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1. Rates and Returns
- a. interpret interest rates as required rates of return, discount rates, or opportunity costs and explain an interest rate as the sum of a real risk-free rate and premiums that compensate investors for bearing distinct types of risk
- b. calculate and interpret different approaches to return measurement over time and describe their appropriate uses
- d. calculate and interpret annualized return measures and continuously compounded returns, and describe their appropriate uses
- e. calculate and interpret major return measures and describe their appropriate uses
2. Time Value of Money in Finance
- c. explain the cash flow additivity principle, its importance for the no-arbitrage condition, and its use in calculating implied forward interest rates, forward exchange rates, and option values
- a. calculate and interpret the present value (PV) of fixed-income and equity instruments based on expected future cash flows
- b. calculate and interpret the implied return of fixed-income instruments and required return and implied growth of equity instruments given the present value (PV) and cash flows
6. Simulation Methods
- a. explain the relationship between normal and lognormal distributions and why the lognormal distribution is used to model asset prices when using continuously compounded asset returns
- b. describe Monte Carlo simulation and explain how it can be used in investment applications
- c. describe the use of bootstrap resampling in conducting a simulation based on observed data in investment applications
10. Simple Linear Regression
- c. calculate and interpret measures of fit and formulate and evaluate tests of fit and of regression coefficients in a simple linear regression
18. Capital Flows and the FX Market
- b. describe exchange rate regimes and explain the effects of exchange rates on countries’ international trade and capital flows
19. Exchange Rate Calculations
- b. explain the arbitrage relationship between spot and forward exchange rates and interest rates, calculate a forward rate using points or in percentage terms, and interpret a forward discount or premium
22. Organizational Forms, Corporate Issuer Features, and Ownership
- a. compare the organizational forms of businesses
- c. compare publicly and privately owned corporate issuers
- b. describe key features of corporate issuers
23. Investors and Other Stakeholders
- a. compare the financial claims and motivations of lenders and shareholders
- b. describe a company’s stakeholder groups and compare their interests
- c. describe environmental, social, and governance factors of corporate issuers considered by investors
24. Corporate Governance-Conflicts, Mechanisms, Risks, and Benefits
- a. describe the principal-agent relationship and conflicts that may arise between stakeholder groups
- b. describe corporate governance and mechanisms to manage stakeholder relationships and mitigate associated risks
26. Capital Investments and Capital Allocation
- a. describe types of capital investments
- b. describe the capital allocation process, calculate net present value (NPV), internal rate of return (IRR), and return on invested capital (ROIC), and contrast their use in capital allocation
- c. describe principles of capital allocation and common capital allocation pitfalls
- d. describe types of real options relevant to capital investments
27. Capital Structure
- b. explain factors affecting capital structure and the weighted-average cost of capital
- d. describe optimal and target capital structures
- a. calculate and interpret the weighted-average cost of capital for a company
28. Business Models
- a. describe key features of business models
- b. describe various types of business models
29. Introduction to Financial Statement Analysis
- c. describe the importance of regulatory filings, financial statement notes and supplementary information, management’s commentary, and audit reports
- d. describe implications for financial analysis of alternative financial reporting systems and the importance of monitoring developments in financial reporting standards
- e. describe information sources that analysts use in financial statement analysis besides annual and interim financial reports
30. Analyzing Income Statements
- a. describe general principles of revenue recognition, specific revenue recognition applications, and implications of revenue recognition choices for financial analysis
- b. describe general principles of expense recognition, specific expense recognition applications, implications of expense recognition choices for financial analysis and contrast costs that are capitalized versus those that are expensed in the period in which they are incurred
- c. describe the financial reporting treatment and analysis of non-recurring items (including discontinued operations, unusual or infrequent items) and Changes in accounting policies
- d. describe how earnings per share is calculated and calculate and interpret a company’s basic and diluted earnings per share for companies with simple and complex capital structures including those with antidilutive securities
31. Analyzing Balance Sheets
- a. explain the financial reporting and disclosures related to intangible assets
- b. explain the financial reporting and disclosures related to goodwill
34. Analysis of Inventories
- a. describe the measurement of inventory at the lower of cost and net realisable value and its implications for financial statements and ratios
- c. describe the presentation and disclosures relating to inventories and explain issues that analysts should consider when examining a company’s inventory disclosures and other sources of information
35. Analysis of Long-Term Assets
- b. explain and evaluate how impairment and derecognition of property, plant, and equipment and intangible assets affect the financial statements and ratios
36. Topics in Long-Term Liabilities and Equity
- a. explain the financial reporting of leases from the perspectives of lessors and lessees
- b. explain the financial reporting of defined contribution, defined benefit, and stock-based compensation plans
- c. describe the financial statement presentation of and disclosures relating to long-term liabilities and share-based compensation
37. Analysis of Income Taxes
- a. contrast accounting profit, taxable income, taxes payable, and income tax expense and temporary versus permanent differences between accounting profit and taxable income
- c. calculate, interpret, and contrast an issuer’s effective tax rate, statutory tax rate, and cash tax rate
39. Financial Analysis Techniques
- e. describe the uses of industry-specific ratios used in financial analysis
46. Industry and Competitive Analysis
- b. describe industry classification methods and compare methods by which companies can be grouped
- d. analyze an industry’s structure and external influences using Porter’s Five Forces and PESTLE frameworks
- a. describe the purposes of, and steps involved in, industry and competitive analysis
- c. determine an industry’s size, growth characteristics, profitability, and market share trends
- e. evaluate the competitive strategy and position of a company
49. Fixed-Income Instrument Features
- a. describe the features of a fixed-income security
- b. describe the contents of a bond indenture and contrast affirmative and negative covenants
50. Fixed-Income Cash Flows and Types
- a. describe common cash flow structures of fixed-income instruments and contrast cash flow contingency provisions that benefit issuers and investors
- b. describe how legal, regulatory, and tax considerations affect the issuance and trading of fixed-income securities
51. Fixed-Income Issuance and Trading
- c. compare primary and secondary fixed-income markets to equity markets
- a. describe fixed-income market segments and their issuer and investor participants
- b. describe types of fixed-income indexes
52. Fixed-Income Markets for Corporate Issuers
- a. compare short-term funding alternatives available to corporations and financial institutions
- b. describe repurchase agreements (repos), their uses, and their benefits and risk
- c. contrast the long-term funding of investment-grade versus high-yield corporate issuers
57. The Term Structure of Interest Rates-Spot, Par, and Forward Curves
- a. define spot rates and the spot curve, and calculate the price of a bond using spot rates
- b. define par and forward rates, and calculate par rates, forward rates from spot rates, spot rates from forward rates, and the price of a bond using forward rates
- c. compare the spot curve, par curve, and forward curve
60. Yield-Based Bond Convexity and Portfolio Properties
- a. calculate and interpret convexity and describe the convexity adjustment
- b. calculate the percentage price change of a bond for a specified change in yield, given the bond’s duration and convexity
61. Curve-Based and Empirical Fixed-Income Risk Measures
- a. explain why effective duration and effective convexity are the most appropriate measures of interest rate risk for bonds with embedded options
- c. define key rate duration and describe its use to measure price sensitivity of fixed-income instruments to benchmark yield curve Changes
- b. calculate the percentage price change of a bond for a specified change in benchmark yield, given the bond’s effective duration and convexity
62. Credit Risk
- a. describe credit risk and its components, probability of default and loss given default
- b. describe the uses of ratings from credit rating agencies and their limitations
- c. describe macroeconomic, market, and issuer-specific factors that influence the level and volatility of yield spreads
63. Credit Analysis for Government Issuers
- a. explain special considerations when evaluating the credit of sovereign and non-sovereign government debt issuers and issues
64. Credit Analysis for Corporate Issuers
- b. calculate and interpret financial ratios used in credit analysis
- c. describe the seniority rankings of debt, secured versus unsecured debt and the priority of claims in bankruptcy, and their impact on credit ratings
- a. describe the qualitative and quantitative factors used to evaluate a corporate borrower’s creditworthiness
65. Fixed-Income Securitization
- a. explain benefits of securitization for issuers, investors, economies, and financial markets
- b. describe securitization, including the parties and the roles they play
66. Asset-Backed Security Instrument and Market Features
- a. describe characteristics and risks of covered bonds and how they differ from other asset-backed securities
- b. describe typical credit enhancement structures used in securitizations
- c. describe types and characteristics of non-mortgage asset-backed securities, including the cash flows and risks of each type
- d. describe collateralized debt obligations, including their cash flows and risks
67. Mortgage-Backed Security Instrument and Market Features
- a. define prepayment risk and describe time tranching structures in securitizations and their purpose
- c. describe types and characteristics of residential mortgage-backed securities, including mortgage pass-through securities and collateralized mortgage obligations, and explain the cash flows and risks for each type
- b. describe fundamental features of residential mortgage loans that are securitized
78. Alternative Investment Features, Methods, and Structures
- b. compare direct investment, co-investment, and fund investment methods for alternative investments
- c. describe investment ownership and compensation structures commonly used in alternative investments
79. Alternative Investment Performance and Returns
- b. calculate and interpret alternative investment returns both before and after fees
- a. describe the performance appraisal of alternative investments
80. Investments in Private Capital-Equity and Debt
- a. explain features of private equity and its investment characteristics
- b. explain features of private debt and its investment characteristics
- c. describe the diversification benefits that private capital can provide
81. Real Estate and Infrastructure
- a. explain features and characteristics of real estate
- b. explain the investment characteristics of real estate investments
- c. explain features and characteristics of infrastructure
- d. explain the investment characteristics of infrastructure investments
82. Natural Resources
- a. explain features of raw land, timberland, and farmland and their investment characteristics
- b. describe features of commodities and their investment characteristics
- c. analyze sources of risk, return, and diversification among natural resource investments
83. Hedge Funds
- a. explain investment features of hedge funds and contrast them with other asset classes
- b. describe investment forms and vehicles used in hedge fund investments
- c. analyze sources of risk, return, and diversification among hedge fund investments
84. Introduction to Digital Assets
- a. describe financial applications of distributed ledger technology
- b. explain investment features of digital assets and contrast them with other asset classes
- c. describe investment forms and vehicles used in digital asset investments
- d. analyze sources of risk, return, and diversification among digital asset investments
17. International Trade
- a. describe the benefits and costs of international trade
25. Working Capital and Liquidity
- a. explain the cash conversion cycle and compare issuers’ cash conversion cycles
- b. explain liquidity and compare issuers’ liquidity levels
- c. describe issuers’ objectives and compare methods for managing working capital and liquidity
40. Introduction to Financial Statement Modeling
- a. demonstrate the development of a sales-based pro forma company model
- b. explain how behavioral factors affect analyst forecasts and recommend remedial actions for analyst biases
- c. explain how the competitive position of a company based on a Porter’s five forces analysis affects prices and costs
- d. explain how to forecast industry and company sales and costs when they are subject to price inflation or deflation
- e. explain considerations in the choice of an explicit forecast horizon and an analyst’s choices in developing projections beyond the short-term forecast horizon
45. Company Analysis-Past and Present
- b. determine a company’s business model
- c. evaluate a company’s revenue and revenue drivers, including pricing power
- d. evaluate a company’s operating profitability and working capital using key measures
- e. evaluate a company’s capital investments and capital structure
47. Company Analysis-Forecasting
- a. explain principles and approaches to forecasting a company’s financial results and position
- b. explain approaches to forecasting a company’s revenues
- c. explain approaches to forecasting a company’s operating expenses and working capital
- d. explain approaches to forecasting a company’s capital investments and capital structure
- e. describe the use of scenario analysis in forecasting
53. Fixed-Income Markets for Government Issuers
- a. describe funding choices by sovereign and non-sovereign governments, quasi-government entities, and supranational agencies
- b. contrast the issuance and trading of government and corporate fixed-income instruments
5. Sampling and Estimation
- b. explain sampling error
11. Understanding Business Cycles
- d. describe theories of the business cycle
12. Monetary and Fiscal Policy
- m. determine whether a monetary policy is expansionary or contractionary
18. Understanding Income Statements
- h. contrast dilutive and antidilutive securities and describe the implications of each for the earnings per share calculation
21. Financial Analysis Techniques
- f. explain the requirements for segment reporting and calculate and interpret segment ratios
23. Long-Lived Assets
- a. Identify and contrast costs that are capitalised and costs that are expensed in the period in which they are incurred.
- c. explain and evaluate how capitalising versus expensing costs in the period in which they are incurred affects financial statements and ratios
24. Income Taxes
- j. identify the key provisions of and differences between income tax accounting under International Financial Reporting Standards (IFRS) and US generally accepted accounting principles (GAAP)
25. Non-Current (Long-Term) Liabilities
- d. describe the role of debt covenants in protecting creditors
- e. describe the financial statement presentation of and disclosures relating to debt
- f. explain motivations for leasing assets instead of purchasing them
- h. explain the financial reporting of leases from a lessor’s perspective
- j. calculate and interpret leverage and coverage ratios
29. Introduction to Corporate Governance and Other ESG Considerations
- f. describe environmental, social, and governance investment approaches
30. Business Models & Risks
- b. Describe expected relations between a company’s external environment, business model, and financing needs
- c. Explain and classify types of business and financial risks for a company
32. Working Capital & Liquidity
- a. compare methods to finance working capital
- b. explain expected relations between working capital, liquidity, and short-term funding needs
- c. describe sources of primary and secondary liquidity and factors affecting a company’s liquidity position
- d. compare a company’s liquidity position with that of peers
- e. evaluate short-term funding choices available to a company
33. Cost of Capital-Foundational Topics
- b. describe how taxes affect the cost of capital from different capital sources
- c. calculate and interpret the cost of debt capital using the yield-to-maturity approach and the debt-rating approach
- d. calculate and interpret the cost of noncallable, nonconvertible preferred stock
- e. calculate and interpret the cost of equity capital using the capital asset pricing model approach and the bond yield plus risk premium approach
- f. explain and demonstrate beta estimation for public companies, thinly traded public companies, and nonpublic companies
- g. explain and demonstrate the correct treatment of flotation costs
34. Capital Structure
- e. describe competing stakeholder interests in capital structure decisions
35. Measures of Leverage
- a. define and explain leverage, business risk, sales risk, operating risk, and financial risk and classify a risk
- b. calculate and interpret the degree of operating leverage, the degree of financial leverage, and the degree of total leverage
- c. analyze the effect of financial leverage on a company’s net income and return on equity
- d. calculate the breakeven quantity of sales and determine the company's net income at various sales levels
- e. calculate and interpret the operating breakeven quantity of sales
40. Introduction to Industry and Company Analysis
- a. explain uses of industry analysis and the relation of industry analysis to company analysis
- c. explain the factors that affect the sensitivity of a company to the business cycle and the uses and limitations of industry and company descriptors such as “growth,” “defensive,” and “cyclical"
- d. describe current industry classification systems, and identify how a company should be classified, given a description of its activities and the classification system
- e. explain how a company’s industry classification can be used to identify a potential “peer group” for equity valuation
- f. describe the elements that need to be covered in a thorough industry analysis
- g. describe the principles of strategic analysis of an industry
- j. describe macroeconomic, technological, demographic, governmental, social, and environmental influences on industry growth, profitability, and risk
- k. compare characteristics of representative industries from the various economic sectors
43. Fixed-Income Markets-Issuance, Trading, and Funding
- b. describe the use of interbank offered rates as reference rates in floating-rate debt
- g. describe types of debt issued by corporations
- h. describe structured financial instruments
44. Introduction to Fixed-Income Valuation
- d. describe and calculate the flat price, accrued interest, and the full price of a bond
46. Understanding Fixed-Income Risk and Return
- j. describe how the term structure of yield volatility affects the interest rate risk of a bond
- l. explain how Changes in credit spread and liquidity affect yield-to-maturity of a bond and how duration and convexity can be used to estimate the price effect of the Changes
47. Understanding Fixed-Income Risk and Return
- f. explain the four Cs (Capacity, Collateral, Covenants, and Character) of traditional credit analysis
67. Technical Analysis
- a. explain principles and assumptions of technical analysis
- b. describe potential links between technical analysis and behavioral finance
- c. compare principles of technical analysis and fundamental analysis
- d. describe and interpret different types of technical analysis charts
- e. explain uses of trend, support, and resistance lines
- f. explain common chart patterns
- g. explain common technical indicators
- h. describe principles of intermarket analysis
- i. explain technical analysis applications to portfolio management