Foreword by Pamela Peterson Drake, PhD, CFA vii
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
