Claritas Syllabus Overview

8/12/2019 Claritas Syllabus Overview

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SYLLABUS OVERVIEW


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CONTENTS

MODULE 1: OVERVIEW4

CHAPTER 1 The Investment Industry: A Top-Down View

MODULE 2: ETHICS AND REGULATION 6

CHAPTER 2 Ethics and Investment Professionalism

CHAPTER 3 Regulation and Supervision

MODULE 3: INPUTS AND TOOLS 8

CHAPTER 4 Microeconomics

CHAPTER 5 Macroeconomics

CHAPTER 6 International Trade and Foreign Exchange

CHAPTER 7 Financial Statements

CHAPTER 8 Quantitative Concepts

MODULE 4: INVESTMENT INSTRUMENTS 12

CHAPTER 9 Equity Securities

CHAPTER 10 Debt Securities

CHAPTER 11 Derivatives

CHAPTER 12 Alternative Investments


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MODULE 5: INDUSTRY STRUCTURE15

CHAPTER 13 Structure of the Investment Industry

CHAPTER 14 Investment Vehicles and Structures

CHAPTER 15 Investment Market Characteristics

MODULE 6: INDUSTRY CONTROLS 18

CHAPTER 16 Risk Management

CHAPTER 17 Performance Evaluation

CHAPTER 18 Investment Industry Documentation

MODULE 7: SERVING CLIENT NEEDS 20

CHAPTER 19 Investor Needs and Investment Policy

CHAPTER 20 Asset Allocation

CHAPTER 21 Active and Passive Investment Management

EXAM WEIGHTING 22


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MODULE 1OVERVIEW

It is about getting to the heart and the core

purpose of the investment industry its

vital role in the world: from helping people

save for the future to funding schools,

hospitals, roads and other essentials.

The benefits this brings when done well

(ethically and all parts working together)

help serve society.


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CHAPTER 1

THE INVESTMENT INDUSTRY: A

TOP-DOWN VIEW

After completing this chapter, you should be able to dothe following:

Explain how an economy benefits from the existence

of the investment industry;

Explain how an individual benefits from the existence

of the investment industry;

Describe types and functions of participants that

collectively comprise the structure of the investment

industry;

Describe forces that affect the evolution of the

investment industry.


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MODULE 2ETHICS AND REGULATION

This module focuses on the essential

foundations for the investment world ethics

and regulation. The firm ground on which

we build for our clients: trust, reputation,

confidence and value the essentials of a

strong and healthy client-focused industry.


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CHAPTER 2

ETHICS AND INVESTMENT PROFESSIONALISM

After completing this chapter, you should be able to do

the following:

Describe the need for ethics in the investment industry;

Identify obligations that individuals in the investment

industry have to clients, prospective clients, employers,

and co-workers;

Describe the relevance of ethics to individuals that

work in the investment industry;

Identify the elements of the CFA Institute Code of

Ethics; Explain the standards of practice (professional

principles) that are based on the CFA Institute Code of

Ethics;

Describe consequences of conduct that is unethical or

unprofessional;

Describe a framework for making ethical decisions.

CHAPTER 3

REGULATION AND SUPERVISION


the following:

Describe objectives of regulation;

Describe a regulatory process and the importance of

each step in the process;

Identify specific types of regulation and describe the

reasons for each;

Describe a firms obligations to consumers and related

elements of corporate policies and procedures;

Describe potential consequences of inadequateregulation and of failure to comply with regulations

and corporate policies and procedures.


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MODULE 3INPUTS AND TOOLS

This is about understanding how the

(economic) world works the big

picture and the fine detail. How the

actions of individuals, corporations and

governments play out at micro, macro

and international levels, how this

translates to a companys finances,

and how to get a clearer understanding

of what this all means.


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CHAPTER 4

MICROECONOMICS


the following:

Define economics and the concept of scarcity;

Differentiate between macroeconomics and

microeconomics;

Explain factors that affect quantity demanded and

quantity supplied;

Describe market equilibrium;

Describe and interpret price and income elasticities of

demand and their effects on quantity and revenue; Describe how demand for a good is affected by

substitute and complementary goods and by market

supply;

Distinguish between economic profit and accounting

profit;

Explain production levels and costs, contrast fixed

and variable costs, and explain the law of diminishing

returns; Identify factors that affect pricing;

Compare types of industry structure: perfect

competition, pure monopoly, monopolistic

competition, and oligopoly.

CHAPTER 5

MACROECONOMICS

After completing this chapter, you should be able to do the

following:

Describe why macroeconomic considerations

are important to an investment firm and how

macroeconomic information may be used;

Define gross domestic product (GDP) and GDP per

capita;

Identify basic components of GDP;

Describe economic growth and factors that affect it;

Describe phases of a business cycle and theircharacteristics;

Explain the global nature of business cycles;

Describe economic indicators and their uses and

limitations;

Define inflation, deflation, stagflation, and

hyperinflation and describe their effects on

consumers, businesses, and investments;

Describe and compare monetary and fiscal policy;

Explain limitations of monetary policy and fiscal policy.


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CHAPTER 6

INTERNATIONAL TRADE AND FOREIGN

EXCHANGE

After completing this chapter, you should be able to dothe following:

Define imports and exports;

Explain the need for and benefit of international trade;

Describe comparative advantages among countries;

Describe the flows of goods, services, and capital in

international trade;

Define the balance of payments and explain the

relationship between the current account and thecapital account;

Compare fixed versus floating exchange rate systems;

Describe the functioning of the foreign exchange

market;

Compare spot and forward transactions;

Describe factors that cause appreciation and

depreciation of currencies.

CHAPTER 7

FINANCIAL STATEMENTS


the following:

Describe information provided by the income

statement, balance sheet, and cash flow statement;

Compare types of assets, liabilities, and equity;

Explain links between the income statement, balance

sheet, and cash flow statement;

Distinguish between profit and net cash flow;

Identify and compare cash flow classifications of

operating, investing, and financing activities; Explain the usefulness of ratio analysis for financial

statements;

Identify and interpret ratios used to analyze

a companys liquidity, profitability, financing,

shareholder return, and shareholder value.


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CHAPTER 8

QUANTITATIVE CONCEPTS


the following:

Define the concept of interest;

Compare simple and compound interest;

Describe effects of time and discount rate on value;

Explain the relevance of the net present value in

valuing financial investments;

Explain uses of mean, median, mode, range,

percentile, and standard deviation;

Describe and interpret the characteristics of a normaldistribution;

Describe and interpret correlation.


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MODULE 4INVESTMENT INSTRUMENTS

This module covers the basic investment options,

what they are and their purpose from conventional

equities and bonds to more specialized investments

such as real estate and derivatives.


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CHAPTER 9

EQUITY SECURITIES


the following:

Describe differences in voting rights and other

ownership characteristics among different equity

classes;

Describe types and characteristics of equity

securities;

Distinguish between preferred stock and common

stock;

Describe global depository receipts; Describe characteristics of convertible bond and

warrants;

Compare risk and return characteristics of types of

equity securities;

Describe approaches to valuing common stock;

Distinguish between an initial public offering (IPO) and

a seasoned equity offering;

Describe corporate actions that affect a companys

shares outstanding.

CHAPTER 10

DEBT SECURITIES


the following:

Identify issuers of debt securities;

Describe types and characteristics of debt securities;

Explain seniority ranking of debt securities when

default occurs;

Describe characteristics of fixed-rate bonds, floating-

rate bonds, and zero-coupon bonds;

Describe characteristics of bonds with embedded

provisions; Explain risks of investing in debt securities;

Describe the discounted cash flow approach to

valuing debt securities;

Explain the relationship between a bonds price and

its yield to maturity;

Compare a bonds yield to maturity and its current

yield;

Describe term structure of interest rates and credit

spreads.


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CHAPTER 11

DERIVATIVES


the following:

Define a derivative contract and describe the uses of

derivatives contracts;

Distinguish between forwards, futures, options, and

swaps;

Distinguish between long and short positions in

derivative contracts;

Describe characteristics of derivative contracts;

Compare forward and futures contracts; Explain the role of futures markets;

Describe option contracts and factors that affect

option values;

Describe swap contracts and identify factors that

affect swap values.

CHAPTER 12

ALTERNATIVE INVESTMENTS


the following:

Describe advantages and limitations of alternative

investments;

Describe private equity investments;

Describe real estate investments;

Describe commodity investments.


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MODULE 5INDUSTRY STRUCTURE

The industry is complex and highly

interdependent. This module looks at how the

industry helps us invest, who the participants

are and what they do, the different markets

where investments take place, and the

investment products themselves.


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CHAPTER 13

STRUCTURE OF THE INVESTMENT INDUSTRY


the following:

Identify and describe types of individual and

institutional investors;

Describe needs served by the investment industry;

Describe services provided by the investment

industry, including financial planning, investment

advisory, investment information, trading, and

custodial and depository services;

Compare passive and active management, anddescribe approaches used by active investment

managers to design their investment strategies;

Identify types of financial intermediaries, including

deposit-taking institutions, finance corporations,

securitizers, and insurance companies, and explain

their role in the investment industry;

Distinguish between buy- and sell-side firms in the

investment industry;

Distinguish between front-, middle-, and back-office

functions in the investment industry;

Identify positions and responsibilities for firms in the

investment industry;

Describe aspects of institutional investors investment

processes.

CHAPTER 14

INVESTMENT VEHICLES AND STRUCTURES


the following:

Explain the purpose of security market indices,

identify their types, and describe uses of security

market indices in the investment industry;

Compare investing through direct investments in

securities and assets with investing through indirect

investments;

Describe structured investment products, including

linked notes, equity-linked annuities, and exchangetraded notes;

Distinguish among closed-end funds, open-

end mutual funds, exchange traded funds, and

unit investment trusts and identify their relative

advantages and limitations;

Describe the characteristics of hedge funds;

Describe the characteristics of funds of funds;

Explain the differences between separate accounts

and commingled accounts;

Compare investment in taxable and tax-advantaged

accounts;

Compare defined contribution and defined benefit

pension schemes.


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CHAPTER 15

INVESTMENT MARKET CHARACTERISTICS


the following:

Distinguish between primary and secondary markets;

Identify characteristics of quote-driven, order-driven,

and brokered markets;

Compare the roles of brokers and dealers;

Explain the roles of exchanges and alternative trading

systems;

Compare long, short, and levered positions in terms of

risk and potential return; Compare different orders and order instructions;

Describe steps for clearing and settlement of trades;

Identify types of transaction costs;

Describe market efficiency in terms of operations,

information, and allocation.


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MODULE 6INDUSTRY CONTROLS

Controls are critical in helping ensure

everything runs smoothly. In the fast

moving world of investments and risk it is

essential to understand how systems and

controls are used in the industry to ensure

the client is properly served.


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CHAPTER 16

RISK MANAGEMENT


the following:

Define risk and identify types of risk;

State the importance of risk management;

Describe a risk management process;

Describe benefits and costs of risk management;

Describe limitations of using models and historical

information to measure risk;

Define operational risk and explain how they are

managed; Define compliance risk and explain how they are

managed;

Define investment risk and explain how they are

managed.

CHAPTER 17

PERFORMANCE EVALUATION


the following:

Describe a performance evaluation process;

Describe measures of return, including holding-period

returns and time-weighted rates of return;

Compare arithmetic and geometric means rates of

returns;

Describe measures of risk, including standard

deviation, downside deviation, and reward-to-risk

ratios;

Describe uses of benchmarks and explain theselection of a benchmark;

Explain measures of relative performance, including

tracking error and the information ratio;

Explain the concept of alpha;

Explain uses and processes of performance

attribution.

CHAPTER 18INVESTMENT INDUSTRY DOCUMENTATION


the following:

Define a document;

Describe objectives of documentation;

Describe document classification systems; Describe types of internal documentation;

Compare internal and external documentation;

Describe types of external documentation;

Describe document management.


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MODULE 7SERVING CLIENT NEEDS

This is about focusing on clients gaining

a clear understanding of their needs,

circumstances, motivations and ambitions

so investments can be allocated and

managed in the right way for them.


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CHAPTER 19

INVESTOR NEEDS AND INVESTMENT POLICY


the following:

Describe the importance of identifying investor needs

to the investment process;

Describe and contrast types of investors;

Explain how needs differ among investors;

Describe the rationale for and structure of investment

policy statements in serving client needs.

CHAPTER 20

ASSET ALLOCATION


the following:

Describe how portfolios are constructed to address

client investment objectives and constraints;

Compare strategic and tactical asset allocation.

CHAPTER 21

ACTIVE AND PASSIVE INVESTMENT

MANAGEMENT


the following:

Compare active and passive investment management;

Explain factors necessary for profitable active

management;

Describe how active managers attempt to identify and

capture market inefficiencies.


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EXAM WEIGHTING

Questions in the examination will be allocated approximately as follows:

Module 1 5%

Module 2 10%

Module 3 20%

Module 4 20%

Module 5 20%

Module 6 20%

Module 7 5%

Note: These weightings may be subject to slight variation to allow for effective question

trialing and to achieve an equal balance of difficulty for all candidates.

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NOTES

1.4


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CFA Institute 2014. The Claritas mark is registered in several countries around the world.

Claritas Syllabus Overview

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