Title Details

How to Use the Exam Companion ix

Study Session 1 Ethics and Professional Standards 1

Reading 1 Code of Ethics and Standards of Professional Conduct 3

Reading 2 Guidance for Standards I–VII 6

Reading 3 Introduction to the Global Investment Performance Standards (GIPS) 8

Reading 4 Global Investment Performance Standards (GIPS) 11

Study Session 2 Quantitative Methods: Basic Concepts 13

Reading 5 The Time Value of Money 15

Reading 6 Discounted Cash Flow Applications 19

Reading 7 Statistical Concepts and Market Returns 22

Reading 8 Probability Concepts 26

Study Session 3 Quantitative Methods: Application 31

Reading 9 Common Probability Distributions 33

Reading 10 Sampling and Estimation 37

Reading 11 Hypothesis Testing 40

Reading 12 Technical Analysis 45

Study Session 4 Economics: Microeconomic Analysis 49

Reading 13 Demand and Supply Analysis: Introduction 51

Reading 14 Demand and Supply Analysis: Consumer Demand 56

Reading 15 Demand and Supply Analysis: The Firm 58

Reading 16 The Firm and Market Structures 62

Study Session 5 Economics: Macroeconomic Analysis 67

Reading 17 Aggregate Output, Prices, and Economic Growth 69

Reading 18 Understanding Business Cycles 74

Reading 19 Monetary and Fiscal Policy 78

Study Session 6 Economics: Economics in a Global Context 83

Reading 20 International Trade and Capital Flows 85

Reading 21 Currency Exchange Rates 88

Study Session 7 Financial Reporting and Analysis: An Introduction 91

Reading 22 Financial Statement Analysis: An Introduction 95

Reading 23 Financial Reporting Mechanics 98

Reading 24 Financial Reporting Standards 103

Study Session 8 Financial Reporting and Analysis: Income Statements, Balance Sheets, and Cash Flow Statements 107

Reading 25 Understanding Income Statements 109

Reading 26 Understanding Balance Sheets 114

Reading 27 Understanding Cash Flow Statements 118

Reading 28 Financial Analysis Techniques 124

Study Session 9 Financial Reporting and Analysis: Inventories, Long-lived Assets, Income Taxes, and Non-current Liabilities 129

Reading 29 Inventories 131

Reading 30 Long-lived Assets 135

Reading 31 Income Taxes 140

Reading 32 Non-current (Long-term) Liabilities 144

Study Session 10 Financial Reporting and Analysis: Evaluating Financial Reporting Quality and Other Applications 151

Reading 33 Financial Reporting Quality: Red Flags and Accounting Warning Signs 153

Reading 34 Accounting Shenanigans on the Cash Flow Statement 155

Reading 35 Financial Statement Analysis: Applications 156

Study Session 11 Corporate Finance 159

Reading 36 Capital Budgeting 161

Reading 37 Cost of Capital 165

Reading 38 Measures of Leverage 170

Reading 39 Dividends and Share Repurchases: Basics 172

Reading 40 Working Capital Management 175

Reading 41 The Corporate Governance of Listed Companies: A Manual for Investors 180

Study Session 12 Portfolio Management 183

Reading 42 Portfolio Management: An Overview 185

Reading 43 Portfolio Risk and Return: Part I 187

Reading 44 Portfolio Risk and Return: Part II 192

Reading 45 Basics of Portfolio Planning and Construction 196

Study Session 13 Equity: Market Organization, Market Indices, and Market Efficiency 199

Reading 46 Market Organization and Structure 201

Reading 47 Security Market Indices 206

Reading 48 Market Efficiency 209

Study Session 14 Equity Analysis and Valuation 213

Reading 49 Overview of Equity Securities 215

Reading 50 Introduction to Industry and Company Analysis 218

Reading 51 Equity Valuation: Concepts and Basic Tools 221

Study Session 15 Fixed Income: Basic Concepts 225

Reading 52 Features of Debt Securities 227

Reading 53 Risks Associated with Investing in Bonds 231

Reading 54 Overview of Bond Sectors and Instruments 236

Reading 55 Understanding Yield Spreads 241

Study Session 16 Fixed Income Analysis and Valuation 245

Reading 56 Introduction to the Valuation of Debt Securities 247

Reading 57 Yield Measures, Spot Rates, and Forward Rates 252

Reading 58 Introduction to the Measurement of Interest Rate Risk 257

Reading 59 Fundamentals of Credit Analysis 262

Study Session 17 Derivatives 265

Reading 60 Derivative Markets and Instruments 267

Reading 61 Forward Markets and Contracts 270

Reading 62 Futures Markets and Contracts 274

Reading 63 Option Markets and Contracts 278

Reading 64 Swap Markets and Contracts 284

Reading 65 Risk Management Applications of Option Strategies 287

Study Session 18 Alternative Investments 289

Reading 66 Introduction to Alternative Investments 291

Reading 67 Investing in Commodities 294

Answers to Sample Questions 297

Index 317