Investment
Analysis II
MGMT-6330 Investment Analysis II
An Overview of the CFA Program
Investment Analysis II - © 2012 Houman Younessi
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Investment
Analysis II
The CFA Institute
CFA Institute is the global, not-for-profit association of investment professionals
that awards the CFA (Chartered Financial Analyst) and the CIPM (Certificate in
Investment Performance Measurement) designations.
Number of members: 107,028
Countries with members: 138
Number of societies: 135
Countries with societies: 58
Number of Charterholders: 97,890
Investment Analysis II - © 2012 Houman Younessi
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Investment
Analysis II
The CFA Program
To qualify for the CFA designation, a candidate must:
 Be at least an affiliate member of the CFA Institute in good standing,
 Have successfully passed the three examinations (collectively called the
CFA Exam) given by the CFA institute
 Have completed 48 months of related and qualifying work experience
 Lodge a successful application for conversion to a Charterholder status
You do not need to be a member or affiliate member of the CFA to sit the
examination.
You may become an affiliate member of the CFA Institute without
registering to sit an examination. The current fees are $275 per year
You may apply to convert your status to Full Member when you accrue 48
months of qualifying work experience
Investment Analysis II - © 2012 Houman Younessi
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Investment
Analysis II
The CFA Examination
The examination is conducted in three stages. Candidates must pass each
stage in sequence (you cannot take two exams at the same time).
There are four principal topic areas:




Ethical and professional standards
Investment tools
Asset classes
Portfolio management and wealth planning
There is a first time enrollment fee (currently $420) and an examination
fee (currently $650) for each examination.
The fees cover the cost of the study materials
Investment Analysis II - © 2012 Houman Younessi
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Investment
Analysis II
The CFA Examination
Distribution of topic areas
Topic Area
Level 1
Level 2
Level 3
Ethical and professional standards
15
10
10
Investment tools
50
30-60
0
Asset classes
30
35-75
35-45
Portfolio management and wealth planning
5
5-15
45-55
TOTAL
100
100
100
Investment Analysis II - © 2012 Houman Younessi
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Investment
Analysis II
The CFA Examination
The Body of Knowledge
I. Ethical and Professional Standards
A. Professional Standards of Practice
B. Ethical Practices
II. Quantitative Methods
A. Time Value of Money
C. Probability Distributions
E. Hypothesis Testing
G. Time Series Analysis
I. Technical Analysis
B. Probability
D. Sampling and Estimation
F. Correlation Analysis and Regression
H. Simulation Analysis
Investment Analysis II - © 2012 Houman Younessi
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Investment
Analysis II
The CFA Examination
The Body of Knowledge
III. Economics
A.Supply and Demand
B. The Firm and Industry Organization
C. National Income and Growth
D. Business Cycles
E. The Monetary System
F. Inflation
G. Trade and Capital Flows
H. Currency Exchange Rates
I.Monetary and Fiscal Policy
J. Economic Growth and Development
K. Government Regulation
L. Impact of Economic Factors on Investment Markets
Investment Analysis II - © 2012 Houman Younessi
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Investment
Analysis II
The CFA Examination
The Body of Knowledge
IV. Financial Reporting and Analysis
A. Financial Reporting System
B. Principal Financial Statements
C. Financial Reporting Quality
D. Analysis of Inventories
E. Analysis of Long-Lived Assets
F. Analysis of Taxes
G. Analysis of Debt
H. Off-Balance-Sheet Analysis
I. Analysis of Pensions, Stock Compensation, and Other Employee Benefits
J. Analysis of Inter-Corporate Investments
K. Analysis of Business Combinations
L. Analysis of Global Operations
M. Ratio and Financial Analysis
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Investment
Analysis II
The CFA Examination
The Body of Knowledge
V. Corporate Finance
A. Corporate Governance
B. Dividend Policy
C. Capital Investment Decisions
D. Business and Financial Risk
E. Long-Term Financial Policy
F. Short-Term Financial Policy
G. Mergers and Acquisitions and Corporate Restructuring
VI. Equity Investments
A. Types of Equity
C. Fundamental Analysis
E. Residual Earnings
B. Equity Markets
D. Equity Market Valuation
F. Equity Hybrid Investment Vehicles
Investment Analysis II - © 2012 Houman Younessi
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Investment
Analysis II
The CFA Examination
The Body of Knowledge
VII. Fixed Income
A.Fixed-Income Securities
B. Fixed-Income Markets
C. Fixed-Income Valuation
D. Term Structure and Yield Spreads
E. Analysis of Interest Rate Risk
F. Analysis of Credit Risk
G. Valuing Bonds with Embedded Options H. Structured Products
VIII. Derivatives
A.Derivative Instruments
C. Futures Markets and Instruments
E. Swaps Markets and Instruments
B. Forward Markets and Instruments
D. Options Markets and Instruments
F. Credit Derivatives Markets
Investment Analysis II - © 2012 Houman Younessi
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Investment
Analysis II
The CFA Examination
The Body of Knowledge
X. Portfolio Management and Wealth Planning
A.Portfolio Concepts
B. Management of Individual Portfolios
C. Management of Institutional Portfolios
D. Pension Plans and Employee Benefit Funds
E. Investment Manager Selection
F. Other Institutional Investors
G. Mutual Funds, Pooled Funds, and ETFs
H. Economic Analysis and Setting Capital Market Expectations
I. Tax Efficiency
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Investment
Analysis II
The CFA Examination
The Body of Knowledge
J. Asset Allocation (including Currency Overlay)
K. Portfolio Construction and Revision
L. Equity Portfolio Management Strategies
M. Fixed-Income Portfolio Management Strategies
N. Alternative Investments Management Strategies
O. Risk Management
P. Execution of Portfolio Decisions (Trading)
Q. Performance Evaluation
R. Presentation of Performance Results
Investment Analysis II - © 2012 Houman Younessi
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Investment
Analysis II
The CFA Examination
Examination Format
Each examination is six hours in duration and follows the following format:
Level
Format
Level 1
240 multiple choice questions
Level 2
20 mini-cases (item sets) each with 6
multiple choice questions
Level 3
10-15 short essays in the morning, 10 minicases (item sets) in the afternoon.
Investment Analysis II - © 2012 Houman Younessi
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