

demonstrate the use of a time line in

modeling and solving time value ofmoney problems

Quantitative 2.6.a

calculate and interpret the net presentvalue (NPV) and the internal rate of

return (IRR) of an investment 2.6.a

calculate and interpret the net presentvalue (NPV) and the internal rate of

return (IRR) of an investment



"""#$%&&'()&*+,-.'(%(*-#*+/

Quantitative 2.6.b

contrast the NPV rule to the IRR rule,and identify problems associated with

the IRR rule 2.6.b

contrast the NPV rule to the IRR rule,and identify problems associated with

the IRR rule

Quantitative 2.6.ccalculate and interpret a holding periodreturn (total return) 2.6.c

calculate and interpret a holding periodreturn (total return)

Quantitative 2.6.d

calculate, interpret, and distinguish

between the money-weighted and time-

weighted rates of return of a portfolio,and evaluate the performance of

portfolios based on these measures 2.6.d

calculate and compare the money-

weighted and time-weighted rates of

return of a portfolio and evaluate theperformance of portfolios based on

these measures

Wording

Change

Quantitative 2.6.e

calculate and interpret the bank discount

yield, holding period yield, effectiveannual yield, and money market yield

for a U.S. Treasury bill 2.6.e

calculate and interpret the bank

discount yield, holding period yield,

effective annual yield, and moneymarket yield for US Treasury bills and

other money market instruments

Wording

Change

Quantitative 2.6.f

convert among holding period yields,

money market yields, effective annualyields, and bond equivalent yields 2.6.f

convert among holding period yields,

money market yields, effective annualyields, and bond equivalent yields

Quantitative 2.7.a

differentiate between descriptivestatistics and inferential statistics,

between a population and a sample, and

among the types of measurement scales 2.7.a

distinguish between descriptivestatistics and inferential statistics,between a population and a sample,

and among the types of measurement

scales

Wording

Change

Quantitative 2.7.b

define a parameter, a sample statistic,

and a frequency distribution 2.7.b

define a parameter, a sample statistic,

and a frequency distribution

Quantitative 2.7.c

calculate and interpret relativefrequencies and cumulative relative

frequencies, given a frequency

distribution 2.7.c

calculate and interpret relativefrequencies and cumulative relative

frequencies, given a frequency

distribution

Quantitative 2.7.d

describe the properties of a data setpresented as a histogram or a frequency

polygon 2.7.d

describe the properties of a data setpresented as a histogram or a

frequency polygon

Quantitative 2.7.e

calculate and interpret measures ofcentral tendency, including the

population mean, sample mean,

arithmetic mean, weighted average ormean (including a portfolio return

viewed as a weighted mean), geometric

mean, harmonic mean, median, and

mode 2.7.e

calculate and interpret measures of

central tendency, including thepopulation mean, sample mean,

arithmetic mean, weighted average or

mean, geometric mean, harmonic

mean, median, and mode

Wording

Change



"""#$%&&'()&*+,-.'(%(*-#*+/

Quantitative 2.7.f

calculate and interpret quartiles,

quintiles, deciles, and percentiles 2.7.f

calculate and interpret quartiles,

quintiles, deciles, and percentiles

Quantitative 2.7.g

calculate and interpret 1) a range and a

mean absolute deviation and 2) the

variance and standard deviation of apopulation and of a sample 2.7.g

calculate and interpret 1) a range and a

mean absolute deviation and 2) the

variance and standard deviation of apopulation and of a sample

Quantitative 2.7.h

calculate and interpret the proportion of

observations falling within a specifiednumber of standard deviations of the

mean using Chebyshev’s inequality 2.7.h

calculate and interpret the proportion of

observations falling within a specifiednumber of standard deviations of the

mean using Chebyshev’s inequality

Quantitative 2.7.icalculate and interpret the coefficient ofvariation and the Sharpe ratio 2.7.i

calculate and interpret the coefficient ofvariation and the Sharpe ratio

Quantitative 2.7.j

explain skewness and the meaning of apositively or negatively skewed return

distribution 2.7.j

explain skewness and the meaning of apositively or negatively skewed return

distribution

Quantitative 2.7.k

describe the relative locations of the

mean, median, and mode for aunimodal, nonsymmetrical distribution 2.7.k

describe the relative locations of the

mean, median, and mode for aunimodal, nonsymmetrical distribution

Quantitative 2.7.lexplain measures of sample skewnessand kurtosis 2.7.l

explain measures of sample skewnessand kurtosis

Quantitative 2.7.m

explain the use of arithmetic and

geometric means when analyzinginvestment returns 2.7.m

explain the use of arithmetic and

geometric means when analyzinginvestment returns

Quantitative 2.8.a

define a random variable, an outcome,

an event, mutually exclusive events,

and exhaustive events 2.8.a

define a random variable, an outcome,

an event, mutually exclusive events,

and exhaustive events

Quantitative 2.8.b

explain the two defining properties of

probability and distinguish among

empirical, subjective, and a priori

probabilities 2.8.b

state the two defining properties of

probability and distinguish among

empirical, subjective, and a priori

probabilities

Wording

Change

Quantitative 2.8.c

state the probability of an event in

terms of odds for or against the event 2.8.c

state the probability of an event in

terms of odds for and against the event

Wording

Change

Quantitative 2.8.d

distinguish between unconditional and

conditional probabilities 2.8.d

distinguish between unconditional and

conditional probabilities

Quantitative 2.8.edefine and explain the multiplication,addition, and total probability rules 2.8.e

explain the multiplication, addition, andtotal probability rules

WordingChange



"""#$%&&'()&*+,-.'(%(*-#*+/

Quantitative 2.8.f

calculate and interpret 1) the jointprobability of two events, 2) the

probability that at least one of two

events will occur, given the probabilityof each and the joint probability of the

two events, and 3) a joint probability of

any number of independent events 2.8.f

calculate and interpret 1) the jointprobability of two events, 2) the

probability that at least one of two

events will occur, given the probabilityof each and the joint probability of the

two events, and 3) a joint probability of

any number of independent events

Quantitative 2.8.g distinguish between dependent andindependent events 2.8.g distinguish between dependent andindependent events

Quantitative 2.8.h

calculate and interpret an unconditional

probability using the total probabilityrule 2.8.h

calculate and interpret an unconditional

probability using the total probabilityrule

Quantitative 2.8.i

explain the use of conditional

expectation in investment applications 2.8.i

explain the use of conditional

expectation in investment applications

Quantitative 2.8.j

explain the use of a tree diagram to

represent an investment problem 2.8.j

explain the use of a tree diagram to

represent an investment problem

Quantitative 2.8.kcalculate and interpret covariance andcorrelation 2.8.k

calculate and interpret covariance andcorrelation

Quantitative 2.8.l

calculate and interpret the expectedvalue, variance, and standard deviationof a random variable and of returns on a

portfolio 2.8.l

calculate and interpret the expectedvalue, variance, and standard deviationof a random variable and of returns on

a portfolio

Quantitative 2.8.m

calculate and interpret covariance given

a joint probability function 2.8.m

calculate and interpret covariance given

a joint probability function

Quantitative 2.8.n

calculate and interpret an updated

probability using Bayes’ formula 2.8.n

calculate and interpret an updated

probability using Bayes’ formula

Quantitative 2.8.o

identify the most appropriate method to

solve a particular counting problem, and

solve counting problems using the

factorial, combination, and permutationnotations 2.8.o

identify the most appropriate method to

solve a particular counting problem,

and solve counting problems using the

factorial, combination, and permutationnotations

Quantitative 3.9.a

define a probability distribution and

distinguish between discrete and

continuous random variables and theirprobability functions 3.9.a

define a probability distribution and

distinguish between discrete and

continuous random variables and theirprobability functions

Quantitative 3.9.b

describe the set of possible outcomes of

a specified discrete random variable 3.9.b

describe the set of possible outcomes of

a specified discrete random variable

Quantitative 3.9.c

interpret a cumulative distribution

function 3.9.c

interpret a cumulative distribution

function



"""#$%&&'()&*+,-.'(%(*-#*+/

Quantitative 3.9.d

calculate and interpret probabilities for arandom variable, given its cumulative

distribution function 3.9.d

calculate and interpret probabilities fora random variable, given its cumulative

distribution function

Quantitative 3.9.e

define a discrete uniform random

variable, a Bernoulli random variable,and a binomial random variable 3.9.e

define a discrete uniform random

variable, a Bernoulli random variable,and a binomial random variable

Quantitative 3.9.f

calculate and interpret probabilities

given the discrete uniform and thebinomial distribution functions 3.9.f

calculate and interpret probabilities

given the discrete uniform and thebinomial distribution functions

Quantitative 3.9.g

construct a binomial tree to describe

stock price movement 3.9.g

construct a binomial tree to describe

stock price movement

Quantitative 3.9.h calculate and interpret tracking error 3.9.h calculate and interpret tracking error

Quantitative 3.9.i

define the continuous uniform

distribution and calculate and interpretprobabilities, given a continuous uniform

distribution 3.9.i

define the continuous uniform

distribution and calculate and interpretprobabilities, given a continuous

uniform distribution

Quantitative 3.9.jexplain the key properties of the normaldistribution 3.9.j

explain the key properties of thenormal distribution

Quantitative 3.9.k

distinguish between a univariate and amultivariate distribution, and explain therole of correlation in the multivariate

normal distribution 3.9.k

distinguish between a univariate and amultivariate distribution, and explainthe role of correlation in the

multivariate normal distribution

Quantitative 3.9.l

determine the probability that a

normally distributed random variable

lies inside a given interval 3.9.l

determine the probability that a

normally distributed random variable

lies inside a given interval

Quantitative 3.9.m

define the standard normal distribution,explain how to standardize a random

variable, and calculate and interpret

probabilities using the standard normal

distribution 3.9.m

define the standard normal distribution,explain how to standardize a random

variable, and calculate and interpret

probabilities using the standard normal

distribution

Quantitative 3.9.n

define shortfall risk, calculate the safety-

first ratio, and select an optimal portfolio

using Roy’s safety-first criterion 3.9.n

define shortfall risk, calculate the

safety-first ratio, and select an optimal

portfolio using Roy’s safety-first

criterion

Quantitative 3.9.o

explain the relationship between normaland lognormal distributions and why the

lognormal distribution is used to model

asset prices 3.9.o

explain the relationship between normaland lognormal distributions and why

the lognormal distribution is used to

model asset prices



"""#$%&&'()&*+,-.'(%(*-#*+/

Quantitative 3.9.p

distinguish between discretely and

continuously compounded rates of

return, and calculate and interpret a

continuously compounded rate of return,given a specific holding period return 3.9.p

distinguish between discretely and

continuously compounded rates of

return, and calculate and interpret a

continuously compounded rate of

return, given a specific holding periodreturn

Quantitative 3.9.q

explain Monte Carlo simulation and

describe its major applications and

limitations 3.9.q

explain Monte Carlo simulation and

describe its major applications and

limitations

Quantitative 3.9.r

compare Monte Carlo simulation and

historical simulation 3.9.r

compare Monte Carlo simulation and

historical simulation

Quantitative 3.10.adefine simple random sampling and asampling distribution 3.10.a

define simple random sampling and asampling distribution

Quantitative 3.10.b explain sampling error 3.10.b explain sampling error

Quantitative 3.10.c

distinguish between simple random and

stratified random sampling 3.10.c

distinguish between simple random and

stratified random sampling

Quantitative 3.10.d

distinguish between time-series and

cross-sectional data 3.10.d

distinguish between time-series and

cross-sectional data

Quantitative 3.10.e

explain the central limit theorem and its

importance 3.10.e

explain the central limit theorem and its

importance

Quantitative 3.10.f

calculate and interpret the standard

error of the sample mean 3.10.f

calculate and interpret the standard

error of the sample mean

Quantitative 3.10.gidentify and describe desirableproperties of an estimator 3.10.g

identify and describe desirableproperties of an estimator

Quantitative 3.10.h

distinguish between a point estimate

and a confidence interval estimate of a

population parameter 3.10.h

distinguish between a point estimate

and a confidence interval estimate of a

population parameter

Quantitative 3.10.i

describe the properties of Student’s t-

distribution and calculate and interpret

its degrees of freedom 3.10.i

describe the properties of Student’s t-

distribution and calculate and interpret

its degrees of freedom

Quantitative 3.10.j

calculate and interpret a confidence

interval for a population mean, given a

normal distribution with 1) a known

population variance, 2) an unknown

population variance, or 3) an unknownvariance and a large sample size 3.10.j

calculate and interpret a confidence

interval for a population mean, given a

normal distribution with 1) a known

population variance, 2) an unknown

population variance, or 3) an unknownvariance and a large sample size



"""#$%&&'()&*+,-.'(%(*-#*+/

Quantitative 3.10.k

describe the issues regarding selection

of the appropriate sample size, data-

mining bias, sample selection bias,

survivorship bias, look-ahead bias, andtime-period bias 3.10.k

describe the issues regarding selection

of the appropriate sample size, data-

mining bias, sample selection bias,

survivorship bias, look-ahead bias, andtime-period bias

Quantitative 3.11.a

define a hypothesis, describe the steps

of hypothesis testing, describe and

interpret the choice of the null andalternative hypotheses, and distinguish

between one-tailed and two-tailed tests

of hypotheses 3.11.a

define a hypothesis, describe the steps

of hypothesis testing, describe and

interpret the choice of the null andalternative hypotheses, and distinguish

between one-tailed and two-tailed tests

of hypotheses

Quantitative 3.11.b

explain a test statistic, Type I and Type

II errors, a significance level, and howsignificance levels are used in

hypothesis testing 3.11.b

explain a test statistic, Type I and Type

II errors, a significance level, and howsignificance levels are used in

hypothesis testing

Quantitative 3.11.c

explain a decision rule, the power of atest, and the relation between

confidence intervals and hypothesis

tests 3.11.c

explain a decision rule, the power of atest, and the relation between

confidence intervals and hypothesis

tests

Quantitative 3.11.d

distinguish between a statistical result

and an economically meaningful result 3.11.d

distinguish between a statistical result

and an economically meaningful result

Quantitative 3.11.e

explain and interpret the p-value as it

relates to hypothesis testing 3.11.e

explain and interpret the p-value as it

relates to hypothesis testing

Quantitative 3.11.f

identify the appropriate test statistic and

interpret the results for a hypothesis

test concerning the population mean ofboth large and small samples when the

population is normally or approximately

distributed and the variance is 1) knownor 2) unknown 3.11.f

identify the appropriate test statistic

and interpret the results for a

hypothesis test concerning the

population mean of both large andsmall samples when the population is

normally or approximately distributed

and the variance is 1) known or 2)unknown

Quantitative 3.11.g


interpret the results for a hypothesistest concerning the equality of the

population means of two at least

approximately normally distributedpopulations, based on independent

random samples with 1) equal or 2)

unequal assumed variances 3.11.g


and interpret the results for ahypothesis test concerning the equality

of the population means of two at least

approximately normally distributedpopulations, based on independent

random samples with 1) equal or 2)

unequal assumed variances



"""#$%&&'()&*+,-.'(%(*-#*+/

Quantitative 3.11.h


interpret the results for a hypothesis

test concerning the mean difference of

two normally distributed populations 3.11.h


and interpret the results for a

hypothesis test concerning the mean

difference of two normally distributed

populations

Quantitative 3.11.i

identify the appropriate test statistic andinterpret the results for a hypothesis

test concerning 1) the variance of anormally distributed population, and 2)the equality of the variances of two

normally distributed populations based

on two independent random samples 3.11.i


and interpret the results for ahypothesis test concerning 1) the

variance of a normally distributedpopulation, and 2) the equality of thevariances of two normally distributed

populations based on two independent

random samples

Quantitative 3.11.j

distinguish between parametric and

nonparametric tests and describe the

situations in which the use of

nonparametric tests may be appropriate 3.11.j

distinguish between parametric and

nonparametric tests and describe the

situations in which the use of

nonparametric tests may be

appropriate

Quantitative 3.12.a

explain the principles of technical

analysis, its applications, and itsunderlying assumptions 3.12.a

explain the principles of technical

analysis, its applications, and itsunderlying assumptions

Quantitative 3.12.b

describe the construction of andinterpret different types of technical

analysis charts 3.12.b

describe the construction of andinterpret different types of technical

analysis charts

Quantitative 3.12.c

demonstrate the uses of trend, support,

and resistance lines, and change inpolarity 3.12.c

explain the uses of trend, support,resistance lines, and change in polarity

WordingChange

Quantitative 3.12.d

identify and interpret common chart

patterns 3.12.d

identify and interpret common chart

patterns

Quantitative 3.12.e

discuss common technical analysis

indicators: price-based, momentumoscillators, sentiment, and flow of funds 3.12.e

describe common technical analysis

indicators: price-based, momentumoscillators, sentiment, and flow of funds

Quantitative 3.12.f

explain the use of cycles by technical

analysts 3.12.f

explain the use of cycles by technical

analysts

Quantitative 3.12.g

discuss the key tenets of Elliott WaveTheory and the importance of Fibonacci

numbers 3.12.g

describe the key tenets of Elliott WaveTheory and the importance of Fibonacci

numbers

Quantitative 3.12.h

describe intermarket analysis as it

relates to technical analysis and asset

allocation 3.12.h

describe intermarket analysis as it

relates to technical analysis and asset

allocation



"""#$%&&'()&*+,-.'(%(*-#*+/

Economics 4.13.a distinguish among types of markets 4.13.a distinguish among types of markets

Economics 4.13.b

explain the principles of demand and

supply 4.13.b

explain the principles of demand and

supply

Economics 4.13.c

describe causes of shifts in and

movements along demand and supplycurves 4.13.c

describe causes of shifts in and

movements along demand and supplycurves

Economics 4.13.d

describe the process of aggregating

demand and supply curves, includingthe concept of equilibrium and

mechanisms by which markets achieve

equilibrium 4.13.d

describe the process of aggregatingdemand and supply curves, the concept

of equilibrium, and mechanisms by

which markets achieve equilibrium

Wording

Change

Economics 4.13.e

distinguish between stable and unstableequilibria and identify instances of such

equilibria 4.13.e

distinguish between stable and unstableequilibria and identify instances of such

equilibria

Economics 4.13.f

calculate and interpret individual and

aggregate inverse demand and supplyfunctions and individual and aggregate

demand and supply curves 4.13.f

calculate and interpret individual and

aggregate demand, inverse demand

and supply functions and interpretindividual and aggregate demand and

supply curves

Wording

Change

Economics 4.13.g

calculate and interpret the amount of

excess demand or excess supplyassociated with a non-equilibrium price 4.13.g

calculate and interpret the amount of

excess demand or excess supplyassociated with a non-equilibrium price

Economics 4.13.h

describe the types of auctions and

calculate the winning price(s) of an

auction 4.13.h

describe the types of auctions and

calculate the winning price(s) of an

auction

Economics 4.13.i

analyze the causes of a demand or

supply imbalance that affects a good or

service NEW

Economics 4.13.l

calculate and interpret consumer

surplus, producer surplus, and totalsurplus 4.13.i

calculate and interpret consumer

surplus, producer surplus, and totalsurplus

Economics 4.13.j

describe the impact of government

regulation and intervention on demand

and supply 4.13.j

analyze the effects of government

regulation and intervention on demand

and supply

Wording

Change

Economics 4.13.k

forecast the effect of the introduction

and removal of a market interference

(e.g., a price floor or ceiling) on price

and quantity 4.13.k

forecast the effect of the introduction

and the removal of a market

interference (eg, a price floor or ceiling)

on price and quantity



"""#$%&&'()&*+,-.'(%(*-#*+/

Economics 4.13.m

calculate and interpret price, income,

and cross-price elasticities of demandincluding factors that affect each

measure 4.13.l

calculate and interpret price, income,

and cross-price elasticities of demandand describe factors that affect each

measure

Wording

Change

Economics 4.14.adescribe consumer choice theory andutility theory 4.14.a

describe consumer choice theory andutility theory

Economics 4.14.b

describe the use of indifference curves,opportunity sets, and budget constraints

in decision making 4.14.b

describe the use of indifference curves,opportunity sets, and budget

constraints in decision making

Economics 4.14.c

calculate and interpret a budget

constraint 4.14.c

calculate and interpret a budget

constraint

Economics 4.14.d

determine a consumer’s equilibrium

bundle of goods based on utility analysis 4.14.d

determine a consumer’s equilibrium

bundle of goods based on utility

analysis

Economics 4.14.e compare substitution and income effects 4.14.ecompare substitution and incomeeffects

Economics 4.14.f

distinguish between normal goods andinferior goods, and explain Giffen goods

and Veblen goods in this context 4.14.f

distinguish between normal goods andinferior goods, and explain Giffen goods

and Veblen goods in this context

Economics 4.15.a

calculate, interpret, and compare

accounting profit, economic profit,normal profit, and economic rent 4.15.a

calculate, interpret, and compare

accounting profit, economic profit,normal profit, and economic rent

Economics 4.15.b

calculate and interpret total, average,

and marginal revenue 4.15.b

calculate and interpret and compare

total, average, and marginal revenue

Wording

Change

Economics 4.15.c describe the firm’s factors of production 4.15.c describe the firm’s factors of production

Economics 4.15.d


marginal, fixed, and variable costs 4.15.d


marginal, fixed, and variable costs

Economics 4.15.e

describe breakeven and shutdown points

of production 4.15.e

determine and describe breakeven and

shutdown points of production

Wording

Change

Economics 4.15.fexplain how economies of scale anddiseconomies of scale affect costs 4.15.f

explain how economies of scale anddiseconomies of scale affect costs

Economics 4.15.gdescribe approaches to determining theprofit-maximizing level of output 4.15.g

describe approaches to determining theprofit-maximizing level of output

Economics 4.15.h

distinguish between short-run and long-

run profit maximization 4.15.h

distinguish between short-run and long-

run profit maximization

Economics 4.15.i

distinguish among decreasing-cost,

constant-cost, and increasing-cost

industries and describe the long-runsupply of each 4.15.i

distinguish among decreasing-cost,

constant-cost, and increasing-cost

industries and describe the long-runsupply of each



"""#$%&&'()&*+,-.'(%(*-#*+/

Economics 4.15.j

calculate and interpret total, marginal,

and average product of labor 4.15.j

calculate and interpret total, marginal,

and average product of labor

Economics 4.15.k

describe the phenomenon of diminishing

marginal returns and calculate and

interpret the profit-maximizingutilization level of an input 4.15.k

describe the phenomenon of

diminishing marginal returns and

calculate and interpret the profit-maximizing utilization level of an input

Economics 4.15.l

describe the optimal combination of

resources that minimizes cost. 4.15.l

determine the optimal combination of

resources that minimizes cost

Wording

Change

Economics 4.16.a

describe the characteristics of different

market structures: perfect competition,

monopolistic competition, oligopoly, andpure monopoly 4.16.a

describe the characteristics of perfect

competition, monopolistic competition,oligopoly, and pure monopoly

WordingChange

Economics 4.16.b

explain the relationships between price,

marginal revenue, marginal cost,economic profit, and the elasticity of

demand under each market structure 4.16.b

explain the relationships between price,

marginal revenue, marginal cost,economic profit, and the elasticity of

demand under each market structure

Economics 4.16.cdescribe the firm’s supply function undereach market structure 4.16.c

describe the firm’s supply functionunder each market structure

Economics 4.16.d

describe and determine the profit-maximizing price and output for firms

under each market structure 4.16.d

describe and determine the optimalprice and output for firms under each

market structure

Wording

Change

Economics 4.16.e

explain the effects of demand changes,entry and exit of firms, and other factors

on long-run equilibrium under each

market structure 4.16.e

explain factors affecting long-run

equilibrium under each market

structure

Wording

Change

Economics 4.16.fdescribe pricing strategy under each market

structure NEW

Economics 4.16.f

describe the use and limitations of

concentration measures in identifying

market structure 4.16.g

describe the use and limitations of

concentration measures in identifying

market structure

Economics 4.16.g

identify the type of market structure

within which a firm is operating. 4.16.h

identify the type of market structure a

firm is operating within

Wording

Change

Economics 5.17.a

calculate and explain gross domestic

product (GDP) using expenditure andincome approaches 5.17.a

calculate and explain gross domestic

product (GDP) using expenditure andincome approaches

Economics 5.17.b

compare the sum-of-value-added and

value-of-final-output methods of

calculating GDP 5.17.b

compare the sum-of-value-added and

value-of-final-output methods of

calculating GDP



"""#$%&&'()&*+,-.'(%(*-#*+/

Economics 5.17.c

compare nominal and real GDP and

calculate and interpret the GDP deflator 5.17.c

compare nominal and real GDP and

calculate and interpret the GDP deflator

Economics 5.17.d

compare GDP, national income, personal

income, and personal disposable income 5.17.d

compare GDP, national income,

personal income, and personal

disposable income

Economics 5.17.e

explain the fundamental relationshipamong saving, investment, the fiscal

balance, and the trade balance 5.17.e

explain the fundamental relationshipamong saving, investment, the fiscal

balance, and the trade balance

Economics 5.17.f

explain the IS and LM curves and how

they combine to generate the aggregate

demand curve 5.17.f

explain the IS and LM curves and how

they combine to generate the

aggregate demand curve

Economics 5.17.g

explain the aggregate supply curve in

the short run and long run 5.17.g

explain the aggregate supply curve in

the short run and long run

Economics 5.17.h

describe the causes of shifts in and

movements along aggregate demandand supply curves 5.17.h

explain the causes of movements along

and shifts in aggregate demand andsupply curves

WordingChange

Economics 5.17.i

describe how fluctuations in aggregate

demand and aggregate supply cause

short-run changes in the economy andthe business cycle 5.17.i

describe how fluctuations in aggregate

demand and aggregate supply cause

short-run changes in the economy andthe business cycle

Economics 5.17.j

explain how a short run macroeconomic

equilibrium may occur at a level above

or below full employment NEW

Economics 5.17.k

analyze the effect of combined changesin aggregate supply and demand on the

economy NEW

Economics 5.17.jdescribe the sources, measurement, andsustainability of economic growth 5.17.l

describe the sources, measurement,and sustainability of economic growth

Economics 5.17.k

describe the production function

approach to analyzing the sources ofeconomic growth 5.17.m

describe the production function

approach to analyzing the sources ofeconomic growth

Economics 5.17.l

distinguish between input growth and

growth of total factor productivity ascomponents of economic growth. 5.17.n

distinguish between input growth and

growth of total factor productivity ascomponents of economic growth

Economics 5.18.a

describe the business cycle and its

phases 5.18.a

describe the business cycle and its

phases



"""#$%&&'()&*+,-.'(%(*-#*+/

Economics 5.18.b

describe what typically happens to

inventory levels and labor and physical

capital utilization levels as an economymoves through the business cycle 5.18.b

explain the typical patterns of resource

use fluctuation, housing sector activity,

and external trade sector activity, as an

economy moves through the businesscycle

WordingChange

Economics 5.18.c describe theories of the business cycle 5.18.c describe theories of the business cycle

Economics 5.18.d

explain the types of unemployment and

describe measures of unemployment 5.18.d

describe types of unemployment and

measures of unemployment

Wording

Change

Economics 5.18.e

explain inflation, disinflation, and

deflation 5.18.e

explain inflation, hyperinflation,

disinflation, and deflation

Wording

Change

Economics 5.18.fexplain the construction of indices usedto measure inflation 5.18.f

explain the construction of indices usedto measure inflation

Economics 5.18.g

compare inflation measures, including

their uses and limitations 5.18.g

compare inflation measures, including

their uses and limitations

Economics 5.18.h describe factors that affect price levels 5.18.h

distinguish between cost-push and

demand-pull inflation

Wording

Change

Economics 5.18.idescribe economic indicators, includingtheir uses and limitations 5.18.i

describe economic indicators, includingtheir uses and limitations

Economics 5.18.j

identify the past, current, or expectedfuture business cycle phase of an

economy based on economic indicators. 5.18.j

identify the past, current, or expectedfuture business cycle phase of an

economy based on economic indicators

Economics 5.19.a compare monetary and fiscal policy 5.19.a compare monetary and fiscal policy

Economics 5.19.b

explain the definition, qualities, and

functions of money, and the money

creation process 5.19.b

describe functions and definitions of

money Separation

Economics 5.19.c explain the money creation process Separation

Economics 5.19.c

describe theories of the demand for and

supply of money 5.19.d

describe theories of the demand for and

supply of money

Economics 5.19.d describe the Fisher effect 5.19.e describe the Fisher effect

Economics 5.19.edescribe the roles and objectives ofcentral banks 5.19.f

describe the roles and objectives ofcentral banks

Economics 5.19.g

contrast the costs of expected and

unexpected NEW

Economics 5.19.fdescribe the implementation ofmonetary policy 5.19.h

describe the implementation ofmonetary policy

Economics 5.19.g

describe the qualities of effective central

banks 5.19.i

describe the qualities of effective

central banks



"""#$%&&'()&*+,-.'(%(*-#*+/

Economics 5.19.h

explain the relationships betweenmonetary policy and economic growth,

inflation, interest, and exchange rates 5.19.j

explain the relationships betweenmonetary policy and economic growth,

inflation, interest, and exchange rates

Economics 5.19.k

contrast the use of inflation, interest

rate, and exchange rate targeting bycentral banks NEW

Economics 5.19.i

determine whether a monetary policy is

expansionary or contractionary 5.19.l

determine whether a monetary policy is

expansionary or contractionary

Economics 5.19.j

describe the limitations of monetary

policy 5.19.m

describe the limitations of monetary

policy

Economics 5.19.kdescribe the roles and objectives offiscal policy 5.19.n

describe the roles and objectives offiscal policy

Economics 5.19.l

describe the tools of fiscal policyincluding their advantages and

disadvantages 5.19.o

describe the tools of fiscal policy,including their advantages and

disadvantages

Economics 5.19.m

describe the arguments for and against

being concerned with the size of a fiscaldeficit (relative to GDP) 5.19.p

describe the arguments for and against

being concerned with the size of a fiscaldeficit (relative to GDP)

Economics 5.19.n

explain the implementation of fiscalpolicy and the difficulties of

implementation 5.19.q

explain the implementation of fiscalpolicy and the difficulties of

implementation

Economics 5.19.odetermine whether a fiscal policy isexpansionary or contractionary 5.19.r

determine whether a fiscal policy isexpansionary or contractionary

Economics 5.19.p

explain the interaction of monetary and

fiscal policy. 5.19.s

explain the interaction of monetary and

fiscal policy

Economics 6.20.a

compare gross domestic product and

gross national product NEW

Economics 6.20.adescribe the benefits and costs ofinternational trade 6.20.b

describe the benefits and costs ofinternational trade

Economics 6.20.bdistinguish between comparativeadvantage and absolute advantage 6.20.c

distinguish between comparativeadvantage and absolute advantage

Economics 6.20.c

explain the Ricardian and Heckscher–

Ohlin models of trade and the source(s)of comparative advantage in each model 6.20.d

explain the Ricardian and Heckscher–

Ohlin models of trade and the source(s)

of comparative advantage in eachmodel

Economics 6.20.d

compare types of trade and capital

restrictions and their economic

implications 6.20.e

compare types of trade and capital

restrictions and their economic

implications



"""#$%&&'()&*+,-.'(%(*-#*+/

Economics 6.20.e

explain motivations for and advantagesof trading blocs, common markets, and

economic unions 6.20.f

explain motivations for and advantagesof trading blocs, common markets, and

economic unions

Economics 6.20.fdescribe the balance of paymentsaccounts including their components 6.20.g

describe the balance of payments accounts

including their components

Economics 6.20.g

explain how decisions by consumers,

firms, and governments influence the

balance of payments 6.20.h

explain how decisions by consumers,

firms, and governments affect the

balance of payments

Wording

Change

Economics 6.20.h

describe functions and objectives of the

international organizations that facilitatetrade, including the World Bank, the

International Monetary Fund, and the

World Trade Organization. 6.20.i

describe functions and objectives of the

international organizations thatfacilitate trade, including the World

Bank, the International Monetary Fund,

and the World Trade Organization

Economics 6.21.a

define an exchange rate, and distinguish

between nominal and real exchange

rates and spot and forward exchange

rates 6.21.a

define an exchange rate, and

distinguish between nominal and real

exchange rates and spot and forward

exchange rates

Economics 6.21.b

describe functions of and participants in

the foreign exchange market 6.21.b

describe functions of and participants in

the foreign exchange market

Economics 6.21.c

define direct and indirect foreignexchange quotations, and convert direct

(indirect) foreign exchange quotations

into indirect (direct) foreign exchange

quotations REMOVED

Economics 6.21.d

calculate and interpret the percentage

change in a currency relative to another

currency 6.21.c

calculate and interpret the percentage

change in a currency relative to another

currency

Economics 6.21.ecalculate and interpret currency cross-rates 6.21.d

calculate and interpret currency cross-rates

Economics 6.21.f

convert forward quotations expressed on

a points basis or in percentage terms

into an outright forward quotation 6.21.e

convert forward quotations expressedon a points basis or in percentage

terms into an outright forward

quotation

Economics 6.21.f

explain the arbitrage relationship

between spot rates, forward rates andinterest rates NEW

Economics 6.21.g

calculate and interpret a forward

discount or premium 6.21.g

calculate and interpret a forward

discount or premium



"""#$%&&'()&*+,-.'(%(*-#*+/

Economics 6.21.h

calculate and interpret the forward rateconsistent with the spot rate and the

interest rate in each currency 6.21.h

calculate and interpret the forward rateconsistent with the spot rate and the

interest rate in each currency

Economics 6.21.i describe exchange rate regimes 6.21.i describe exchange rate regimes

Economics 6.21.j

explain the impact of exchange rates on

countries’ international trade and capital

flows. 6.21.j

explain the impact of exchange rates on

countries’ international trade and

capital flows

Financial

Reporting 7.22.a

describe the roles of financial reporting

and financial statement analysis 7.22.a

describe the roles of financial reporting

and financial statement analysis

Financial

Reporting 7.22.b

describe the roles of the key financial

statements (statement of financialposition, statement of comprehensive

income, statement of changes in equity,

and statement of cash flows) inevaluating a company’s performance

and financial position 7.22.b

describe the roles of the key financial

statements (statement of financialposition, statement of comprehensive

income, statement of changes in

equity, and statement of cash flows) inevaluating a company’s performance

and financial position

Financial

Reporting 7.22.c

describe the importance of financial

statement notes and supplementary

information—including disclosures ofaccounting policies, methods, andestimates—and management’s

commentary 7.22.c

describe the importance of financial

statement notes and supplementary

information—including disclosures ofaccounting policies, methods, andestimates— and management’s

commentary

Financial

Reporting 7.22.d

describe the objective of audits offinancial statements, the types of audit

reports, and the importance of effective

internal controls 7.22.d

describe the objective of audits offinancial statements, the types of audit

reports, and the importance of effective

internal controls

FinancialReporting 7.22.e

identify and explain information sources

that analysts use in financial statement

analysis besides annual financial

statements and supplementaryinformation 7.22.e

identify and explain information sources

that analysts use in financial statement

analysis besides annual financial

statements and supplementaryinformation

Financial

Reporting 7.22.f

describe the steps in the financial

statement analysis framework. 7.22.f

describe the steps in the financial

statement analysis framework

Financial

Reporting 7.23.a

explain the relationship of financial

statement elements and accounts, and

classify accounts into the financial

statement elements 7.23.a

explain the relationship of financial

statement elements and accounts, and

classify accounts into the financial

statement elements

Financial

Reporting 7.23.b

explain the accounting equation in its

basic and expanded forms 7.23.b

explain the accounting equation in its

basic and expanded forms



"""#$%&&'()&*+,-.'(%(*-#*+/

Financial

Reporting 7.23.c

explain the process of recording

business transactions using anaccounting system based on the

accounting equation 7.23.c

explain the process of recording

business transactions using anaccounting system based on the

accounting equation

Financial

Reporting 7.23.d

explain the need for accruals and other

adjustments in preparing financial

statements 7.23.d

explain the need for accruals and other

adjustments in preparing financial

statements

Financial

Reporting 7.23.e

explain the relationships among theincome statement, balance sheet,

statement of cash flows, and statement

of owners’ equity 7.23.e

explain the relationships among theincome statement, balance sheet,

statement of cash flows, and statement

of owners’ equity

Financial

Reporting 7.23.f

describe the flow of information in an

accounting system 7.23.f

describe the flow of information in an

accounting system

Financial

Reporting 7.23.g

explain the use of the results of the

accounting process in security analysis. 7.23.g

explain the use of the results of the

accounting process in security analysis

Financial

Reporting 7.24.a

describe the objective of financialstatements and the importance of

financial reporting standards in security

analysis and valuation 7.24.a

describe the objective of financialstatements and the importance of

financial reporting standards in security

analysis and valuation

Financial

Reporting 7.24.b

describe the roles and desirable

attributes of financial reportingstandard-setting bodies and regulatory

authorities in establishing and enforcingreporting standards, and describe the

role of the International Organization of

Securities Commissions 7.24.b

describe the roles and desirable

attributes of financial reportingstandard-setting bodies and regulatory

authorities in establishing and enforcingreporting standards, and describe the

role of the International Organization of

Securities Commissions

FinancialReporting 7.24.c

describe the status of global

convergence of accounting standards

and ongoing barriers to developing one

universally accepted set of financialreporting standards 7.24.c

describe the status of global

convergence of accounting standards

and ongoing barriers to developing one

universally accepted set of financialreporting standards

Financial

Reporting 7.24.d

describe the International Accounting

Standards Board’s conceptual

framework, including the objective andqualitative characteristics of financial

statements, required reporting

elements, and constraints andassumptions in preparing financial

statements 7.24.d

describe the International Accounting

Standards Board’s conceptual

framework, including the objective andqualitative characteristics of financial

statements, required reporting

elements, and constraints andassumptions in preparing financial

statements



"""#$%&&'()&*+,-.'(%(*-#*+/

Financial

Reporting 7.24.e

describe general requirements for

financial statements under IFRS 7.24.e

describe general requirements for

financial statements under IFRS

FinancialReporting 7.24.f

compare key concepts of financial

reporting standards under IFRS and U.S.GAAP reporting systems 7.24.f

compare key concepts of financial

reporting standards under IFRS and USGAAP reporting systems

Financial

Reporting 7.24.g

identify the characteristics of a coherent

financial reporting framework and the

barriers to creating such a framework 7.24.g

identify the characteristics of acoherent financial reporting framework

and the barriers to creating such a

framework

Financial

Reporting 7.24.h

explain the implications for financial

analysis of differing financial reporting

systems and the importance of

monitoring developments in financial

reporting standards 7.24.h

explain the implications for financial

analysis of differing financial reporting

systems and the importance of

monitoring developments in financial

reporting standards

Financial

Reporting 7.24.i

analyze company disclosures of

significant accounting policies. 7.24.i

analyze company disclosures of

significant accounting policies

FinancialReporting 8.25.a

describe the components of the income

statement and alternative presentationformats of that statement 8.25.a

describe the components of the income

statement and alternative presentationformats of that statement

Financial

Reporting 8.25.b

describe the general principles ofrevenue recognition and accrual

accounting, specific revenue recognition

applications (including accounting for

long-term contracts, installment sales,

barter transactions, and gross and net

reporting of revenue), and theimplications of revenue recognition

principles for financial analysis 8.25.b

describe the general principles ofrevenue recognition and accrual

accounting, specific revenue recognition

applications (including accounting for

long-term contracts, installment sales,

barter transactions, gross and net

reporting of revenue), and theimplications of revenue recognition

principles for financial analysis


calculate revenue given information that

might influence the choice of revenuerecognition method 8.25.c

calculate revenue given information

that might influence the choice ofrevenue recognition method

FinancialReporting 8.25.d

describe the general principles ofexpense recognition, specific expense

recognition applications, and the

implications of expense recognitionchoices for financial analysis 8.25.d

describe the general principles ofexpense recognition, specific expense

recognition applications, and the

implications of expense recognitionchoices for financial analysis



"""#$%&&'()&*+,-.'(%(*-#*+/


describe the financial reporting

treatment and analysis of non-recurringitems (including discontinued

operations, extraordinary items, and

unusual or infrequent items) andchanges in accounting standards 8.25.e

describe the financial reporting

treatment and analysis of non-recurringitems (including discontinued

operations, extraordinary items,

unusual or infrequent items) andchanges in accounting standards

Financial

Reporting 8.25.f

distinguish between the operating andnon-operating components of the

income statement 8.25.f

distinguish between the operating andnon-operating components of the

income statement

Financial

Reporting 8.25.g

describe how earnings per share is

calculated and calculate and interpret a

company’s earnings per share (both

basic and diluted earnings per share) forboth simple and complex capital

structures 8.25.g

describe how earnings per share is

calculated and calculate and interpret a

company’s earnings per share (both

basic and diluted earnings per share)for both simple and complex capital

structures

Financial

Reporting 8.25.h

distinguish between dilutive andantidilutive securities, and describe the

implications of each for the earnings per

share calculation 8.25.h

distinguish between dilutive andantidilutive securities, and describe the

implications of each for the earnings

per share calculationFinancial

Reporting 8.25.i

convert income statements to common-

size income statements 8.25.i

convert income statements to common-

size income statements

Financial

Reporting 8.25.j

evaluate a company’s financialperformance using common-size income

statements and financial ratios based on

the income statement 8.25.j

evaluate a company’s financialperformance using common-size

income statements and financial ratios

based on the income statement

Financial

Reporting 8.25.k

describe, calculate, and interpret

comprehensive income 8.25.k


comprehensive income

Financial

Reporting 8.25.l

describe other comprehensive income,

and identify the major types of items

included in it. 8.25.l

describe other comprehensive income,

and identify the major types of items

included in itFinancial

Reporting 8.26.a

describe the elements of the balance

sheet: assets, liabilities, and equity 8.26.a

describe the elements of the balance

sheet: assets, liabilities, and equity

Financial

Reporting 8.26.b

describe the uses and limitations of the

balance sheet in financial analysis 8.26.b

describe the uses and limitations of the

balance sheet in financial analysis


describe alternative formats of balancesheet presentation 8.26.c

describe alternative formats of balancesheet presentation

Financial

Reporting 8.26.d

distinguish between current and non-current assets, and current and non-

current liabilities 8.26.d

distinguish between current and non-current assets, and current and non-

current liabilities



"""#$%&&'()&*+,-.'(%(*-#*+/

Financial

Reporting 8.26.e

describe different types of assets andliabilities and the measurement bases of

each 8.26.e

describe different types of assets andliabilities and the measurement bases

of each


describe the components ofshareholders’ equity 8.26.f

describe the components ofshareholders’ equity

Financial

Reporting 8.26.g

analyze balance sheets and statements

of changes in equity 8.26.g

analyze balance sheets and statements

of changes in equity

Financial

Reporting 8.26.h

convert balance sheets to common-sizebalance sheets and interpret the

common-size balance sheets 8.26.h

convert balance sheets to common-sizebalance sheets and interpret the

common-size balance sheets

FinancialReporting 8.26.i

calculate and interpret liquidity andsolvency ratios. 8.26.i

calculate and interpret liquidity andsolvency ratios

Financial

Reporting 8.27.a

compare cash flows from operating,investing, and financing activities and

classify cash flow items as relating to

one of those three categories given a

description of the items 8.27.a

compare cash flows from operating,investing, and financing activities and

classify cash flow items as relating to

one of those three categories given a

description of the items

Financial

Reporting 8.27.b

describe how non-cash investing and

financing activities are reported 8.27.b

describe how non-cash investing and

financing activities are reported

Financial

Reporting 8.27.c

contrast cash flow statements preparedunder International Financial Reporting

Standards (IFRS) and U.S. generally

accepted accounting principles (U.S.

GAAP) 8.27.c

contrast cash flow statements preparedunder International Financial Reporting

Standards (IFRS) and US generally

accepted accounting principles (US

GAAP)

Financial

Reporting 8.27.d

distinguish between the direct and

indirect methods of presenting cash

from operating activities and describe

the arguments in favor of each method 8.27.d

distinguish between the direct and

indirect methods of presenting cash

from operating activities and describe

the arguments in favor of each method


describe how the cash flow statement is

linked to the income statement and thebalance sheet 8.27.e

describe how the cash flow statement is

linked to the income statement and thebalance sheet


describe the steps in the preparation ofdirect and indirect cash flow statements,

including how cash flows can be

computed using income statement andbalance sheet data 8.27.f

describe the steps in the preparation ofdirect and indirect cash flow

statements, including how cash flows

can be computed using incomestatement and balance sheet data

Financial

Reporting 8.27.g

convert cash flows from the indirect to

the direct method 8.27.g

convert cash flows from the indirect to

direct method



"""#$%&&'()&*+,-.'(%(*-#*+/

Financial

Reporting 8.27.h

analyze and interpret both reported and

common-size cash flow statements 8.27.h

analyze and interpret both reported and

common-size cash flow statements


calculate and interpret free cash flow to

the firm, free cash flow to equity, and

performance and coverage cash flowratios. 8.27.i

calculate and interpret free cash flow to

the firm, free cash flow to equity, and

performance and coverage cash flowratios

Financial

Reporting 8.28.a

describe the tools and techniques usedin financial analysis, including their uses

and limitations 8.28.a

describe tools and techniques used infinancial analysis, including their uses

and limitations

FinancialReporting 8.28.b

classify, calculate, and interpret activity,

liquidity, solvency, profitability, andvaluation ratios 8.28.b

classify, calculate, and interpret

activity, liquidity, solvency, profitability,and valuation ratios

Financial

Reporting 8.28.c

describe the relationships among ratiosand evaluate a company using ratio

analysis 8.28.c

describe the relationships among ratiosand evaluate a company using ratio

analysis

Financial

Reporting 8.28.d

demonstrate the application of theDuPont analysis of return on equity, and

calculate and interpret the effects of

changes in its components 8.28.d

demonstrate the application of DuPontanalysis of return on equity, and

calculate and interpret the effects of

changes in its components

Financial

Reporting 8.28.e

calculate and interpret ratios used inequity analysis, credit analysis, and

segment analysis 8.28.e

calculate and interpret ratios used inequity analysis, credit analysis, and

segment analysis

Financial

Reporting 8.28.f

describe how ratio analysis and other

techniques can be used to model and

forecast earnings. 8.28.f

describe how ratio analysis and other

techniques can be used to model and

forecast earnings


distinguish between costs included in

inventories and costs recognized as

expenses in the period in which they areincurred 9.29.a

distinguish between costs included in

inventories and costs recognized as

expenses in the period in which theyare incurred


describe different inventory valuationmethods (cost formulas) 9.29.b

describe different inventory valuationmethods (cost formulas)


calculate cost of sales and endinginventory using different inventory

valuation methods and explain the

impact of the inventory valuationmethod choice on gross profit 9.29.c

calculate cost of sales and endinginventory using different inventory

valuation methods and explain the

impact of the inventory valuationmethod choice on gross profit



"""#$%&&'()&*+,-.'(%(*-#*+/

Financial

Reporting 9.29.d

calculate and compare cost of sales,

gross profit, and ending inventory usingperpetual and periodic inventory

systems 9.29.d

calculate and compare cost of sales,

gross profit, and ending inventory usingperpetual and periodic inventory

systems

Financial

Reporting 9.29.e

compare cost of sales, ending inventory,

and gross profit using different inventory

valuation methods 9.29.e

compare and contrast cost of sales,

ending inventory, and gross profit using

different inventory valuation methods

Wording

Change

Financial

Reporting 9.29.f

describe the measurement of inventoryat the lower of cost and net realisable

value 9.29.f

describe the measurement of inventoryat the lower of cost and net realisable

value

Financial

Reporting 9.29.g

describe the financial statement

presentation of and disclosures relating

to inventories 9.29.g


presentation of and disclosures relating

to inventories

Financial

Reporting 9.29.h

calculate and interpret ratios used to

evaluate inventory management. 9.29.h

calculate and interpret ratios used to

evaluate inventory management


distinguish between costs that are

capitalised and costs that are expensedin the period in which they are incurred 9.30.a

distinguish between costs that are

capitalized and costs that are expensedin the period in which they are incurred

Financial

Reporting 9.30.b

compare the financial reporting of thefollowing classifications of intangible

assets: purchased, internally developed,

acquired in a business combination 9.30.b

compare the financial reporting of thefollowing classifications of intangibleassets: purchased, internally

developed, acquired in a business

combination

Financial

Reporting 9.30.c

describe the different depreciation

methods for property, plant, andequipment, the effect of the choice of

depreciation method on the financialstatements, and the effects of

assumptions concerning useful life and

residual value on depreciation expense 9.30.c

describe the different depreciation

methods for property, plant, andequipment, the effect of the choice of

depreciation method on the financialstatements, and the effects of

assumptions concerning useful life and

residual value on depreciation expenseFinancial

Reporting 9.30.d calculate depreciation expense 9.30.d calculate depreciation expense


describe the different amortisation

methods for intangible assets with finite

lives, the effect of the choice ofamortisation method on the financial

statements, and the effects of

assumptions concerning useful life andresidual value on amortisation expense 9.30.e

describe the different amortization

methods for intangible assets with finite

lives, the effect of the choice ofamortization method on the financial

statements, and the effects of

assumptions concerning useful life andresidual value on amortization expense



"""#$%&&'()&*+,-.'(%(*-#*+/

Financial

Reporting 9.30.f calculate amortisation expense 9.30.f calculate amortization expense

Financial

Reporting 9.30.g describe the revaluation model 9.30.g describe the revaluation model

Financial

Reporting 9.30.h

explain the impairment of property,

plant, and equipment, and intangible

assets 9.30.h

explain the imparment of property,

plant, and equipment, and intangible

assets

Financial

Reporting 9.30.i

explain the derecognition of property,plant, and equipment, and intangible

assets 9.30.i

explain the derecognition of property,plant, and equipment, and intangible

assets

Financial

Reporting 9.30.j

describe the financial statementpresentation of and disclosures relating

to property, plant, and equipment, and

intangible assets 9.30.j

describe the financial statementpresentation of and disclosures relating

to property, plant, and equipment, and

intangible assets

Financial

Reporting 9.30.k

compare the financial reporting of

investment property with that of

property, plant, and equipment. 9.30.k

compare the financial reporting of

investment property with that of

property, plant, and equipment


describe the differences between

accounting profit and taxable income,and define key terms, including deferred

tax assets, deferred tax liabilities,

valuation allowance, taxes payable, andincome tax expense 9.31.a

describe the differences between

accounting profit and taxable income,and define key terms, including

deferred tax assets, deferred tax

liabilities, valuation allowance, taxespayable, and income tax expense

Financial

Reporting 9.31.b

explain how deferred tax liabilities andassets are created and the factors that

determine how a company’s deferred

tax liabilities and assets should be

treated for the purposes of financial

analysis 9.31.b

explain how deferred tax liabilities andassets are created and the factors that

determine how a company's deferred

tax liabilities and assets should be

treated for the purposes of financial

analysis

FinancialReporting 9.31.c determine the tax base of a company’sassets and liabilities 9.31.c determine the tax base of a company'sassets and liabilities

FinancialReporting 9.31.d

calculate income tax expense, income

taxes payable, deferred tax assets, anddeferred tax liabilities, and calculate and

interpret the adjustment to the financial

statements related to a change in theincome tax rate 9.31.d

calculate income tax expense, income

taxes payable, deferred tax assets, anddeferred tax liabilities, and calculate

and interpret the adjustment to the

financial statements related to a changein the income tax rate



"""#$%&&'()&*+,-.'(%(*-#*+/

Financial

Reporting 9.31.e

evaluate the impact of tax rate changeson a company’s financial statements and

ratios 9.31.e

evaluate the impact of tax rate changeson a company's financial statements

and ratios


distinguish between temporary and

permanent differences in pre-taxaccounting income and taxable income 9.31.f

distinguish between temporary and

permanent differences in pre-taxaccounting income and taxable income

Financial

Reporting 9.31.g

describe the valuation allowance for

deferred tax assets—when it is requiredand what impact it has on financial

statements 9.31.g

describe the valuation allowance for

deferred tax assets—when it is requiredand what impact it has on financial

statements

FinancialReporting 9.31.h compare a company’s deferred tax items 9.31.h

compare a company's deferred taxitems


analyze disclosures relating to deferred

tax items and the effective tax rate

reconciliation, and explain how

information included in these disclosures

affects a company’s financial statementsand financial ratios 9.31.i

analyze disclosures relating to deferred

tax items and the effective tax rate

reconciliation, and explain how

information included in these

disclosures affects a company'sfinancial statements and financial ratios

Financial

Reporting 9.31.j

identify the key provisions of anddifferences between income tax

accounting under IFRS and U.S. GAAP. 9.31.j

identify the key provisions of anddifferences between income tax

accounting under IFRS and US GAAP

Financial

Reporting 9.32.a

determine the initial recognition, initial

measurement, and subsequent

measurement of bonds 9.32.a


measurement and subsequent

measurement of bonds


describe the effective interest methodand calculate interest expense,

amortisation of bond

discounts/premiums, and interestpayments 9.32.b

discuss the effective interest methodand calculate interest expense,

amortisation of bond

discounts/premiums, and interestpayments

WordingChange

FinancialReporting 9.32.c explain the derecognition of debt 9.32.c discuss the derecognition of debt

WordingChange

Financial

Reporting 9.32.d

describe the role of debt covenants in

protecting creditors 9.32.d

explain the role of debt covenants in

protecting creditors

Wording

Change



presentation of and disclosures relatingto debt 9.32.e

discuss the financial statement

presentation of and disclosures relatingto debt

WordingChange

Financial

Reporting 9.32.f

explain the motivations for leasing

assets instead of purchasing them 9.32.f

discuss the motivations for leasing

assets instead of purchasing them

Wording

Change



"""#$%&&'()&*+,-.'(%(*-#*+/

Financial

Reporting 9.32.g

distinguish between a finance lease and

an operating lease from the perspectives

of the lessor and the lessee 9.32.g

distinguish between a finance lease and

an operating lease from the

perspectives of the lessor and the

lessee

Financial

Reporting 9.32.h



measurement of finance leases 9.32.h



measurement of finance leases

Financial

Reporting 9.32.i

compare the disclosures relating to

finance and operating leases 9.32.i

compare the disclosures relating to

finance and operating leasesFinancial

Reporting 9.32.j

describe defined contribution and

defined benefit pension plans 9.32.j

describe defined contribution and

defined benefit pension plans

Financial

Reporting 9.32.k

compare the presentation and disclosure

of defined contribution and defined

benefit pension plans 9.32.k

compare the presentation and

disclosure of defined contribution and

defined benefit pension plans

Financial

Reporting 9.32.l

calculate and interpret leverage and

coverage ratios. 9.32.l

calculate and interpret leverage and

coverage ratios


describe incentives that might induce a

company’s management to overreportor underreport earnings 10.33.a

describe incentives that might induce a

company’s management to overreportor underreport earnings

Financial

Reporting 10.33.b

describe activities that will result in a

low quality of earnings 10.33.b

describe activities that will result in a

low quality of earnings


describe the three conditions that aregenerally present when fraud occurs,

including the risk factors related tothese conditions 10.33.c

describe the three conditions that aregenerally present when fraud occurs,

including the risk factors related tothese conditions

Financial

Reporting 10.33.d

describe common accounting warning

signs and methods for detecting each. 10.33.d

describe common accounting warning

signs and methods for detecting each

Financial

Reporting 10.34.a

analyze and describe the following waysto manipulate the cash flow statement:

stretching out payables financing ofpayables securitization of receivables

and using stock buybacks to offset

dilution of earnings. 10.34.a

analyze and describe the following waysto manipulate the cash flow statement:

stretching out payables financing ofpayables securitization of receivables

and using stock buybacks to offset

dilution of earnings

Financial

Reporting 10.35.a

evaluate a company’s past financial

performance and explain how a

company’s strategy is reflected in past

financial performance 10.35.a

evaluate a company’s past financial

performance and explain how a

company’s strategy is reflected in past

financial performance



"""#$%&&'()&*+,-.'(%(*-#*+/

Financial

Reporting 10.35.b

forecast a company’s future net income

and cash flow 10.35.b

prepare a basic projection of acompany’s future net income and cash

flow

Wording

Change


describe the role of financial statement

analysis in assessing the credit quality ofa potential debt investment 10.35.c

describe the role of financial statement

analysis in assessing the credit qualityof a potential debt investment

Financial

Reporting 10.35.d

describe the use of financial statementanalysis in screening for potential equity

investments 10.35.d

describe the use of financial statementanalysis in screening for potential

equity investments

Corporate

Finance 10.35.e

explain appropriate analyst adjustmentsto a company’s financial statements to

facilitate comparison with another

company. 10.35.e

determine and justify appropriateanalyst adjustments to a company’s

financial statements to facilitate

comparison with another company

Wording

Change

Corporate

Finance 11.36.a

describe the capital budgeting process,

including the typical steps of the

process, and distinguish among the

various categories of capital projects 11.36.a

describe the capital budgeting process,

including the typical steps of the

process, and distinguish among the

various categories of capital projects

CorporateFinance 11.36.b

describe the basic principles of capital

budgeting, including cash flowestimation 11.36.b

describe the basic principles of capital

budgeting, including cash flowestimation

Corporate

Finance 11.36.c

explain how the evaluation and selection

of capital projects is affected by

mutually exclusive projects, project

sequencing, and capital rationing 11.36.c

explain how the evaluation and

selection of capital projects is affected

by mutually exclusive projects, project

sequencing, and capital rationing

CorporateFinance 11.36.d

calculate and interpret the results usingeach of the following methods to

evaluate a single capital project: net

present value (NPV), internal rate of

return (IRR), payback period,

discounted payback period, andprofitability index (PI) 11.36.d

calculate and interpret the results usingeach of the following methods to

evaluate a single capital project: net

present value (NPV), internal rate of

return (IRR), payback period,

discounted payback period, andprofitability index (PI)

Corporate

Finance 11.36.e

explain the NPV profile, compare the

NPV and IRR methods when evaluating

independent and mutually exclusive

projects, and describe the problems

associated with each of the evaluation

methods 11.36.e

explain the NPV profile, compare the

NPV and IRR methods when evaluating

independent and mutually exclusive

projects, and describe the problems

associated with each of the evaluation

methods



"""#$%&&'()&*+,-.'(%(*-#*+/

CorporateFinance 11.36.f

describe and account for the relative

popularity of the various capital

budgeting methods and explain the

relation between NPV and companyvalue and stock price 11.36.f

describe and account for the relative

popularity of the various capital

budgeting methods and explain the

relation between NPV and companyvalue and stock price

Corporate

Finance 11.36.g

describe the expected relations among

an investment’s NPV, company value,

and share price. 11.36.g

describe the expected relations among

an investment’s NPV, company value,

and share price

Corporate

Finance 11.37.a

calculate and interpret the weighted

average cost of capital (WACC) of a

company 11.37.a

calculate and interpret the weighted

average cost of capital (WACC) of a

company

Corporate

Finance 11.37.b

describe how taxes affect the cost of

capital from different capital sources 11.37.b

describe how taxes affect the cost of

capital from different capital sources

Corporate

Finance 11.37.c

explain alternative methods of

calculating the weights used in the

WACC, including the use of the

company’s target capital structure 11.37.c

explain alternative methods of

calculating the weights used in the

WACC, including the use of the

company’s target capital structure

Corporate

Finance 11.37.d

explain how the marginal cost of capital

and the investment opportunityschedule are used to determine the

optimal capital budget 11.37.d

explain how the marginal cost of capital

and the investment opportunityschedule are used to determine the

optimal capital budget

Corporate

Finance 11.37.e

explain the marginal cost of capital’s

role in determining the net present

value of a project 11.37.e

explain the marginal cost of capital’s

role in determining the net present

value of a project

Corporate

Finance 11.37.f

calculate and interpret the cost of fixed

rate debt capital using the yield-to-

maturity approach and the debt-rating

approach 11.37.f

calculate and interpret the cost of fixed

rate debt capital using the yield-to-

maturity approach and the debt-rating

approach

CorporateFinance 11.37.g

calculate and interpret the cost of

noncallable, nonconvertible preferredstock 11.37.g

calculate and interpret the cost of

noncallable, nonconvertible preferredstock

CorporateFinance 11.37.h

calculate and interpret the cost of equitycapital using the capital asset pricing

model approach, the dividend discount

model approach, and the bond-yield-plus risk-premium approach 11.37.h

calculate and interpret the cost ofequity capital using the capital asset

pricing model approach, the dividend

discount model approach, and thebond-yield-plus risk-premium approach

Corporate

Finance 11.37.i

calculate and interpret the beta and cost

of capital for a project 11.37.i

calculate and interpret the beta and

cost of capital for a project



"""#$%&&'()&*+,-.'(%(*-#*+/

Corporate

Finance 11.37.j

explain the country equity risk premium

in the estimation of the cost of equityfor a company located in a developing

market 11.37.j

explain the country risk premium in the

estimation of the cost of equity for acompany located in a developing

market

Wording

Change

Corporate

Finance 11.37.k

describe the marginal cost of capital

schedule, explain why it may be

upward-sloping with respect toadditional capital, and calculate and

interpret its break-points 11.37.k

describe the marginal cost of capital

schedule, explain why it may be

upward-sloping with respect toadditional capital, and calculate and

interpret its break-points

Corporate

Finance 11.37.l

explain and demonstrate the correct

treatment of flotation costs. 11.37.l

explain and demonstrate the correct

treatment of flotation costs

Corporate

Finance 11.38.a

define and explain leverage, business

risk, sales risk, operating risk, andfinancial risk, and classify a risk, given a

description 11.38.a

define and explain leverage, business

risk, sales risk, operating risk, andfinancial risk, and classify a risk, given

a description

Corporate

Finance 11.38.b

calculate and interpret the degree ofoperating leverage, the degree of

financial leverage, and the degree of

total leverage 11.38.b

calculate and interpret the degree ofoperating leverage, the degree of

financial leverage, and the degree of

total leverage

Corporate

Finance 11.38.c

describe the effect of financial leverageon a company’s net income and return

on equity 11.38.c

describe the effect of financial leverageon a company’s net income and return

on equity

Corporate

Finance 11.38.d

calculate the breakeven quantity of sales

and determine the company’s net

income at various sales levels 11.38.d

calculate the breakeven quantity of

sales and determine the company's net

income at various sales levels

Corporate

Finance 11.38.e

calculate and interpret the operating

breakeven quantity of sales. 11.38.e

calculate and interpret the operating

breakeven quantity of sales

Corporate

Finance 11.39.a

describe regular cash dividends, extra

dividends, stock dividends, stock splits,

and reverse stock splits, including theirexpected effect on a shareholder’s

wealth and a company’s financial ratios 11.39.a

describe regular cash dividends, extra

dividends, stock dividends, stock splits,

and reverse stock splits, including theirexpected effect on a shareholder’s

wealth and a company’s financial ratios


describe dividend payment chronology,

including the significance of declaration,

holder-of-record, ex-dividend, andpayment dates 11.39.b

describe dividend payment chronology,

including the significance of declaration,

holder-of-record, ex-dividend, andpayment dates

Corporate

Finance 11.39.c compare share repurchase methods 11.39.c compare share repurchase methods



"""#$%&&'()&*+,-.'(%(*-#*+/


calculate and compare the effects of a

share repurchase on earnings per sharewhen 1) the repurchase is financed with

the company’s excess cash and 2) the

company uses funded debt to financethe repurchase 11.39.d

calculate and compare the effects of a

share repurchase on earnings per sharewhen 1) the repurchase is financed with

the company’s excess cash and 2) the

company uses funded debt to financethe repurchase

Corporate

Finance 11.39.e

calculate the effect of a share

repurchase on book value per share 11.39.e

calculate the effect of a share

repurchase on book value per share

Corporate

Finance 11.39.f

explain why a cash dividend and a share

repurchase of the same amount areequivalent in terms of the effect on

shareholders’ wealth, all else being

equal. 11.39.f

explain why a cash dividend and a

share repurchase of the same amountare equivalent in terms of the effect on

shareholders’ wealth, all else being

equal

Corporate

Finance 11.40.a

describe primary and secondary sourcesof liquidity and factors that influence a

company’s liquidity position 11.40.a

describe primary and secondarysources of liquidity and factors that

influence a company’s liquidity position


compare a company’s liquidity measureswith those of peer companies 11.40.b

compare a company’s liquiditymeasures with those of peer companies

CorporateFinance 11.40.c

evaluate working capital effectiveness ofa company based on its operating and

cash conversion cycles, and compare the

company’s effectiveness with that ofpeer companies 11.40.c

evaluate working capital effectivenessof a company based on its operating

and cash conversion cycles, and

compare the company’s effectivenesswith that of peer companies

Corporate

Finance 11.40.d

explain the effect of different types of

cash flows on a company’s net daily

cash position 11.40.d

explain the effect of different types of

cash flows on a company’s net daily

cash position

CorporateFinance 11.40.e

calculate and interpret comparable

yields on various securities, compare

portfolio returns against a standard

benchmark, and evaluate a company’sshort-term investment policy guidelines 11.40.e

calculate and interpret comparable

yields on various securities, compare

portfolio returns against a standard

benchmark, and evaluate a company’sshort-term investment policy guidelines

CorporateFinance 11.40.f

evaluate a company’s management of

accounts receivable, inventory, and

accounts payable over time andcompared to peer companies 11.40.f

evaluate a company’s management of

accounts receivable, inventory, and

accounts payable over time andcompared to peer companies

Corporate

Finance 11.40.g

evaluate the choices of short-term

funding available to a company and

recommend a financing method. 11.40.g

evaluate the choices of short-term

funding available to a company and

recommend a financing method



"""#$%&&'()&*+,-.'(%(*-#*+/

Corporate

Finance 11.41

The candidate should be able todemonstrate the use of pro forma

income and balance sheet statements. REMOVED

CorporateFinance 11.42.a define corporate governance 11.41.a define corporate governance

Corporate

Finance 11.42.b

describe practices related to board and

committee independence, experience,

compensation, external consultants, and

frequency of elections, and determine

whether they are supportive of

shareowner protection 11.41.b

describe practices related to board and

committee independence, experience,

compensation, external consultants,

and frequency of elections, and

determine whether they are supportive

of shareowner protection

Corporate

Finance 11.42.c

describe board independence and

explain the importance of independent

board members in corporate governance 11.41.c

describe board independence and

explain the importance of independent

board members in corporate

governance


identify factors that an analyst should

consider when evaluating thequalifications of board members 11.41.d

identify factors that an analyst should

consider when evaluating thequalifications of board members

Corporate

Finance 11.42.e

describe the responsibilities of the audit,compensation, and nominations

committees and identify factors aninvestor should consider when

evaluating the quality of each committee 11.41.e

describe the responsibilities of the

audit, compensation, and nominationscommittees and identify factors an

investor should consider whenevaluating the quality of each

committee

Portfolio

Management 11.42.f

explain the provisions that should be

included in a strong corporate code of

ethics 11.41.f

explain the provisions that should be

included in a strong corporate code of

ethics

PortfolioManagement 11.42.g

evaluate, from a shareowner’sperspective, company policies related to

voting rules, shareowner sponsored

proposals, common stock classes, andtakeover defenses. 11.41.g

evaluate, from a shareowner’sperspective, company policies related

to voting rules, shareowner sponsored

proposals, common stock classes, andtakeover defenses

Portfolio

Management 12.43.a

describe the portfolio approach to

investing 12.42.a

describe the portfolio approach to

investing

PortfolioManagement 12.43.b

describe types of investors and

distinctive characteristics and needs ofeach 12.42.b

describe types of investors and

distinctive characteristics and needs ofeach

Portfolio

Management 12.43.c

describe the steps in the portfolio

management process 12.42.c

describe the steps in the portfolio

management process



"""#$%&&'()&*+,-.'(%(*-#*+/

Portfolio

Management 12.43.d

describe mutual funds and compare

them with other investment products. 12.42.d

describe mutual funds and comparethem with other pooled investment

products

Wording

Change

PortfolioManagement 12.44.a

calculate and interpret major return

measures and describe their appropriateuses 12.43.a

calculate and interpret major return

measures and describe theirappropriate uses

PortfolioManagement 12.44.c

calculate and interpret the mean,

variance, and covariance (or correlation)of asset returns based on historical data 12.43.b

calculate and interpret the mean,

variance, and covariance (or

correlation) of asset returns based onhistorical data

PortfolioManagement 12.44.b

describe the characteristics of the major

asset classes that investors consider informing portfolios 12.43.c

describe the characteristics of the

major asset classes that investorsconsider in forming portfolios

Portfolio

Management 12.44.d

explain risk aversion and its implications

for portfolio selection 12.43.d

explain risk aversion and its

implications for portfolio selection

Portfolio

Management 12.44.e

calculate and interpret portfolio standard

deviation 12.43.e

calculate and interpret portfolio

standard deviation

Portfolio

Management 12.44.f

describe the effect on a portfolio’s risk of

investing in assets that are less than

perfectly correlated 12.43.f

describe the effect on a portfolio’s risk

of investing in assets that are less than

perfectly correlated

Portfolio

Management 12.44.g

describe and interpret the minimum-

variance and efficient frontiers of risky

assets and the global minimum-variance

portfolio 12.43.g

describe and interpret the minimum-

variance and efficient frontiers of risky

assets and the global minimum-

variance portfolio

Portfolio

Management 12.44.h

describe the selection of an optimal

portfolio, given an investor’s utility (orrisk aversion) and the capital allocation

line. 12.43.h

discuss the selection of an optimal

portfolio, given an investor’s utility (orrisk aversion) and the capital allocation

line

Wording

Change

PortfolioManagement 12.45.a

describe the implications of combining a

risk-free asset with a portfolio of riskyassets 12.44.a

describe the implications of combining a

risk-free asset with a portfolio of riskyassets

Portfolio

Management 12.45.b

explain the capital allocation line (CAL)

and the capital market line (CML) 12.44.b

explain the capital allocation line (CAL)

and the capital market line (CML)

Portfolio

Management 12.45.c

explain systematic and nonsystematic

risk, including why an investor should

not expect to receive additional return

for bearing nonsystematic risk 12.44.c

explain systematic and nonsystematic

risk, including why an investor should

not expect to receive additional return

for bearing nonsystematic risk



"""#$%&&'()&*+,-.'(%(*-#*+/

Portfolio

Management 12.45.d

explain return generating models(including the market model) and their

uses 12.44.d

explain return generating models(including the market model) and their

uses

PortfolioManagement 12.45.e calculate and interpret beta 12.44.e calculate and interpret beta

Portfolio

Management 12.45.f

explain the capital asset pricing model

(CAPM), including the requiredassumptions, and the security market

line (SML) 12.44.f

explain the capital asset pricing model

(CAPM), including the requiredassumptions, and the security market

line (SML)

Portfolio

Management 12.45.g

calculate and interpret the expected

return of an asset using the CAPM 12.44.g

calculate and interpret the expected

return of an asset using the CAPM

Portfolio

Management 12.45.h

describe and demonstrate applications

of the CAPM and the SML. 12.44.h

describe and demonstrate applications

of the CAPM and the SML

Portfolio

Management 12.46.a

describe the reasons for a written

investment policy statement (IPS) 12.45.a

describe the reasons for a written

investment policy statement (IPS)

Portfolio

Management 12.46.b

describe the major components of an

IPS 12.45.b

describe the major components of an

IPS

Portfolio

Management 12.46.c

describe risk and return objectives and

how they may be developed for a client 12.45.c

describe risk and return objectives and

how they may be developed for a client

PortfolioManagement 12.46.d

distinguish between the willingness and

the ability (capacity) to take risk in

analyzing an investor’s financial risktolerance 12.45.d

distinguish between the willingness and

the ability (capacity) to take risk in

analyzing an investor’s financial risktolerance

Equity 12.46.e

describe the investment constraints of

liquidity, time horizon, tax concerns,

legal and regulatory factors, and unique

circumstances and their implications for

the choice of portfolio assets 12.45.e

describe the investment constraints of

liquidity, time horizon, tax concerns,

legal and regulatory factors, and unique

circumstances and their implications for

the choice of portfolio assets

Equity 12.46.f

explain the specification of asset classes

in relation to asset allocation 12.45.f

explain the specification of asset

classes in relation to asset allocation

Equity 12.46.g

describe the principles of portfolioconstruction and the role of asset

allocation in relation to the IPS. 12.45.g

discuss the principles of portfolioconstruction and the role of asset

allocation in relation to the IPS

Equity 13.47.aexplain the main functions of thefinancial system 13.46.a

explain the main functions of thefinancial system

Equity 13.47.b

describe classifications of assets and

markets 13.46.b

describe classifications of assets and

markets



"""#$%&&'()&*+,-.'(%(*-#*+/

Equity 13.47.c

describe the major types of securities,

currencies, contracts, commodities, and

real assets that trade in organized

markets, including their distinguishingcharacteristics and major subtypes 13.46.c

describe the major types of securities,

currencies, contracts, commodities, and

real assets that trade in organized

markets, including their distinguishingcharacteristics and major subtypes

Equity 13.47.d

describe the types of financial

intermediaries and the services that

they provide 13.46.d

describe types of financial

intermediaries and services that they

provide

Equity 13.47.ecompare the positions an investor cantake in an asset 13.46.e

compare positions an investor can takein an asset

Equity 13.47.f

calculate and interpret the leverage

ratio, the rate of return on a margin

transaction, and the security price atwhich the investor would receive a

margin call 13.46.f

calculate and interpret the leverage

ratio, the rate of return on a margin

transaction, and the security price atwhich the investor would receive a

margin call

Equity 13.47.g

compare execution, validity, and

clearing instructions 13.46.g

compare execution, validity, and

clearing instructions

Equity 13.47.h compare market orders with limit orders 13.46.h

compare market orders with limit

orders

Equity 13.47.i

describe the primary and secondary

markets and explain how secondary

markets support primary markets 13.46.i

define primary and secondary markets

and explain how secondary markets

support primary markets

Equity 13.47.j

describe how securities, contracts, and

currencies are traded in quote-driven

markets, order-driven markets and

brokered markets 13.46.j

describe how securities, contracts, and

currencies are traded in quote-driven,

order-driven, and brokered markets

Equity 13.47.k

describe the characteristics of a well-

functioning financial system 13.46.k

describe characteristics of a well-

functioning financial system

Equity 13.47.l

describe the objectives of market

regulation. 13.46.l describe objectives of market regulationEquity 13.48.a describe a security market index 13.47.a describe a security market index

Equity 13.48.b

calculate and interpret the value, price

return, and total return of an index 13.47.b

calculate and interpret the value, price

return, and total return of an index

Equity 13.48.c

describe the choices and issues in index

construction and management 13.47.c

describe the choices and issues in index

construction and management

Equity 13.48.dcompare the different weightingmethods used in index construction 13.47.d

compare the different weightingmethods used in index construction



"""#$%&&'()&*+,-.'(%(*-#*+/

Equity 13.48.e

calculate and analyze the value andreturn of an index given its weighting

method 13.47.e

calculate and analyze the value andreturn of an index given its weighting

method

Equity 13.48.fdescribe rebalancing and reconstitutionof an index 13.47.f

describe rebalancing and reconstitutionof an index

Equity 13.48.g describe uses of security market indices 13.47.g describe uses of security market indices

Equity 13.48.h describe types of equity indices 13.47.h describe types of equity indices

Equity 13.48.i describe types of fixed-income indices 13.47.i describe types of fixed-income indices

Equity 13.48.jdescribe indices representing alternativeinvestments 13.47.j

describe indices representingalternative investments

Equity 13.48.kcompare types of security marketindices. 13.47.k

compare types of security marketindices

Equity 13.49.a

explain market efficiency and relatedconcepts, including their importance to

investment practitioners 13.48.a

describe market efficiency and relatedconcepts, including their importance to

investment practitioners

Wording

Change

Equity 13.49.b

distinguish between market value and

intrinsic value 13.48.b

distinguish between market value and

intrinsic value

Equity 13.49.c

explain factors affecting a market’s

efficiency 13.48.c

explain factors that affect a market’s

efficiency

Wording

Change

Equity 13.49.d

contrast the weak-form, semi-strong

form, and strong-form market efficiency 13.48.d

contrast weak-form, semi-strong-form,

and strong-form market efficiency

Equity 13.49.e

explain the implications of each form of

market efficiency for fundamentalanalysis, technical analysis, and the

choice between active and passive

portfolio management 13.48.e

explain the implications of each form of

market efficiency for fundamentalanalysis, technical analysis, and the

choice between active and passive

portfolio management

Equity 13.49.f

describe identified market pricing

anomalies and explain possibleinconsistencies with market efficiency 13.48.f describe selected market anomalies

WordingChange

Equity 13.49.g

contrast the behavioral finance view ofinvestor behavior to that of traditional

finance. 13.48.g

contrast the behavioral finance view ofinvestor behavior to that of traditional

finance

Equity 14.50.a

describe characteristics of types of

equity securities 14.49.a

describe characteristics of types of

equity securities

Equity 14.50.b

describe differences in voting rights and

other ownership characteristics among

different equity classes 14.49.b

describe differences in voting rights and

other ownership characteristics among

different equity classes

Equity 14.50.c

distinguish between public and private

equity securities 14.49.c

distinguish between public and private

equity securities



"""#$%&&'()&*+,-.'(%(*-#*+/

Equity 14.50.d

describe methods for investing in non-

domestic equity securities 14.49.d

describe methods for investing in non-

domestic equity securities

Equity 14.50.e

compare the risk and return

characteristics of types of equitysecurities 14.49.e

compare the risk and return

characteristics of types of equitysecurities

Equity 14.50.f

explain the role of equity securities in

the financing of a company’s assets 14.49.f

explain the role of equity securities in

the financing of a company’s assets

Equity 14.50.g

distinguish between the market value

and book value of equity securities 14.49.g

distinguish between the market value

and book value of equity securities

Equity 14.50.h

compare a company’s cost of equity, its

(accounting) return on equity, andinvestors’ required rates of return. 14.49.h

compare a company’s cost of equity, its

(accounting) return on equity, andinvestors’ required rates of return

Equity 14.51.a

explain the uses of industry analysis andthe relation of industry analysis to

company analysis 14.50.a

explain the uses of industry analysisand the relation of industry analysis to

company analysis

Equity 14.51.b

compare methods by which companies

can be grouped, current industryclassification systems, and classify a

company, given a description of its

activities and the classification system 14.50.b

compare methods by which companies

can be grouped, current industryclassification systems, and classify a

company, given a description of its

activities and the classification system

Equity 14.51.c

explain factors that affect the sensitivity

of a company to the business cycle andthe uses and limitations of industry and

company descriptors such as “growth,”

“defensive,” and “cyclical” 14.50.c

explain the factors that affect the

sensitivity of a company to the businesscycle and the uses and limitations of

industry and company descriptors such

as “growth,” “defensive,” and “cyclical”

Equity 14.51.d

explain the relation of “peer group,” as

used in equity valuation, to a company’s

industry classification 14.50.d

explain the relation of “peer group,” as

used in equity valuation, to a

company’s industry classification

Equity 14.51.e

describe the elements that need to be

covered in a thorough industry analysis 14.50.e

describe the elements that need to be

covered in a thorough industry analysis

Equity 14.51.i

describe the principles of strategic

analysis of an industry 14.50.f

describe the principles of strategic

analysis of an industry

Equity 14.51.h

explain effects of industry concentration,

ease of entry, and capacity on return oninvested capital and pricing power 14.50.g

explain the effects of barriers to entry,

industry concentration, industry

capacity, and market share stability onpricing power and return on capital

WordingChange



"""#$%&&'()&*+,-.'(%(*-#*+/

Equity 14.51.g

describe product and industry life cyclemodels, classify an industry as to life

cycle phase (e.g., embryonic, growth,

shakeout, maturity, or decline) based ona description of it, and describe the

limitations of the life-cycle concept in

forecasting industry performance 14.50.h

describe product and industry life cyclemodels, classify an industry as to life

cycle phase (eg, embryonic, growth,

shakeout, maturity, and decline) basedon a description of it, and describe the

limitations of the life-cycle concept in

forecasting industry performance

Equity 14.51.j

compare characteristics of

representative industries from thevarious economic sectors 14.50.i

compare characteristics of

representative industries from thevarious economic sectors

Equity 14.51.f

describe demographic, governmental,

social, and technological influences on

industry growth, profitability, and risk 14.50.j

describe demographic, governmental,

social and technological influences on

industry growth, profitability and risk

Equity 14.51.k

describe the elements that should be

covered in a thorough companyanalysis. 14.50.k

describe the elements that should be

covered in a thorough companyanalysis

Equity 14.52.a

evaluate whether a security, given its

current market price and a value

estimate, is overvalued, fairly valued, or

undervalued by the market 14.51.a

evaluate whether a security, given its

current market price and a value

estimate, is overvalued, fairly valued,

or undervalued by the market

Equity 14.52.bdescribe major categories of equityvaluation models 14.51.b

describe major categories of equityvaluation models

Equity 14.52.c

explain the rationale for using present-

value of cash flow models to value

equity and describe the dividend

discount and free-cash-flow-to-equitymodels 14.51.c

explain the rationale for using present-

value of cash flow models to value

equity and describe the dividend

discount and free-cash-flow-to-equitymodels

Equity 14.52.dcalculate the intrinsic value of a non-callable, non-convertible preferred stock 14.51.d

calculate the intrinsic value of a non-

callable, non-convertible preferredstock

Equity 14.52.e

calculate and interpret the intrinsic value

of an equity security based on the

Gordon (constant) growth dividend

discount model or a two-stage dividend

discount model, as appropriate 14.51.e

calculate and interpret the intrinsic

value of an equity security based on the

Gordon (constant) growth dividend

discount model or a two-stage dividend

discount model, as appropriate

Equity 14.52.f

identify companies for which the

constant growth or a multistage

dividend discount model is appropriate 14.51.f

identify companies for which the

constant growth or a multistage

dividend discount model is appropriate



"""#$%&&'()&*+,-.'(%(*-#*+/

Equity 14.52.g

explain the rationale for using price

multiples to value equity and distinguish

between multiples based on

comparables versus multiples based onfundamentals 14.51.g

explain the rationale for using price

multiples to value equity and

distinguish between multiples based on

comparables versus multiples based onfundamentals

Equity 14.52.h

calculate and interpret the following

multiples: price to earnings, price to anestimate of operating cash flow, price to

sales, and price to book value 14.51.h

calculate and interpret the following

multiples: price to earnings, price to anestimate of operating cash flow, price

to sales, and price to book value

Equity 14.52.i

explain the use of enterprise valuemultiples in equity valuation and

demonstrate the use of enterprise value

multiples to estimate equity value 14.51.i

explain the use of enterprise valuemultiples in equity valuation and

demonstrate the use of enterprise value

multiples to estimate equity value

Fixed

Income 14.52.j

explain asset-based valuation modelsand demonstrate the use of asset-based

models to calculate equity value 14.51.j

explain asset-based valuation modelsand demonstrate the use of asset-

based models to calculate equity value

FixedIncome 14.52.k

explain advantages and disadvantagesof each category of valuation model. 14.51.k

explain advantages and disadvantagesof each category of valuation model

Fixed

Income 15.53.a

explain the purposes of a bond’sindenture and describe affirmative and

negative covenants 15.52.a

explain the purposes of a bond’sindenture and describe affirmative and

negative covenants

Fixed

Income 15.53.b

describe the basic features of a bond,

the various coupon rate structures, and

the structure of floating-rate securities 15.52.b

describe the basic features of a bond,

the various coupon rate structures, and

the structure of floating-rate securities

Fixed

Income 15.53.c

define accrued interest, full price, and

clean price 15.52.c

define accrued interest, full price, and

clean price

Fixed

Income 15.53.d

explain the provisions for redemption

and retirement of bonds 15.52.d

explain the provisions for redemption

and retirement of bonds

Fixed

Income 15.53.e

identify common options embedded in a

bond issue, explain the importance ofembedded options, and identify whetheran option benefits the issuer or the

bondholder 15.52.e

identify common options embedded in a

bond issue, explain the importance ofembedded options, and identifywhether an option benefits the issuer or

the bondholder

Fixed

Income 15.53.f

describe methods used by institutional

investors in the bond market to finance

the purchase of a security (i.e., margin

buying and repurchase agreements). 15.52.f

describe methods used by institutional

investors in the bond market to finance

the purchase of a security (ie, margin

buying and repurchase agreements)

Fixed

Income 15.54.a

explain the risks associated with

investing in bonds 15.53.a

explain the risks associated with

investing in bonds



"""#$%&&'()&*+,-.'(%(*-#*+/

FixedIncome 15.54.b

identify the relations among a bond’s

coupon rate, the yield required by the

market, and the bond’s price relative to

par value (i.e., discount, premium, orequal to par) 15.53.b

identify the relations among a bond’s

coupon rate, the yield required by the

market, and the bond’s price relative to

par value (ie, discount, premium, orequal to par)

Fixed

Income 15.54.c

explain how a bond maturity, coupon,

embedded options and yield level affect

its interest rate risk 15.53.c

explain how a bond maturity, coupon,

embedded options and yield level affect

its interest rate risk

FixedIncome 15.54.d

identify the relation of the price of a

callable bond to the price of an option-

free bond and the price of the embeddedcall option 15.53.d

identify the relation of the price of a

callable bond to the price of an option-

free bond and the price of theembedded call option

Fixed

Income 15.54.e

explain the interest rate risk of afloating-rate security and why its price

may differ from par value 15.53.e

explain the interest rate risk of afloating-rate security and why its price

may differ from par value

Fixed

Income 15.54.f

calculate and interpret the duration and

dollar duration of a bond 15.53.f

calculate and interpret the duration and

dollar duration of a bond

Fixed

Income 15.54.g

describe yield-curve risk and explain

why duration does not account for yield-

curve risk 15.53.g

describe yield-curve risk and explain

why duration does not account for

yield-curve risk

Fixed

Income 15.54.h

explain the disadvantages of a callable

or prepayable security to an investor 15.53.h

explain the disadvantages of a callable

or prepayable security to an investor

Fixed

Income 15.54.i

identify the factors that affect the

reinvestment risk of a security and

explain why prepayable amortizing

securities expose investors to greater

reinvestment risk than nonamortizing

securities 15.53.i

identify the factors that affect the

reinvestment risk of a security and

explain why prepayable amortizing

securities expose investors to greater

reinvestment risk than nonamortizing

securities

Fixed

Income 15.54.j

describe types of credit risk and the

meaning and role of credit ratings 15.53.j

describe types of credit risk and the

meaning and role of credit ratings

Fixed

Income 15.54.k

explain liquidity risk and why it might be

important to investors even if they

expect to hold a security to the maturity

date 15.53.k

explain liquidity risk and why it might

be important to investors even if they

expect to hold a security to the

maturity date

Fixed

Income 15.54.l

describe the exchange rate risk an

investor faces when a bond makes

payments in a foreign currency 15.53.l

describe the exchange rate risk an

investor faces when a bond makes

payments in a foreign currency

Fixed

Income 15.54.m explain inflation risk 15.53.m explain inflation risk



"""#$%&&'()&*+,-.'(%(*-#*+/

FixedIncome 15.54.n

explain how yield volatility affects the

price of a bond with an embedded

option and how changes in volatility

affect the value of a callable bond and aputable bond 15.53.n

explain how yield volatility affects the

price of a bond with an embedded

option and how changes in volatility

affect the value of a callable bond and aputable bond

Fixed

Income 15.54.o

describe sovereign risk and types of

event risk. 15.53.o

describe sovereign risk and types of

event risk

FixedIncome 15.55.a

describe features, credit risk

characteristics, and distribution methodsfor government securities 15.54.a

describe features, credit risk

characteristics, and distributionmethods for government securities

Fixed

Income 15.55.b

describe the types of securities issuedby the U.S. Department of the Treasury

(e.g. bills, notes, bonds, and inflation

protection securities), and distinguishbetween on-the-run and off-the-run

Treasury securities 15.54.b

describe the types of securities issuedby the US Department of the Treasury

(eg bills, notes, bonds, and inflation

protection securities), and distinguishbetween on-the-run and off-the-run

Treasury securities

Fixed

Income 15.55.c

describe how stripped Treasurysecurities are created and distinguish

between coupon strips and principal

strips 15.54.c

describe how stripped Treasurysecurities are created and distinguish

between coupon strips and principal

strips

Fixed

Income 15.55.d

describe the types and characteristics of

securities issued by U.S. federal

agencies 15.54.d

describe the types and characteristics

of securities issued by US federal

agencies

FixedIncome 15.55.e

describe the types and characteristics of

mortgage-backed securities and explain

the cash flow and prepayment risk foreach type 15.54.e

describe the types and characteristics

of mortgage-backed securities and

explain the cash flow and prepaymentrisk for each type

Fixed

Income 15.55.f

state the motivation for creating a

collateralized mortgage obligation 15.54.f

explain the motivation for creating a

collateralized mortgage obligation

Wording

Change

Fixed

Income 15.55.g

describe the types of securities issuedby municipalities in the United States

and distinguish between tax-backed

debt and revenue bonds 15.54.g

describe the types of securities issuedby municipalities in the United States

and distinguish between tax-backed

debt and revenue bonds



"""#$%&&'()&*+,-.'(%(*-#*+/

Fixed

Income 15.55.h

describe the characteristics andmotivation for the various types of debt

issued by corporations (including

corporate bonds, medium-term notes,structured notes, commercial paper,

negotiable CDs, and bankers

acceptances) 15.54.h

describe the characteristics andmotivation for the various types of debt

issued by corporations (including

corporate bonds, medium-term notes,structured notes, commercial paper,

negotiable CDs, and bankers

acceptances)

Fixed

Income 15.55.i

define an asset-backed security,

describe the role of a special purpose

vehicle in an asset-backed security’s

transaction, state the motivation for a

corporation to issue an asset-backed

security, and describe the types ofexternal credit enhancements for asset-

backed securities 15.54.i

define an asset-backed security,

describe the role of a special purpose

vehicle in an asset-backed security’s

transaction, state the motivation for a

corporation to issue an asset-backed

security, and describe the types ofexternal credit enhancements for asset-

backed securities

FixedIncome 15.55.j describe collateralized debt obligations 15.54.j describe collateralized debt obligations

Fixed

Income 15.55.k

describe the mechanisms available for

placing bonds in the primary market anddistinguish between the primary and

secondary markets for bonds. 15.54.k

describe the mechanisms available for

placing bonds in the primary marketand distinguish between the primary

and secondary markets for bonds

FixedIncome 15.56.a

identify the interest rate policy toolsavailable to a central bank 15.55.a

identify the interest rate policy toolsavailable to a central bank

FixedIncome 15.56.b

describe a yield curve and the variousshapes of the yield curve 15.55.b

describe a yield curve and the variousshapes of the yield curve

FixedIncome 15.56.c

explain the basic theories of the term

structure of interest rates and describe

the implications of each theory for theshape of the yield curve 15.55.c

explain the basic theories of the term

structure of interest rates and describe

the implications of each theory for theshape of the yield curve

FixedIncome 15.56.d define a spot rate 15.55.d define a spot rate

Fixed

Income 15.56.e

calculate and compare yield spread

measures 15.55.e

calculate and compare yield spread

measures

Fixed

Income 15.56.f

describe a credit spread and the

suggested relation between credit

spreads and the well-being of the

economy 15.55.f

describe credit spreads and

relationships between credit spreads

and economic conditions

Wording

Change

Fixed

Income 15.56.g

describe how embedded options affect

yield spreads 15.55.g

describe how embedded options affect

yield spreads



"""#$%&&'()&*+,-.'(%(*-#*+/

Fixed

Income 15.56.h

explain how liquidity and issue-sizeaffects the yield spread of a bond

relative to other similar securities 15.55.h

explain how liquidity and issue-sizeaffects the yield spread of a bond

relative to other similar securities

FixedIncome 15.56.i

calculate the after-tax yield of a taxable

security and the tax-equivalent yield ofa tax-exempt security 15.55.i

calculate the after-tax yield of a taxable

security and the tax-equivalent yield ofa tax-exempt security

Fixed

Income 15.56.j

define LIBOR and explain its importanceto funded investors who borrow short

term. 15.55.j

define LIBOR and explain its importanceto funded investors who borrow short

termFixed

Income 16.57.a

explain the steps in the bond valuation

process 16.56.a

explain steps in the bond valuation

process

Fixed

Income 16.57.b

describe types of bonds for which

estimating the expected cash flows is

difficult 16.56.b

describe types of bonds for which

estimating the expected cash flows is

difficult

Fixed

Income 16.57.c

calculate the value of a bond (coupon

and zero-coupon) 16.56.c

calculate the value of a bond (coupon

and zero-coupon)

Fixed

Income 16.57.d

explain how the price of a bond changes

if the discount rate changes and as the

bond approaches its maturity date 16.56.d

explain how the price of a bondchanges if the discount rate changes

and as the bond approaches its

maturity dateFixed

Income 16.57.e

calculate the change in value of a bond

given a change in its discount rate 16.56.e

calculate the change in value of a bond

given a change in its discount rate

Fixed

Income 16.57.f

explain and demonstrate the use of thearbitrage-free valuation approach and

describe how a dealer can generate an

arbitrage profit if a bond is mispriced. 16.56.f

explain and demonstrate the use of thearbitrage-free valuation approach and

describe how a dealer can generate an

arbitrage profit if a bond is mispriced

Fixed

Income 16.58.a

describe the sources of return from

investing in a bond 16.57.a

describe the sources of return from

investing in a bond

FixedIncome 16.58.b

calculate and interpret traditional yieldmeasures for fixed-rate bonds and

explain their limitations andassumptions 16.57.b

calculate and interpret traditional yieldmeasures for fixed-rate bonds and

explain their limitations andassumptions

Fixed

Income 16.58.c

explain the reinvestment assumption

implicit in calculating yield to maturityand describe the factors that affect

reinvestment risk 16.57.c

explain the reinvestment assumption

implicit in calculating yield to maturityand describe the factors that affect

reinvestment risk



"""#$%&&'()&*+,-.'(%(*-#*+/

Fixed

Income 16.58.d

calculate and interpret the bond

equivalent yield of an annual-pay bondand the annual-pay yield of a

semiannual-pay bond 16.57.d

calculate and interpret the bond

equivalent yield of an annual-pay bondand the annual-pay yield of a

semiannual-pay bond

Fixed

Income 16.58.e

describe the calculation of the

theoretical Treasury spot rate curve and

calculate the value of a bond using spot

rates 16.57.e

describe the calculation of the

theoretical Treasury spot rate curve and

calculate the value of a bond using spot

rates

FixedIncome 16.58.f

distinguish the relations among thenominal spread, the zero-volatility

spread, the option-adjusted spread, andoption cost 16.57.f

explain nominal, zero-volatility, andoption-adjusted spreads and the

relations among these spreads andoption cost

WordingChange

Fixed

Income 16.58.g

explain a forward rate and calculate spot

rates from forward rates, forward ratesfrom spot rates, and the value of a bond

using forward rates. 16.57.g

explain a forward rate and calculate

spot rates from forward rates, forwardrates from spot rates, and the value of

a bond using forward rates

Fixed

Income 16.59.a

distinguish between the full valuation

approach (the scenario analysis

approach) and the duration/convexity

approach for measuring interest raterisk, and explain the advantage of using

the full valuation approach 16.58.a

distinguish between the full valuation

approach (the scenario analysis

approach) and the duration/convexity

approach for measuring interest raterisk, and explain the advantage of using

the full valuation approach

Fixed

Income 16.59.b

describe the price volatilitycharacteristics for option-free, callable,

prepayable, and putable bonds when

interest rates change 16.58.b

describe the price volatilitycharacteristics for option-free, callable,

prepayable, and putable bonds when

interest rates change

FixedIncome 16.59.c

describe positive convexity, negative

convexity, and their relation to bondprice and yield 16.58.c

describe positive convexity and

negative convexity, and their relation tobond price and yield

Fixed

Income 16.59.d

calculate and interpret the effectiveduration of a bond, given information

about how the bond’s price will increase

and decrease for given changes in

interest rates 16.58.d

calculate and interpret the effectiveduration of a bond, given information

about how the bond’s price will increase

and decrease for given changes in

interest rates

Fixed

Income 16.59.e

calculate the approximate percentage

price change for a bond, given the

bond’s effective duration and a specified

change in yield 16.58.e

calculate the approximate percentage

price change for a bond, given the

bond’s effective duration and a

specified change in yield



"""#$%&&'()&*+,-.'(%(*-#*+/

FixedIncome 16.59.f

distinguish among the alternative

definitions of duration and explain why

effective duration is the most

appropriate measure of interest rate riskfor bonds with embedded options 16.58.f

distinguish among the alternative

definitions of duration and explain why

effective duration is the most

appropriate measure of interest raterisk for bonds with embedded options

Fixed

Income 16.59.g

calculate the duration of a portfolio,

given the duration of the bondscomprising the portfolio, and explain the

limitations of portfolio duration 16.58.g

calculate the duration of a portfolio,

given the duration of the bondscomprising the portfolio, and explain

the limitations of portfolio duration

Fixed

Income 16.59.h

describe the convexity measure of a

bond and estimate a bond’s percentageprice change, given the bond’s duration

and convexity and a specified change in

interest rates 16.58.h

describe the convexity measure of a

bond and estimate a bond’s percentageprice change, given the bond’s duration

and convexity and a specified change in

interest rates

Fixed

Income 16.59.i

distinguish between modified convexity

and effective convexity 16.58.i

distinguish between modified convexity

and effective convexity

Fixed

Income 16.59.j

calculate the price value of a basis point

(PVBP), and explain its relationship to

duration 16.58.j

calculate the price value of a basis point

(PVBP), and explain its relationship to

duration

Fixed

Income 16.59.k

describe the impact of yield volatility on

the interest rate risk of a bond. 16.58.k

describe the impact of yield volatility on

the interest rate risk of a bond

FixedIncome 16.59.a

describe credit risk and credit-relatedrisks affecting corporate bonds NEW

Fixed

Income 16.59.b

describe seniority rankings of corporate

debt and explain the potential violation

of the priority of claims in a bankruptcy

proceeding NEW

FixedIncome 16.59.c

distinguish between corporate issuer

credit ratings and issue credit ratings

and describe the rating agency practiceof “notching” NEW

Fixed

Income 16.59.d

explain risks in relying on ratings from

credit rating agencies NEW

FixedIncome 16.59.e

explain the components of traditionalcredit analysis NEW

Fixed

Income 16.59.f

calculate and interpret financial ratios

used in credit analysis NEW



"""#$%&&'()&*+,-.'(%(*-#*+/

Fixed

Income 16.59.g

evaluate the credit quality of a

corporate bond issuer and a bond ofthat issuer, given key financial ratios of

the issuer and the industry NEW

FixedIncome 16.59.h

describe factors that influence the leveland volatility of yield spreads NEW

Fixed

Income 16.59.i

calculate the return impact of spread

changes NEW

FixedIncome 16.59.j

explain special considerations whenevaluating the credit of high yield,

sovereign, and municipal debt issuersand issues NEW

Derivatives 17.60.a

define a derivative and distinguishbetween exchange-traded and over-the-

counter derivatives 17.60.a

define a derivative and distinguishbetween exchange-traded and over-

the-counter derivatives

Derivatives 17.60.b

contrast forward commitments and

contingent claims NEW

Derivatives 17.60.b

define forward contracts, futures

contracts, options (calls and puts), and

swaps and compare their basic

characteristics 17.60.c

define forward contracts, futures

contracts, options (calls and puts), and

swaps and compare their basic

characteristics

Derivatives 17.60.cdescribe the purposes and criticisms ofderivative markets 17.60.d

describe purposes of and controversiesrelated to derivative markets

WordingChange

Derivatives 17.60.d

explain arbitrage and the role it plays in

determining prices and promoting

market efficiency. 17.60.e

explain arbitrage and the role it plays in

determining prices and promoting

market efficiency

Derivatives 17.61.a

explain delivery/settlement and default

risk for both long and short positions ina forward contract 17.61.a

explain delivery/settlement and default

risk for both long and short positions ina forward contract

Derivatives 17.61.b

describe the procedures for settling aforward contract at expiration, and howtermination prior to expiration can affect

credit risk 17.61.b

describe the procedures for settling aforward contract at expiration, and howtermination prior to expiration can

affect credit risk

Derivatives 17.61.cdistinguish between a dealer and an enduser of a forward contract 17.61.c

distinguish between a dealer and anend user of a forward contract

Derivatives 17.61.d

describe the characteristics of equity

forward contracts and forward contracts

on zero-coupon and coupon bonds 17.61.d

describe the characteristics of equity

forward contracts and forward contracts

on zero-coupon and coupon bonds



"""#$%&&'()&*+,-.'(%(*-#*+/

Derivatives 17.61.e

describe the characteristics of theEurodollar time deposit market, and

define LIBOR and Euribor 17.61.e

describe the characteristics of theEurodollar time deposit market, and

define LIBOR and Euribor

Derivatives 17.61.f

describe forward rate agreements

(FRAs) and calculate the gain/loss on aFRA 17.61.f

describe forward rate agreements

(FRAs) and calculate the gain/loss on aFRA

Derivatives 17.61.g

calculate and interpret the payoff of aFRA and explain each of the component

terms of the payoff formula 17.61.g

calculate and interpret the payoff of aFRA and explain each of the component

terms of the payoff formula

Derivatives 17.61.h

describe the characteristics of currency

forward contracts. 17.61.h

describe the characteristics of currency

forward contracts

Derivatives 17.62.a

describe the characteristics of futures

contracts 17.62.a

describe the characteristics of futures

contracts

Derivatives 17.62.b

compare futures contracts and forward

contracts 17.62.b

compare futures contracts and forward

contracts

Derivatives 17.62.c

distinguish between margin in the

securities markets and margin in the

futures markets, and explain the role of

initial margin, maintenance margin,

variation margin, and settlement in

futures trading 17.62.c

distinguish between margin in the

securities markets and margin in the

futures markets, and explain the role of

initial margin, maintenance margin,

variation margin, and settlement in

futures trading

Derivatives 17.62.d

describe price limits and the process of

marking to market, and calculate andinterpret the margin balance, given the

previous day’s balance and the change

in the futures price 17.62.d

describe price limits and the process of

marking to market, and calculate andinterpret the margin balance, given the

previous day’s balance and the change

in the futures price

Derivatives 17.62.e

describe how a futures contract can be

terminated at or prior to expiration 17.62.e

describe how a futures contract can be

terminated at or prior to expiration

Derivatives 17.62.f


following types of futures contracts:Treasury bill, Eurodollar, Treasury bond,

stock index, and currency. 17.62.f


following types of futures contracts:Treasury bill, Eurodollar, Treasury

bond, stock index, and currency

Derivatives 17.63.a describe call and put options 17.63.a describe call and put options

Derivatives 17.63.bdistinguish between European andAmerican options 17.63.b

distinguish between European andAmerican options

Derivatives 17.63.c

define the concept of moneyness of an

option 17.63.c

define the concept of moneyness of an

option

Derivatives 17.63.d

compare exchange-traded options and

over-the-counter options 17.63.d

compare exchange-traded options and

over-the-counter options



"""#$%&&'()&*+,-.'(%(*-#*+/

Derivatives 17.63.e

identify the types of options in terms of

the underlying instruments 17.63.e

identify the types of options in terms of

the underlying instruments

Derivatives 17.63.f

compare interest rate options with

forward rate agreements (FRAs) 17.63.f

compare interest rate options with

forward rate agreements (FRAs)

Derivatives 17.63.gdefine interest rate caps, floors, andcollars 17.63.g

define interest rate caps, floors, andcollars

Derivatives 17.63.h

calculate and interpret option payoffsand explain how interest rate options

differ from other types of options 17.63.h

calculate and interpret option payoffsand explain how interest rate options

differ from other types of options

Derivatives 17.63.i

define intrinsic value and time value,

and explain their relationship 17.63.i

define intrinsic value and time value,

and explain their relationship

Derivatives 17.63.j

determine the minimum and maximum

values of European options and

American options 17.63.j

determine the minimum and maximum

values of European options and

American options

Derivatives 17.63.k

calculate and interpret the lowest prices

of European and American calls and puts

based on the rules for minimum valuesand lower bounds 17.63.k

calculate and interpret the lowest prices

of European and American calls and

puts based on the rules for minimumvalues and lower bounds

Derivatives 17.63.l

explain how option prices are affected

by the exercise price and the time to

expiration 17.63.l

explain how option prices are affected

by the exercise price and the time to

expiration

Derivatives 17.63.m

explain put–call parity for Europeanoptions, and explain how put–call parity

is related to arbitrage and the

construction of synthetic options 17.63.m

explain put–call parity for Europeanoptions, and explain how put–call parity

is related to arbitrage and the

construction of synthetic options

Derivatives 17.63.n

explain how cash flows on the

underlying asset affect put–call parity

and the lower bounds of option prices 17.63.n

explain how cash flows on the

underlying asset affect put–call parity

and the lower bounds of option prices

Derivatives 17.63.o

determine the directional effect of an

interest rate change or volatility changeon an option’s price. 17.63.o

determine the directional effect of an

interest rate change or volatility changeon an option’s price

Derivatives 17.64.a

describe the characteristics of swap

contracts and explain how swaps are

terminated 17.64.a

describe the characteristics of swap

contracts and explain how swaps are

terminated

Derivatives 17.64.b

describe, calculate, and interpret the

payments of currency swaps, plain

vanilla interest rate swaps, and equity

swaps. 17.64.b

describe, calculate, and interpret the

payments of currency swaps, plain

vanilla interest rate swaps, and equity

swaps



"""#$%&&'()&*+,-.'(%(*-#*+/

Derivatives 17.65.a

determine the value at expiration, the

profit, maximum profit, maximum loss,

breakeven underlying price at

expiration, and payoff graph of the

strategies of buying and selling calls and

puts and determine the potential

outcomes for investors using these

strategies 17.65.a

determine the value at expiration, the

profit, maximum profit, maximum loss,

breakeven underlying price at

expiration, and payoff graph of the

strategies of buying and selling calls

and puts and determine the potential

outcomes for investors using these

strategies

Derivatives 17.65.b

determine the value at expiration, profit,maximum profit, maximum loss,

breakeven underlying price atexpiration, and payoff graph of a

covered call strategy and a protective

put strategy, and explain the riskmanagement application of each

strategy. 17.65.b

determine the value at expiration,profit, maximum profit, maximum loss,

breakeven underlying price atexpiration, and payoff graph of a

covered call strategy and a protective

put strategy, and explain the riskmanagement application of each

strategy

AlternativeInvestments 18.66.a

compare alternative investments withtraditional investments NEW

Alternative

Investments 18.66.b

describe categories of alternative

investments NEW

AlternativeInvestments 18.66.c

describe potential benefits of

alternative investments in the contextof portfolio management NEW

AlternativeInvestments 18.66.d

describe hedge funds, private equity,

real estate, commodities, and otheralternative investments, including, as

applicable, strategies, sub-categories,

potential benefits and risks, feestructures, and due diligence NEW

Alternative

Investments 18.66.e

describe issues in valuing, andcalculating returns on, hedge funds,private equity, real estate, and

commodities NEW

AlternativeInvestments 18.66.f


management and incentive fees andnet-of-fees returns to hedge funds NEW

Alternative

Investments 18.66.g

describe risk management of

alternative investments NEW



"""#$%&&'()&*+,-.'(%(*-#*+/

AlternativeInvestments 18.66.h

explain the stages in venture capital

investing, venture capital investment

characteristics, and challenges to

venture capital valuation andperformance measurement REMOVED

Alternative

Investments 18.66.i

calculate the net present value (NPV) of

a venture capital project, given theproject’s possible payoff and conditional

failure probabilities REMOVED

Alternative

Investments 18.66.j

describe the objectives, legal structure,and fee structures typical of hedge

funds, and describe the various

classifications of hedge funds REMOVED

Alternative

Investments 18.66.k

explain the benefits and drawbacks to

fund of funds investing REMOVED

Alternative

Investments 18.66.l

describe the leverage and unique risks

of hedge funds REMOVED

AlternativeInvestments 18.66.m

describe the performance of hedge

funds, the biases present in hedge fundperformance measurement, and explain

the effect of survivorship bias on the

reported return and risk measures for ahedge fund database REMOVED

Alternative

Investments 18.66.n

explain how the legal environmentaffects the valuation of closely held

companies REMOVED

Alternative

Investments 18.66.o

describe alternative valuation methods

for closely held companies, and

distinguish among the bases for thediscounts and premiums for these

companies REMOVED

AlternativeInvestments 18.66.p

describe distressed securities investing

and compare venture capital investingwith distressed securities investing REMOVED

Alternative

Investments 18.66.q

explain the motivation for investing incommodities, commodities derivatives,

and commodity-linked securities REMOVED



"""#$%&&'()&*+,-.'(%(*-#*+/

Alternative

Investments 18.66.r

describe the sources of return on a

collateralized commodity futures

position. REMOVED

Cfa Loschanges1 New

Documents

Transcript of Cfa Loschanges1 New