CFA Level 1 - LOS Changes 2014 - 2015

Ethics 1.4.bdescribe the scope of the GIPS standards with respect to an investment firm’s definition and historical performance record 1.4.b describe the scope of the GIPS standards with

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Topic LOS Level I - 2014 (532 LOS) LOS Level I - 2015 (529 LOS) Compared Ethics 1.1.a

describe the structure of the CFA Institute Professional Conduct Program and the process for the enforcement of the Code and Standards

1.1.a

describe the structure of the CFA Institute 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 of Ethics and the seven Standards of Professional Conduct

1.1.b

state the six components of the Code of Ethics and the seven Standards of Professional Conduct

Ethics 1.1.c

explain the ethical responsibilities required by the Code and Standards, including the sub-sections of each Standard

1.1.c

explain the ethical responsibilities required by the Code and Standards, including the sub-sections of each Standard

Ethics 1.2.a

demonstrate 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

Ethics 1.2.b

distinguish between conduct that conforms to the Code and Standards and conduct that violates the Code and Standards

1.2.b

distinguish between conduct that conforms to the Code and Standards and conduct that violates the Code and Standards

Ethics 1.2.c

recommend practices and procedures designed to prevent violations of the Code of Ethics and Standards of Professional Conduct

1.2.c

recommend practices and procedures designed to prevent violations of the Code of Ethics and Standards of Professional Conduct

Ethics 1.3.a

explain why the GIPS standards were created, what parties the GIPS standards apply to, and who is served

by the standards

1.3.a

explain why the GIPS standards were created, what parties the GIPS standards apply to, and who is served

by 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

Ethics 1.4.a

describe the key features of the GIPS standards and the fundamentals of compliance

1.4.a

describe the key features of the GIPS standards and the fundamentals of compliance

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Ethics 1.4.b

describe the scope of the GIPS standards with respect to an investment firm’s definition and historical

performance record

1.4.b

describe the scope of the GIPS standards with respect to an investment firm’s definition and historical

performance record

Ethics 1.4.c

explain how the GIPS standards are implemented in countries with existing standards for performance reporting and describe the appropriate response when the GIPS standards and local regulations conflict

1.4.c

explain how the GIPS standards are implemented in countries with existing standards for performance reporting and describe the appropriate response when the GIPS standards and local regulations conflict

Ethics 1.4.d describe the nine major sections of the GIPS standards 1.4.d describe the nine major sections of the GIPS standards

Quantitative 2.5.a

interpret interest rates as required rates

of return, discount rates, or opportunity costs

2.5.a

interpret interest rates as required rates

of return, discount rates, or opportunity costs

Quantitative 2.5.b

explain an interest rate as the sum of a real risk-free rate, and premiums that compensate investors for bearing distinct types of risk

2.5.b

explain an interest rate as the sum of a real risk-free rate, and premiums that compensate investors for bearing distinct types of risk

Quantitative 2.5.c

calculate and interpret the effective annual rate, given the stated annual interest rate and the frequency of compounding

2.5.c

calculate and interpret the effective annual 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, an annuity 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, an annuity 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 of money problems

2.5.f

demonstrate the use of a time line in modeling and solving time value of money problems

calculate and interpret the net present value (NPV) and the internal rate of return (IRR) of an investment

2.6.a

calculate and interpret the net present value (NPV) and the internal rate of return (IRR) of an investment

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.c calculate and interpret a holding period

calculate and interpret a holding period return (total return)

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Quantitative 2.6.d

calculate and compare the weighted and time-weighted rates of return of a portfolio and evaluate the performance of portfolios based on these measures

money-2.6.d

calculate and compare the weighted and time-weighted rates of return of a portfolio and evaluate the performance of portfolios based on these measures

money-Quantitative 2.6.e

calculate and interpret the bank discount yield, holding period yield, effective annual yield, and money market yield for U.S Treasury bills and other money market instruments

2.6.e

calculate and interpret the bank discount yield, holding period yield, effective annual yield, and money market yield for U.S Treasury bills and other money market instruments

convert among holding period yields, money market yields, effective annual yields, and bond equivalent yields

2.6.f

convert among holding period yields, money market yields, effective annual yields, and bond equivalent yields

distinguish between descriptive statistics and inferential statistics, between a population and a sample, and among the types of measurement scales

2.7.a

distinguish between descriptive statistics and inferential statistics, between a population and a sample, and among the types of measurement scales

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

calculate and interpret relative frequencies and cumulative relative frequencies, given a frequency distribution

2.7.c

calculate and interpret relative frequencies and cumulative relative frequencies, given a frequency distribution

describe the properties of a data set presented as a histogram or a frequency polygon

2.7.d

describe the properties of a data set presented as a histogram or a frequency polygon

calculate and interpret measures of central tendency, including the population mean, sample mean, arithmetic mean, weighted average or mean, geometric mean, harmonic mean, median, and mode

2.7.e

calculate and interpret measures of central tendency, including the population mean, sample mean, arithmetic mean, weighted average or mean, geometric mean, harmonic mean, median, and mode

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 a population 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 a population and of a sample

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Quantitative 2.7.h

calculate and interpret the proportion of observations falling within a specified number of standard deviations of the mean using Chebyshev’s inequality

2.7.h

calculate and interpret the proportion of observations falling within a specified number of standard deviations of the mean using Chebyshev’s inequality

Quantitative 2.7.i calculate and interpret the coefficient of

variation and the Sharpe ratio 2.7.i

calculate and interpret the coefficient of variation and the Sharpe ratio

Quantitative 2.7.j

explain skewness and the meaning of a positively or negatively skewed return distribution

2.7.j

explain skewness and the meaning of a positively or negatively skewed return distribution

Quantitative 2.7.k

describe the relative locations of the mean, median, and mode for a unimodal, nonsymmetrical distribution

2.7.k

describe the relative locations of the mean, median, and mode for a unimodal, nonsymmetrical distribution

Quantitative 2.7.l explain measures of sample skewness and kurtosis 2.7.l explain measures of sample skewness and kurtosis

Quantitative 2.7.m

compare the use of arithmetic and geometric means when analyzing investment returns

2.7.m

compare the use of arithmetic and geometric means when analyzing investment returns

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

state 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

Quantitative 2.8.c state the probability of an event in

terms of odds for and against the event 2.8.c

state the probability of an event in terms of odds for and against the event

Quantitative 2.8.d distinguish between unconditional and conditional probabilities 2.8.d distinguish between unconditional and conditional probabilities

Quantitative 2.8.e explain the multiplication, addition, and total probability rules 2.8.e explain the multiplication, addition, and total probability rules

calculate and interpret 1) the joint probability of two events, 2) the probability that at least one of two events will occur, given the probability

of 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 joint probability of two events, 2) the probability that at least one of two events will occur, given the probability

of 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 and

distinguish between dependent and independent events

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calculate and interpret an unconditional probability using the total probability rule

2.8.h

calculate and interpret an unconditional probability using the total probability rule

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.k calculate and interpret covariance and correlation 2.8.k calculate and interpret covariance and correlation

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 factorial, combination, and permutation concepts

2.8.o

identify the most appropriate method to solve a particular counting problem, and solve counting problems using factorial, combination, and permutation concepts

define a probability distribution and distinguish between discrete and continuous random variables and their probability functions

3.9.a

define a probability distribution and distinguish between discrete and continuous random variables and their probability 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

calculate and interpret probabilities for

a random variable, given its cumulative distribution function

3.9.d

calculate and interpret probabilities for

a random variable, given its cumulative distribution function

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

calculate and interpret probabilities given the discrete uniform and the binomial distribution functions

3.9.f

calculate and interpret probabilities given the discrete uniform and the binomial distribution functions

Quantitative 3.9.g construct a binomial tree to describe

construct a binomial tree to describe stock price movement

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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 interpret probabilities, given a continuous uniform distribution

3.9.i

define the continuous uniform distribution and calculate and interpret probabilities, given a continuous uniform distribution

Quantitative 3.9.j explain the key properties of the normal distribution 3.9.j explain the key properties of the normal distribution

distinguish between a univariate and a multivariate distribution, and explain the role of correlation in the

multivariate normal distribution

3.9.k

distinguish between a univariate and a multivariate distribution, and explain the 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

3.9.o

explain the relationship between normal and lognormal distributions and why the lognormal distribution is used to model asset prices

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 period return

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 applications and limitations

Wording Change Quantitative 3.9.r compare Monte Carlo simulation and

compare Monte Carlo simulation and historical simulation

Quantitative 3.10.a define simple random sampling and a

define simple random sampling and a sampling distribution

Quantitative 3.10.b explain sampling error 3.10.b explain sampling error

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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

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.g identify and describe desirable properties of an estimator 3.10.g identify and describe desirable properties of an estimator

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

describe properties of Student’s distribution and calculate and interpret its degrees of freedom

t-3.10.i

describe properties of Student’s distribution and calculate and interpret its degrees of freedom

t-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 unknown variance 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 unknown variance and a large sample size

describe the issues regarding selection

of the appropriate sample size, mining bias, sample selection bias, survivorship bias, look-ahead bias, and time-period bias

data-3.10.k

describe the issues regarding selection

of the appropriate sample size, mining bias, sample selection bias, survivorship bias, look-ahead bias, and time-period bias

data-Quantitative 3.11.a

define a hypothesis, describe the steps

of hypothesis testing, and describe and interpret the choice of the null and alternative hypotheses

3.11.a

define a hypothesis, describe the steps

of hypothesis testing, and describe and interpret the choice of the null and alternative hypotheses

Quantitative 3.11.b distinguish between one-tailed and two-tailed tests of hypotheses 3.11.b distinguish between one-tailed and two-tailed tests of hypotheses

explain a test statistic, Type I and Type

II errors, a significance level, and how significance levels are used in

hypothesis testing

3.11.c

explain a test statistic, Type I and Type

II errors, a significance level, and how significance levels are used in

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Quantitative 3.11.e distinguish between a statistical result

and an economically meaningful result 3.11.e

distinguish between a statistical result and an economically meaningful result

Quantitative 3.11.f explain and interpret the p-value as it

relates to hypothesis testing 3.11.f

explain and interpret the p-value as it relates to hypothesis testing

identify the appropriate test statistic and interpret the results for a hypothesis test concerning the population mean of both large and small samples when the population is

normally or approximately distributed and the variance is 1) known or 2) unknown

3.11.g

identify the appropriate test statistic and interpret the results for a hypothesis test concerning the population mean of both large and small samples when the population is

normally or approximately distributed and the variance is 1) known or 2) unknown

identify the appropriate test statistic and interpret the results for a hypothesis test concerning the equality

of the population means of two at least approximately normally distributed populations, based on independent random samples with 1) equal or 2) unequal assumed variances

3.11.h

identify the appropriate test statistic and interpret the results for a hypothesis test concerning the equality

of the population means of two at least approximately normally distributed populations, based on independent random samples with 1) equal or 2) unequal assumed variances

identify the appropriate test statistic and interpret the results for a hypothesis test concerning the mean difference of two normally distributed populations

3.11.i

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.j

identify the appropriate test statistic and interpret the results for a hypothesis test concerning 1) the variance of a normally distributed population, and 2) the equality of the variances of two normally distributed populations based on two independent random samples

3.11.j

identify the appropriate test statistic and interpret the results for a hypothesis test concerning 1) the variance of a normally distributed population, and 2) the equality of the variances of two normally distributed populations based on two independent random samples

distinguish between parametric and nonparametric tests and describe situations in which the use of nonparametric tests may be appropriate

3.11.k

distinguish between parametric and nonparametric tests and describe situations in which the use of nonparametric tests may be appropriate

explain principles of technical analysis, its applications, and its underlying assumptions

3.12.a

explain principles of technical analysis, its applications, and its underlying assumptions

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describe the construction of different types of technical analysis charts and interpret them

3.12.b

describe the construction of different types of technical analysis charts and interpret them

Quantitative 3.12.c explain uses of trend, support,

resistance lines, and change in polarity 3.12.c

explain uses of trend, support, resistance lines, and change in polarity

Quantitative 3.12.d describe common chart patterns 3.12.d describe common chart patterns

describe common technical analysis indicators (price-based, momentum oscillators, sentiment, and flow of funds)

3.12.e

describe common technical analysis indicators (price-based, momentum oscillators, sentiment, and flow of funds)

Quantitative 3.12.f explain how technical analysts use cycles 3.12.f explain how technical analysts use cycles

describe the key tenets of Elliott Wave Theory and the importance of Fibonacci numbers

3.12.g

describe the key tenets of Elliott Wave Theory and the importance of Fibonacci numbers

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

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

4.13.c

describe causes of shifts in and movements along demand and supply curves

Economics 4.13.d describe the process of aggregating

describe the process of aggregating demand and supply curves

4.13.f

distinguish between stable and unstable equilibria, including price bubbles, and identify instances of such equilibria

Economics 4.13.g

calculate and interpret individual and aggregate demand, and inverse demand and supply functions, and interpret individual and aggregate demand and supply curves

4.13.g

calculate and interpret individual and aggregate demand, and inverse demand and supply functions, and interpret individual and aggregate demand and supply curves

Economics 4.13.h

calculate and interpret the amount of excess demand or excess supply associated with a non-equilibrium price

4.13.h

calculate and interpret the amount of excess demand or excess supply associated with a non-equilibrium price

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Economics 4.13.i describe types of auctions and calculate

the winning price(s) of an auction 4.13.i

describe types of auctions and calculate the winning price(s) of an auction

Economics 4.13.j

calculate and interpret consumer surplus, producer surplus, and total surplus

4.13.j

calculate and interpret consumer surplus, producer surplus, and total surplus

Economics 4.13.k

describe how government regulation and intervention affect demand and supply

4.13.k

describe how government regulation and intervention affect demand and supply

4.13.m

calculate and interpret price, income, and cross-price elasticities of demand and describe factors that affect each measure

Economics 4.14.a describe consumer choice theory and

describe consumer choice theory and utility theory

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.e compare substitution and income effects

Economics 4.14.f

distinguish between normal goods and inferior goods, and explain Giffen goods and Veblen goods in this context

4.14.f

distinguish between normal goods and inferior 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 and compare

total, average, and marginal revenue 4.15.b

calculate and interpret and compare total, average, and marginal revenue

Economics 4.15.c describe a firm’s factors of production 4.15.c describe a 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 determine and describe breakeven and

shutdown points of production 4.15.e

determine and describe breakeven and shutdown points of production

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Economics 4.15.f describe approaches to determining the

profit-maximizing level of output 4.15.f

describe approaches to determining the profit-maximizing level of output

Economics 4.15.g describe how economies of scale and

diseconomies of scale affect costs 4.15.g

describe how economies of scale and diseconomies of scale affect costs

Economics 4.15.h distinguish between short-run and

distinguish between short-run and run profit maximization

long-Economics 4.15.i

distinguish among decreasing-cost, constant-cost, and increasing-cost industries and describe the long-run supply of each

4.15.i

distinguish among decreasing-cost, constant-cost, and increasing-cost industries and describe the long-run supply of each

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

describe the phenomenon of diminishing marginal returns and calculate and interpret the profit-maximizing utilization 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 determine the optimal combination of

resources that minimizes cost 4.15.l

determine the optimal combination of resources that minimizes cost

describe characteristics of perfect competition, monopolistic competition, oligopoly, and pure monopoly

4.16.a

describe characteristics of perfect competition, monopolistic competition, oligopoly, and pure monopoly

Economics 4.16.b

explain relationships between price, marginal revenue, marginal cost, economic profit, and the elasticity of demand under each market structure

4.16.b

explain relationships between price, marginal revenue, marginal cost, economic profit, and the elasticity of demand under each market structure

Economics 4.16.c describe a firm’s supply function under each market structure 4.16.c each market structuredescribe a firm’s supply function under

Economics 4.16.d

describe and determine the optimal price and output for firms under each market structure

4.16.d

describe and determine the optimal price and output for firms under each market structure

Economics 4.16.e explain factors affecting long-run

equilibrium under each market structure

4.16.e explain factors affecting long-run

equilibrium under each market structure

Economics 4.16.f describe pricing strategy under each

4.16.g

describe the use and limitations of concentration measures in identifying market structure

Economics 4.16.h identify the type of market structure

within which a firm operates 4.16.h

identify the type of market structure within which a firm operates

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calculate and explain gross domestic product (GDP) using expenditure and income approaches

5.17.a

calculate and explain gross domestic product (GDP) using expenditure and income approaches

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

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 relationship among saving, investment, the fiscal balance, and the trade balance

5.17.e

explain the fundamental relationship among saving, investment, the fiscal balance, and the trade balance

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

explain causes of movements along and shifts in aggregate demand and supply curves

5.17.h

explain causes of movements along and shifts in aggregate demand and supply curves

Economics 5.17.i

describe how fluctuations in aggregate demand and aggregate supply cause short-run changes in the economy and the business cycle

5.17.i

describe how fluctuations in aggregate demand and aggregate supply cause short-run changes in the economy and the business cycle

distinguish between the following types

of macroeconomic equilibria: long-run full employment, short-run recessionary gap, short-run inflationary gap, and short-run stagflation

analyze the effect of combined changes

in aggregate supply and demand on the economy

5.17.l

analyze the effect of combined changes

in aggregate supply and demand on the economy

Economics 5.17.l describe sources, measurement, and

sustainability of economic growth 5.17.m

describe sources, measurement, and sustainability of economic growth

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Economics 5.17.m

describe the production function approach to analyzing the sources of economic growth

5.17.n

describe the production function approach to analyzing the sources of economic growth

Economics 5.17.n

distinguish between input growth and growth of total factor productivity as components of economic growth

5.17.o

distinguish between input growth and growth of total factor productivity as components of economic growth

Economics 5.18.a describe the business cycle and its phases 5.18.a phasesdescribe the business cycle and its

describe how resource use, housing sector activity, and external trade sector activity vary as an economy moves through the business cycle

5.18.b

describe how resource use, housing sector activity, and external trade sector activity vary as an economy moves through the business cycle

Economics 5.18.c describe theories of the business cycle 5.18.c describe theories of the business cycle

Economics 5.18.d describe types of unemployment and measures of unemployment 5.18.d describe types of unemployment and measures of unemployment

Economics 5.18.e explain inflation, hyperinflation,

disinflation, and deflation 5.18.e

explain inflation, hyperinflation, disinflation, and deflation

Economics 5.18.f explain the construction of indices used

explain the construction of indices used

to 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 distinguish between cost-push and

distinguish between cost-push and demand-pull inflation

Economics 5.18.i describe economic indicators, including

their uses and limitations 5.18.i

describe economic indicators, including their uses and limitations

Economics 5.19.a compare monetary and fiscal policy 5.19.a compare monetary and fiscal policy

Economics 5.19.b describe functions and definitions of money 5.19.b describe functions and definitions of money

Economics 5.19.c explain the money creation process 5.19.c explain the money creation process

Economics 5.19.d describe theories of the demand for and supply of money 5.19.d supply of moneydescribe theories of the demand for and

Economics 5.19.e describe the Fisher effect 5.19.e describe the Fisher effect

Economics 5.19.f describe roles and objectives of central banks 5.19.f describe roles and objectives of central banks

Economics 5.19.g contrast the costs of expected and

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Economics 5.19.i describe qualities of effective central

5.19.k

explain the relationships between monetary policy and economic growth, inflation, interest, and exchange rates

contrast the use of inflation, interest rate, and exchange rate targeting by central banks

5.19.l

contrast the use of inflation, interest rate, and exchange rate targeting by central banks

Economics 5.19.l determine whether a monetary policy is expansionary or contractionary 5.19.m determine whether a monetary policy is expansionary or contractionary

Economics 5.19.m describe limitations of monetary policy 5.19.n describe limitations of monetary policy

Economics 5.19.n describe roles and objectives of fiscal policy 5.19.o policydescribe roles and objectives of fiscal

Economics 5.19.o describe tools of fiscal policy, including their advantages and disadvantages 5.19.p their advantages and disadvantagesdescribe tools of fiscal policy, including

Economics 5.19.p

describe the arguments about whether the size of a national debt relative to GDP matters

5.19.q

describe the arguments about whether the size of a national debt relative to GDP matters

Economics 5.19.q explain the implementation of fiscal

policy and difficulties of implementation 5.19.r

explain the implementation of fiscal policy and difficulties of implementation

Economics 5.19.r determine whether a fiscal policy is

Economics 6.20.a compare gross domestic product and

compare gross domestic product and gross national product

Economics 6.20.b describe benefits and costs of international trade 6.20.b describe benefits and costs of international trade

Economics 6.20.c distinguish between comparative advantage and absolute advantage 6.20.c advantage and absolute advantagedistinguish between comparative

Economics 6.20.d

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 each model

Economics 6.20.e

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

explain motivations for and advantages

of trading blocs, common markets, and economic unions

6.20.f

explain motivations for and advantages

of trading blocs, common markets, and economic unions

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Economics 6.20.g describe common objectives of capital

restrictions imposed by governments New

Economics 6.20.g describe the balance of payments

accounts including their components 6.20.h

describe the balance of payments accounts including their components

explain how decisions by consumers, firms, and governments affect the balance of payments

6.20.i

explain how decisions by consumers, firms, and governments affect the balance of payments

Economics 6.20.i

describe functions and objectives of the international organizations that facilitate trade, including the World Bank, the International Monetary Fund, and the World Trade Organization

6.20.j

describe functions and objectives of the international organizations that facilitate trade, including the World Bank, the International Monetary Fund, and the World Trade Organization

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

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 anothercurrency

Economics 6.21.d calculate and interpret currency

calculate and interpret currency rates

cross-Economics 6.21.e convert forward quotations expressed

on a points basis or in percentage terms into an outright forward quotation

6.21.e convert forward quotations expressed

on a points basis or in percentage terms into an outright forward quotation

explain the arbitrage relationship between spot rates, forward rates, and interest rates

6.21.f

explain the arbitrage relationship between spot rates, forward rates, and interest rates

Economics 6.21.g calculate and interpret a forward discount or premium 6.21.g calculate and interpret a forward discount or premium

calculate and interpret the forward rate consistent with the spot rate and the interest rate in each currency

6.21.h

calculate and interpret the forward rate consistent 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 effects of exchange rates on countries’ international trade and capital flows

6.21.j

explain the effects of exchange rates on countries’ international trade and capital flows

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Financial

Reporting 7.22.b

describe the roles of the key financial statements (statement of financial position, statement of comprehensive income, statement of changes in equity, and statement of cash flows) in

evaluating a company’s performance and financial position

7.22.b

describe the roles of the key financial statements (statement of financial position, statement of comprehensive income, statement of changes in equity, and statement of cash flows) in

evaluating a company’s performance and financial position

Financial

Reporting 7.22.c

describe the importance of financial statement notes and supplementary information—including disclosures of accounting policies, methods, and estimates— and management’s commentary

7.22.c

describe the importance of financial statement notes and supplementary information—including disclosures of accounting policies, methods, and estimates— and management’s commentary

Financial

Reporting 7.22.d

describe the objective of audits of financial statements, the types of audit reports, and the importance of effective internal controls

7.22.d

describe the objective of audits of financial statements, the types of audit reports, and the importance of effective internal controls

Financial

Reporting 7.22.e

identify and describe information sources that analysts use in financial statement analysis besides annual financial statements and supplementary information

7.22.e

identify and describe information sources that analysts use in financial statement analysis besides annual financial statements and supplementary information

7.23.a

explain the relationship of financial statement elements and accounts, and classify accounts into the financial statement elements

Financial

explain the accounting equation in its

explain the accounting equation in its basic and expanded forms

Financial

describe the process of recording business transactions using an accounting system based on the accounting equation

7.23.c

describe the process of recording business transactions using an accounting system based on the accounting equation

Financial

describe the need for accruals and other adjustments in preparing financial statements

7.23.d

describe the need for accruals and other adjustments in preparing financial statements

Financial

describe the relationships among the income statement, balance sheet, statement of cash flows, and statement

of owners’ equity

7.23.e

describe the relationships among the income statement, balance sheet, statement of cash flows, and statement

of owners’ equity

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describe the objective of financial statements and the importance of financial reporting standards in security analysis and valuation

Financial

describe roles and desirable attributes

of financial reporting standard-setting bodies and regulatory authorities in establishing and enforcing reporting standards, and describe the role of the International Organization of Securities Commissions

7.24.b

describe roles and desirable attributes

of financial reporting standard-setting bodies and regulatory authorities in establishing and enforcing reporting standards, and describe the role of the International Organization of Securities Commissions

Financial

describe the status of global convergence of accounting standards and ongoing barriers to developing one universally accepted set of financial reporting standards

7.24.c

describe the status of global convergence of accounting standards and ongoing barriers to developing one universally accepted set of financial reporting standards

Financial

Reporting 7.24.e describe general requirements for financial statements under IFRS 7.24.e

describe general requirements for financial statements under International Financial Reporting Standards (IFRS)

Wording Change

Financial

Reporting 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 US generally accepted accounting principles (US GAAP) reporting systems

Wording Change

Financial

Reporting 7.24.g

identify characteristics of a coherent financial reporting framework and the barriers to creating such a framework

7.24.g

identify characteristics of a coherent financial reporting framework and the barriers to creating such a framework

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Financial

Reporting 7.24.h

describe implications for financial analysis of differing financial reporting systems and the importance of

monitoring developments in financial reporting standards

7.24.h

describe implications for financial analysis of differing financial reporting systems and the importance of

monitoring developments in financial reporting standards

8.25.a

describe the components of the income statement and alternative presentation formats of that statement

Financial

describe general principles of revenue 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 implications of revenue recognition principles for financial analysis

8.25.b

describe general principles of revenue 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 implications of revenue recognition principles for financial analysis

Financial

calculate revenue given information that might influence the choice of revenue recognition method

8.25.c

calculate revenue given information that might influence the choice of revenue recognition method

Financial

describe general principles of expense recognition, specific expense recognition applications, and implications of

expense recognition choices for financial analysis

8.25.d

describe general principles of expense recognition, specific expense recognition applications, and implications of

expense recognition choices for financial analysis

Financial

describe the financial reporting treatment and analysis of non-recurring items (including discontinued

operations, extraordinary items, unusual or infrequent items) and changes in accounting standards

8.25.e

describe the financial reporting treatment and analysis of non-recurring items (including discontinued

operations, extraordinary items, unusual or infrequent items) and changes in accounting standards

Financial

Reporting 8.25.f

distinguish between the operating and non-operating components of the income statement

8.25.f

distinguish between the operating and non-operating components of the income statement

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Financial

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

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 and antidilutive securities, and describe the implications of each for the earnings per share calculation

8.25.h

distinguish between dilutive and antidilutive securities, and describe the implications of each for the earnings per share calculation

Financial

Reporting 8.25.i

convert income statements to

convert income statements to size income statements

common-Financial

Reporting 8.25.j

evaluate a company’s financial performance using common-size income statements and financial ratios based on the income statement

8.25.j

evaluate a company’s financial performance using common-size income statements and financial ratios based on the income statement

8.25.l

describe other comprehensive income, and identify major types of items included in it

non-8.26.d

distinguish between current and current assets, and current and non-current liabilities

non-Financial

describe different types of assets and liabilities and the measurement bases of each

8.26.e

describe different types of assets and liabilities and the measurement bases of each

Separation

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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

GAAP)

8.27.c

contrast cash flow statements prepared under International Financial Reporting Standards (IFRS) and U.S generally accepted accounting principles (U.S

8.27.d

distinguish between the direct and indirect methods of presenting cash from operating activities and describe arguments in favor of each method

Financial

describe how the cash flow statement is linked to the income statement and the balance sheet

8.27.e

describe how the cash flow statement is linked to the income statement and the balance sheet

8.27.i

calculate and interpret free cash flow to the firm, free cash flow to equity, and performance and coverage cash flow ratios

Financial

Reporting 8.28.a

describe tools and techniques used in financial analysis, including their uses and limitations

8.28.a

describe tools and techniques used in financial analysis, including their uses and limitations

Financial

classify, calculate, and interpret activity, liquidity, solvency, profitability, and valuation ratios

8.28.b

classify, calculate, and interpret activity, liquidity, solvency, profitability, and valuation ratios

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demonstrate the application of DuPont analysis of return on equity, and calculate and interpret effects of changes in its components

8.28.f

explain the requirements for segment reporting, and calculate and interpret segment ratios

Financial

describe how ratio analysis and other techniques can be used to model and forecast earnings

8.28.g

describe how ratio analysis and other techniques can be used to model and forecast earnings

Financial

Reporting 9.29.a

distinguish between costs included in inventories and costs recognized as expenses in the period in which they are incurred

9.29.a

distinguish between costs included in inventories and costs recognised as expenses in the period in which they are incurred

sp

Financial

describe different inventory valuation

describe different inventory valuation methods (cost formulas)

Financial

calculate cost of sales and ending inventory using different inventory valuation methods and explain the effect of the inventory valuation method choice on gross profit

9.29.c

calculate cost of sales and ending inventory using different inventory valuation methods and explain the effect of the inventory valuation method choice on gross profit

Financial

calculate and compare cost of sales, gross profit, and ending inventory using perpetual and periodic inventory

systems

9.29.d

calculate and compare cost of sales, gross profit, and ending inventory using perpetual and periodic inventory

describe the measurement of inventory

at the lower of cost and net realisable value

9.29.f

describe the measurement of inventory

at the lower of cost and net realisable value

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describe the different depreciation methods for property, plant, and equipment, the effect of the choice of depreciation method on the financial statements, and the effects of assumptions concerning useful life and residual value on depreciation expense

amortization method on the financial statements, and the effects of assumptions concerning useful life and residual value on amortization expense

9.30.e

describe the different amortization methods for intangible assets with finite lives, the effect of the choice of

amortization method on the financial statements, and the effects of

assumptions concerning useful life and residual value on amortization expense

9.30.h

explain the impairment 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

9.30.k

compare the financial reporting of investment property with that of property, plant, and equipment

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