CFA 1 - Thomas23

Cover Flash Card

Cover Flash Card

1

Returns of Financial Assets and Instruments

1.1

Rates and Returns

1.a

Describe, compare, and interpret returns.

1.2

Components and Measures of Return

1.b

Describe, compare, and interpret required rates of return, risk-free rates, risk premia, and inflation.

2

Types of Financial Returns

2.1

Financial Assets, Instruments, and Indicators

2.a

Calculate, compare, and interpret different types of returns for financial assets, instruments, and indicators.

2.2

Long-Term Returns on Financial Assets

3

Benchmarking Returns

3.1

Time-Weighted and Money-Weighted Returns

3.a

Calculate and compare money-weighted and time-weighted rates of return.

3.2

Security Market Indexes

3.b

Describe the choices and the implications of the different weighting methods used in index construction and management, and calculate, interpret, and explain the value and the returns of an index.

4

The Time Value of Money in Finance

4.1

Discounted Cash Flow Valuation

4.2

Implied Returns and Cash Flow Additivity

5

Statistical Characteristics of Asset Returns

5.1

Measures of Central Tendency

5.2

Dispersion, Skewness, and Kurtosis

5.3

Covariance, Correlation, and Alternative Measures of Dispersion

6.

Statistical Distributions for Financial Asset Prices and Returns

6.1

Probability Distributions and Expected

6.2

Discrete and Continuous Probability Distributions

6.3

Conditional Expectations and Bayesian Updating

7

Estimation and Hypothesis Testing

7.1

The Central Limit Theorem, Confidence Intervals, and Sampling

7.2

Hypothesis Tests of the Population Mean

7.3

Other Parametric Hypothesis Tests

7.4

Nonparametric Hypothesis Tests

8

The Return and Risk of a Financial Portfolio

8.1

Portfolio Expected Return

8.2

Portfolio Risk Measures

8.3

Correlation and Diversification Benefits

8.4

The Minimum-Variance Portfolio and the Efficient Frontier

8.5

Risk Aversion

8.6

Capital Allocation Line and Capital Market Line

8.7

The Capital Asset Pricing Model

9

Simulation of Financial Asset Prices and Returns

9.1

Historical Simulation

9.2

Bootstrap Resampling

9.3

Monte Carlo Simulation

10

Applications of Simple Linear Regression in Finance

10.1

Linear Regression Basics

10.2

Analysis of Variance (ANOVA) and Goodness of Fit

10.3

Predicted Values and Functional Forms of Regression

10.4

Estimating CAPM Values With Simple Linear Regression

11

Introduction to Financial Data Science

11.1

Introduction to Financial Data Science

20. 
    

Organizational Forms, Corporate Issuer Features, And Ownership

20.1

Features of Corporate Issuers

20.a

Compare the organizational forms of businesses.

20.b

Describe key features of corporate issuers.

20.c

Compare publicly and privately owned corporate issuers.

21.

Investors And Other Stakeholders

21.1

Stakeholders And ESG Factors

21.a

Compare the financial claims and motivations of lenders and shareholders.

21.b

Describe a company’s stakeholder groups and compare their interests.

21.c

Describe environmental, social, and governance factors of corporate issuers considered by investors.

22.

Corporate Governance: Conflicts, Mechanisms, Risks, And Benefits

22.1

Corporate Governance

22.a

Describe the principal-agent relationship and conflicts that may arise between stakeholder groups.

22.b

Describe corporate governance and mechanisms to manage stakeholder relationships and mitigate associated risks.

22.c

Describe potential risks of poor corporate governance and stakeholder management and benefits of effective corporate governance and stakeholder management.

23. 
    

Working Capital and Liquidity

23.1

Liquidity Measures and Management

23.a

Explain the cash conversion cycle and compare issuers’ cash conversion cycles.

23.b

Explain liquidity and compare issuers’ liquidity levels.

23.c

Describe issuers’ objectives and compare methods for managing working capital and liquidity.

24.

Capital Investments And Capital Allocation

24.1

Capital Investments And Project Measures

24.a

Describe types of capital investments.

24.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.

24.2

Capital Allocation Principles And Real Options

24.c

Describe principles of capital allocation and common capital allocation pitfalls.

24.d

Describe types of real options relevant to capital investments.

25.

Capital Structure

25.1

Weighted-Average Cost Of Capital

25.a

Calculate and interpret the weighted-average cost of capital for a company.

25.b

Explain factors affecting capital structure and the weighted-average cost of capital.

25.2

Capital Structure Theories

25.c

Explain the Modigliani–Miller propositions regarding capital structure.

25.d

Describe optimal and target capital structures.

26.

Business Models

26.1

Business Model Features And Types

26.a

Describe key features of business models.

26.b

Describe various types of business models.

27.

Introduction to Financial Statement Analysis

27.1

Financial Statement Roles

27.a

Describe the steps in the financial statement analysis framework.

27.b

Describe the roles of financial statement analysis.

27.c

Describe the importance of regulatory filings, financial statement notes and supplementary information, management's commentary, and audit reports.

27.d

Describe implications for financial analysis of alternative financial reporting systems and the importance of monitoring developments in financial reporting standards.

27.e

Describe information sources that analysts use in financial statement analysis besides annual and interim financial reports.

28

Analyzing Income Statements

28.1

Revenue Recognition

28.a

Describe general principles of revenue recognition, specific revenue recognition applications, and implications of revenue recognition choices for financial analysis.

28.2

Expense Recognition

28.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.