CFA® Body of Knowledge

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Corporate Finance

Basic concepts of corporate finance
Capital investment decisions
Long-term financing decisions
Mergers and acquisitions
Capital budgeting
Capital budgeting with rationing
Analysis of risk in Capital budgeting
Cost of capital
Effect of leverage on cost of capital
Warrants and convertibles
Mergers
Leveraged buyouts, management buyouts, leveraged restructurings
 

Financial Statement Analysis

Financial statements and other required disclosures
Specific accounting principles and practices
Ratio and financial analysis
Short-term financing decisions
Cash and liquidity management
Credit and inventory management
Analysis of business combinations
Analysis of multinational operations
Financial statements
Ratio analysis
Analysis of inventories
Capitalization & depreciation of long-term assets
Analysis of debt financing
Analysis of leases & off-balance sheet financing
Analysis of taxes
Consolidated accounting
Analysis of minority investments
Analysis of subsidiary investments
Analysis of international operations
International Financial Reporting Standards
Accounting for pension costs and pension fund accounts
Detecting and adjusting for creative accounting
Forecasting future performance
 

Ethical and Professional Standards

Applicable laws and standards
Professional standards of practice
Ethical conduct and professional obligations
Global differences
Code of Ethics
Standards of Professional Conduct
Overview of soft dollar standards
Overview of other Applicable Laws and Regulations
Case study analysis, including:

- fiduciary duty
- insider trading
- personal investing
- corporate governance
- soft dollar standards
Case study analysis involving application and interpretation of the Code and Standards in the context of specific, complex situations

Quantitative Methods

Basic concepts
Required input variables for valuation models
Time value of money
Basic statistical concepts
Probability theory and concepts
Random variables
Probability distributions
Sampling theory and distributions
Statistical inference
Regression and correlation
Decision making under uncertainty
Time-series analysis and forecasting
Multivariate techniques
Descriptive statistics
Measures of location & dispersion
Probability theory
Probability distributions
Sampling theory
Hypothesis testing
Linear regression and correlation (bivariate)
Time value of money
Measuring stock returns
Application of binomial distribution to option pricing
Linear regression & correlation (bivariate)
Linear regression & correlation (multivariate)
Analysis of variance
Statistical decision making techniques
Using statistical theory to support portfolio management strategies

Economics

Microeconomics
Macroeconomi cs
International financial systems
Perfect markets
Imperfect markets
Relationship of economic activity to investment process
Relationship of macro- and microeconomic expectations to expected returns and risk for asset classes
Currency (foreign exchange) markets
Basic economics, the supply & demand curves, national economics and the business cycle
Microeconomics – economic models of competition
Macroeconomics – fiscal & monetary policies for economic stability
International economics
Foreign exchange markets and systems
Macroeconomic analysis
Policies for economic stabilization and growth
Foreign exchange and parity theories
Incorporating an economic forecast into the asset allocation decision

Analysis of Debt Investments

Characteristics of debt markets
Market structures
Alternative bond types
Structural features of debt markets
Term structure analysis
Yield spread analysis
Sources of risk
Return or yield measures
Option-free bonds
Analysis of bonds with embedded options
Analysis of mutual bonds
Analysis of structured securities: mortgage-backed
Analysis of structured securities: asset-backed
Analysis of structured securities: structured notes
Credit analysis for corporate bonds
Fundamentals of debt investments and markets
Valuation of debt investments
Yields on debt investments
Risks associated with debt investments
Measurement of interest rate risk
Term structure of interest rates
Simple analysis of debt investments with embedded options
Analysis & valuation of asset-backed securities
Analysis of credit risk
Use of duration and convexity to reduce interest rate risk
Analysis of the term structure of interest rates
Valuation of debt investments with embedded options
Bond trading strategies
Bond portfolio management (domestic & international)

Analysis of Equity Investments

Characteristics of financial markets
Market structures
Market organizations
Structural features of financial markets
Equity markets and instruments
Fundamental analysis
Technical analysis
Fundamentals of financial markets
Fundamental & technical analysis, market efficiency
Fundamentals of equity investments and markets
Valuation and analysis of equity investments
Company analysis and stock selection
Dividend policy
Market efficiency
Multi-stage cash flow valuation models
Free cash flow valuation models
Multiplier valuation models
Competitive strategy - five forces model
Valuing corporate restructurings
Valuing merger/acquisition and demerger opportunities
Measures of value added
Market indexes
International equity investment and emerging markets

Analysis of Derivatives

Options markets
Futures markets
Swap markets
Analysis of fixed-income derivatives
Custom interest rate agreements
Analysis of interest rate swaps
Analysis of equity options
Analysis of warrants
Hedging and hedging strategies
Fundamentals of derivatives markets and instruments
Features of interest rate derivatives
Features of index derivatives
Mechanism of arbitrage pricing of derivatives
Pricing and valuation of interest rate forwards/futures
Hedging strategies using forwards/futures
Fundamentals of swaps
Option strategies and payoffs
Option valuation models
Hedging strategies using options
Managing equity risk using index derivatives
Managing interest rate and credit risk using derivatives

Analysis of Alternative Investm ents

Analysis of real estate investments
Real estate portfolio management
Analysis of private equity [venture capital]
Special applications of fundamental analysis
Hedge funds and other alternative investments
Analysis of real estate investments
Venture capital
Valuation of real estate investments
Structuring a venture capital deal
Real estate and alternative investments portfolio management

Portfolio Management

Efficient market theory
Portfolio theory
Asset pricing theories and models
Portfolio management policies for individuals
Mutual funds
Portfolio management policies for institutions
Capital market expectations
Asset allocation
General portfolio construction and revision
Fixed income portfolio management strategies
Equity portfolio management strategies
Risk measurement and management
Currency portfolio management strategies
Portfolio Theory
Capital asset pricing model
Portfolio management
Asset management
Portfolio Theory
Capital asset pricing model
Arbitrage pricing theory (factor models)
Incorporating real estate investments
Overall portfolio management
Investor characteristics, objectives and constraints
Investment policy for individual investors
Investment policy for institutional investors (e.g., pension plans, employee benefit funds, foundations, insurance companies)
Asset allocation
Portfolio construction and revision
Equity and debt portfolio management strategies
Firm wide and portfolio risk management
Derivatives in portfolio management
Performance measurement – evaluation and attribution
Presentation of performance results – Global Investment Performance Standards (GIPS)