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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
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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
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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
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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
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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
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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
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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
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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
identify the appropriate test statistic and
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
identify the appropriate test statistic
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
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Quantitative 3.11.h
identify the appropriate test statistic and
interpret the results for a hypothesis
test concerning the mean difference of
two normally distributed populations 3.11.h
identify the appropriate test statistic
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
identify the appropriate test statistic
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
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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
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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
calculate and interpret total, average,
marginal, fixed, and variable costs 4.15.d
calculate and interpret total, average,
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
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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
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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
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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
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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
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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
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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
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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
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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
FinancialReporting 8.25.c
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
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FinancialReporting 8.25.e
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
describe, calculate, and interpret
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
FinancialReporting 8.26.c
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
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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
FinancialReporting 8.26.f
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
FinancialReporting 8.27.e
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
FinancialReporting 8.27.f
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
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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
FinancialReporting 8.27.i
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
FinancialReporting 9.29.a
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
FinancialReporting 9.29.b
describe different inventory valuationmethods (cost formulas) 9.29.b
describe different inventory valuationmethods (cost formulas)
FinancialReporting 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 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
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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
describe the financial statement
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
FinancialReporting 9.30.a
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
FinancialReporting 9.30.e
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
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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
FinancialReporting 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, 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
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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
FinancialReporting 9.31.f
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
FinancialReporting 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’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
determine the initial recognition, initial
measurement and subsequent
measurement of bonds
FinancialReporting 9.32.b
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
FinancialReporting 9.32.e
describe the financial statement
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
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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
determine the initial recognition, initial
measurement, and subsequent
measurement of finance leases 9.32.h
determine the initial recognition, initial
measurement, and subsequent
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
FinancialReporting 10.33.a
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
FinancialReporting 10.33.c
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
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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
FinancialReporting 10.35.c
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
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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
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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
CorporateFinance 11.39.b
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
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CorporateFinance 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 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
CorporateFinance 11.40.b
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
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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
CorporateFinance 11.42.d
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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
describe the characteristics of the
following types of futures contracts:Treasury bill, Eurodollar, Treasury bond,
stock index, and currency. 17.62.f
describe the characteristics of the
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
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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
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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
describe, calculate, and interpret
management and incentive fees andnet-of-fees returns to hedge funds NEW
Alternative
Investments 18.66.g
describe risk management of
alternative investments NEW
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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
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Alternative
Investments 18.66.r
describe the sources of return on a
collateralized commodity futures
position. REMOVED
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