Tài liệu CFA 2010 level 2 Outline pptx

Standards of Professional Conduct as well as the CFA Institute Soft Dollar Standards and the CFA Institute Research Objectivity Standards The principles and guidance presented in the CF

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Standards of Professional Conduct as well as the CFA Institute Soft Dollar

Standards and the CFA Institute Research Objectivity Standards

The principles and guidance presented in the CFA Institute Standards of

Practica Handbook (SOPH) form the basis for the GFA Institute self-regulatony

program to maintain the highest professional standards among investment practitioners A cleat understanding of the CFA Institute Cod@ of Ethics and

Standards of Professional Conduct (both found in the SOPH) should allow the

practitioner to identify and appropriately resolve ethical conflicts The resulting recognition for integrity should benefit both the individual and the profession

"Guidance" in the SOPH addresses the practical application of the Cade of Ethics and Standards of Professional Conduct The guidance reviews the purpose and scope of each Standard, presents recommended procedures for compliance, and provides examples of the Standard in practice

The CFA Institute Soft Dollar Standards and CFA Institute Research Objectivity

Standards address contemporary issues for which CFA Institute has believed further, mare specific guidance is warranted Both documents are consistent with and complement the CFA Institute Code of Ethics and Standards of Professional Conduct Soft-dollar payment arrangements, involving the investment manager’s use

of client brokerage to obtain services related to the manager's investment

decision-making process, have become extremely complex As a consequence, ethically ambiguous situations can arise in which it is not immediately clear that the manager remains in compliance with the obligation, under the CFA Institute Code of Ethics, to place client interests ahead of personal or firm interests The Soft Dollar Standards provide guidance on what services and products are

appropriate for purchase with client brokerage, the appropriate disclosure of soft-dollar practices, and the necessary record keeping

wunw.cfainstitute.org/toolkit—Your online preparation resource

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Study Session 1

Investment research objectivity should be the logical consequence of ethical conduct, consistent with the CFA Institute Code of Ethics and Standards of Professional Conduct, in which client interests are placed first and conflicts of interest are fully disclosed When temptation or pressure leads to biased or

misleading research reports, the integrity of all financial professionals is tainted The CFA Institute Research Objectivity Standards present specific policies and procedures designed to create a research environment where conflicts of interests and opportunities for ethical lapses are minimized and disclosed

READING ASSIGNMENTS

Reading 1 Code of Ethics and Standards of Professional Conduct

Standards of Practice Handbook, Ninth Edition Reading 2 Guidance for Standards I-VII

Standards of Practice Handbook, Ninth Edition Reading 3 CFA Institute Soft Dollar Standards

CFA Institute Soft Dollar Standards Reading 4 CFA Institute Research Objectivity Standards

Standards of Practice Handbook, Ninth Edition

b explain the ethical responsibilities required by the Code and Standards

Reading 2: Guidance for Standards I-VII

The candidate should be able to:

a demonstrate a thorough knowledge of the Code of Ethics and Standards of Professional Conduct by applying the Code and Standards to specific situations;

b recommend practices and procedures designed to prevent violations of the Code

of Ethics and Standards of Professional Conduct

Reading 3: CFA Institute Soft Dollar Standards

a define soft-dollar arrangements and state the general principles of the Soft Dollar Standards;

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Reading 4: CFA Institute Research Objectivity Standards The candidate should be able to:

a explain the objectives of the Research Objectivity Standards;

b critique company policies and practices related to research objectivity and distinguish between changes required and changes recommended for compliance with the Research Objectivity Standards

www.VividBook.ne

www.cfainstitute.org/toolkit—Your online preparation resource

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his study session uses case studies as an aid to understanding and

internalizing the values and standards presented in the CFA Institute Code of Ethics and Standards of Professional Conduct

The cases present realistic but fictional situations that closely approximate

how individuals practicing in the investment industry encounter ethical issues in theinday-to-day activitiés, The discussions followingyeach ease identifyekey

Violations of the Standards of Professional Conduct, recommend corrective actions, and when approptiate, formulate policy statements @ifirm could use if seeking to prevent the violations The Standards Reporter readings present

regulatory actions taken in response to actual occurrences and explain how the violations would be viewed from the perspective of the Code of Ethics and Standards of Professional Conduct

Widespread recognition exists that certain situations create a “fiduciary”

relationship in which an elevated level of fidelity, due diligence, and prudence is required of the investment manager Historically, the term “fiduciary” has been defined in country-specific laws and regulations, making generic definitions difficutt Nonetheless, the underlying principles of the prudent investor rule, presented in “Prudence in Perspective,” capture much of what is expected of

investment professionals entrusted with the prudent management of client assets

Ethics Cases Ethics Cases Ethics Cases

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Reading 8 Trade Allocation: Fair Dealing and Disclosure

Standards Reporter Reading 9 Changing Investment Objectives

Standards Reporter Reading 10 Prudence in Perspective

Investing and Managing Trusts Under the New Prudent investor Rule: A Guide for Trustees, investment Advisors, and Lawyers,

by John Train and Thomas A Melfe

LEARNING OUTCOMES

Reading 5: The Glenarm Company

a critique the practices and policies presented;

b explain the appropriate action to take in response to conduct that violates the CFA Institute Code of Ethics and Standards of Professional Conduct

Reading 6: Preston Partners

CFA Institute Code of Ethics and,Standards of Professional Conduct

Reading 7: Super Selection

a critique the practices and policies presented;

b explain the appropriate action to take in response to conduct that violates the CFA Institute Code of Ethics and Standards of Professional Conduct

Reading 8: Trade Allocation: Fair Dealing and Disclosure

a critique trade allocation practices and determine whether there is compliance with the CFA Institute Standards of Professional Conduct addressing fair dealing and client loyalty;

b discuss appropriate actions to take in response to trade allocation practices that

do not adequately respect client interests

Reading 9: Changing Investment Objectives

a critique the disclosure of investment objectives and basic policies and determine whether they comply with the CFA Institute Standards of Professional Conduct;

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Study Session 2

Reading 10: Prudence in Perspective The candidate should be able to:

a explain the basic principles of the new Prudent Investor Rule;

b explain the general fiduciary standards to which a trustee must adhere;

c differentiate between the old Prudent Man Rule and the new Prudent Investor Rule;

d explain the key factors that a trustee should consider when investing and managing trust assets

www.VividBook.n

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in financial modeling, In addition to a discussion of building and interpreting multiple regression models, the readings present information about testing the significance of the estimated parameters and verifying the whole regression model, Equally important is understanding the assumptions behind the structure

of regressionimodels, making corrections ifthe observed variables domnot exhibit the.assumed properties, and avoiding misspecification of the madels

Time-series analysis is used to describe the dynamic behavior of an economic

or financial variable, to forecast its future values, and to detect relations between the time series of different variables, Indeed, regression models must be treated within a time-series context if the variables are measured over time, Regression reports for such models should include standard time-series tests to ensure that

the results of the regression are interpreted correctly Using time-series analysis to

explain the past and predict the future of a data series can help improve portfolio management decision making Model assumptions and the consequences of model misspecification must be considered in any application In addition,

time-series properties, such as stationarity and mean reversion, have important

consequences for portfolio planning

Quantitative Methods for Investment Analysis, Second Edition,

by Richard A DeFusco, CFA, Dennis W McLeavey, CFA, Jerald E Pinto, CFA, and David E Runkle, CFA

by Richard A DeFusco, CFA, Dennis W McLeavey, CFA, Jerald Pinto, CFA, and David E Runkle, CFA

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Study Session 3

Reading 13 Time-Series Analysis

by Richard A DeFusco, CFA, Dennis W McLeavey, CFA, Jerald E Pinto, CFA, and David E Runkle, CFA

LEARNING OUTCOMES

Reading 11: Correlation and Regression

a calculate and interpret a sample covariance and a sample correlation coefficient and interpret a scatter plot;

f calculate and interpret the standard error of estimate, the coefficient of

determination, and a confidence interval for a regression coefficient;

regression coefficient, select the appropriate test statistic, and determine

whether the null hypothesis is rejected at a given level of significance;

h calculate a predicted value for the dependent variable, given an estimated

regression model and a value for the independent variable and calculate and interpret a confidence interval for the predicted value of a dependent variable;

i describe the use of analysis of variance (ANOVA) in regression analysis, interpret ANOVA results, and calculate and interpret an Fstatistic;

j discuss the limitations of regression analysis

Reading 12: Multiple Regression and Issues in Regression Analysis The candidate should be able to:

a formulate a multiple regression equation to describe the relation between a

dependent variable and several independent variables, determine the statistical significance of each independent variable, and interpret the estimated

coefficients and their p-values;

b formulate a null and an alternative hypothesis about the population value of a regression coefficient, calculate the value of the test statistic, determine whether

to reject the null hypothesis at a given level of significance by using a one-tailed

or two-tailed test, and interpret the results of the test;

d explain the assumptions of a multiple regression model;

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e calculate and interpret the Fstatistic and discuss how it is used in regression analysis; define, distinguish between, and interpret the R? and adjusted #? in multiple regression; and infer how well a regression model explains the

dependent variable by analyzing the output of the regression equation and an ANOVA table;

i discuss the effects of model misspecification on the results of a regression

analysis and explain how to avoid the common forms of misspecification;

Reading 13: Time-Series Analysis

a calculate and evaluate the predicted trend value for a time series, modeled as either a linear trendyor a log-linear trend, given the estimated:trend coefficients;

._ discuss the factors that determine whether a |

the significance of a series not being stationary;

d discuss the structure of an autoregressive (AR) model of order p, calculate one- and two-period-ahead forecasts given the estimated coefficients, and explain how autocorrelations of the residuals can be used to test whether the

autoregressive model fits the time series;

h describe the characteristics of random walk processes and contrast them to

covariance stationary processes;

i discuss the implications of unit roots for time-series analysis, explain when unit roots are likely to occur and how to test for them, and demonstrate how a time series with a unit root can be transformed so it can be analyzed with an AR model;

j discuss the steps of the unit root test for nonstationarity and explain the relation

of the test to autoregressive time-series models;

k discuss how to test and correct for seasonality in a time-series model and

calculate and interpret a forecasted value using an AR model with a seasonal lag;

I explain autoregressive conditional heteroskedasticity (ARCH) and discuss how ARCH models can be applied to predict the variance of a time series;

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his study session builds on the principles of economics from Level | and links them to the valuation process The readings discuss how the economic

environment affects a firm's performance, The first topic is alternative theories of economic growth, including capital investment, productivity, human capital, and technology Governments can influence economic growth to an extent by applying different regulations, each of which has an associated cost for firms or consumers Most large firms do not exclusively trade within their own borders, but transact business with companies or individuals outside theiF Øwn coufftry Foreign exchange fluctuations have an impact on the bottom line and hence on the valuation of a company Buyers’ decisions, however, are also based on parity relations; in other words, buyers will purchase goods and services where they can get the most for their money Finally, the study session ends with a review of the measures of economic progress

Economics, Eighth Edition, by Michael Parkin Economics Today, Fourteenth Edition, by Roger LeRoy Miller Economics, Eighth Edition, by Michael Parkin

Economics, Eighth Edition, by Michael Parkin

Global Investments, Sixth Edition, by Bruno Solnik and Dennis McLeavey, CFA

Guide to Economic Indicators, Sixth Edition, by Richard Stutely

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LEARNING OUTCOMES

Reading 14: Economic Growth

a define the sources of economic growth and discuss the preconditions for

c discuss how faster economic growth can be achieved by increasing the growth

of physical capital, technological advances, and investment in human capital;

a explain the rationale for government regulation in the form of 1) economic

regulation of natural monopolies and 2) social regulation of nonmonopolistic industries;

b discuss the potential benefits and possible negative side effects of social

regulation;

pains theory of regulator behavior

Reading 16: Trading with the World

a explain comparative advantage and how countries can gain from international trade;

b compare and contrast tariffs, nontariff barriers, quotas, and voluntary export

restraints;

¢c critique the arguments for trade restrictions

Reading 17: The Exchange Rate and the Balance of Payments

a define an exchange rate and differentiate between the nominal exchange rate and the real exchange rate;

describe the following exchange rate policies: flexible exchange rates, fixed

exchange rates, and crawling pegs

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Study Session 4

Reading 18: Currency Exchange Rates

a define direct and indirect methods of foreign exchange quotations and convert direct (indirect) foreign exchange quotations into indirect (direct) foreign

exchange quotations;

calculate and interpret the spread on a foreign currency quotation and explain how spreads on foreign currency quotations can differ as a result of market

conditions, bank/dealer positions, and trading volume;

calculate and interpret currency cross rates, given two spot exchange quotations involving three currencies;

calculate the profit on a triangular arbitrage opportunity, given the bid-ask

quotations for the currencies of three countries involved in the arbitrage;

distinguish between the spot and forward markets for foreign exchange;

g calculate and interpret a forward discount or premium and express it as an

Reading 19: Foreign Exchange Parity Relations

a explain how exchange rates are determined in a flexible (or floating) exchange rate system;

explain the role of each component of the balance of payments accounts;

explain how current account deficits or surpluses and financial account deficits or surpluses affect an economy;

describe the factors that cause a nation’s currency to appreciate or depreciate; explain how monetary and fiscal policies affect the exchange rate and balance of payments components;

describe a fixed exchange rate and a pegged exchange rate system;

define and discuss absolute purchasing power parity and relative purchasing power parity;

calculate the end-of-period exchange rate implied by purchasing power parity, given the beginning-of-period exchange rate and the inflation rates;

define and discuss the international Fisher relation;

calculate the real interest rate, given interest rates and inflation rates and the assumption that the international Fisher relation holds;

calculate the international Fisher relation, and its linear approximation, between interest rates and expected inflation rates;

define and discuss the theory of uncovered interest rate parity and explain the theory's relation to other exchange rate parity theories;

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m calculate the expected change in the exchange rate, given interest rates and the assumption that uncovered interest rate parity holds;

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ntercorporate investments receive different accounting treatments depending on

the percentage ownership, amount of control, and other variables concerning

the relation between the company making the investment and the investee

An analysis of intercorporate investments is necessary to separate operating performance from investing performance and to understand the potential

accounting distortions that arise as.aresult.of the accounting rules and/or

earnings management ploysthat may occur The analyst also should understand the comparative financial statement effects that occúr from the consdlidationtor proportionate consolidation of intercorporate investments

The analyst should understand the purchase and pooling methods of

accounting that apply to a company's merger and acquisition activities Although the pooling method is no longer available for new acquisitions under international financial reporting standards (ERS) and U.S generally accepted accounting principles (GAAP), the pooling method remains in effect (under both sets of

standards) for pooling acquisitions that were in place before the pooling option

was eliminated Company mergers and acquisitions are troublesome for analysts because a company’s business and financial statements may be radically changed within a short period of time

In the early 2000s, the accounting rules for off-balance sheet subsidiaries such

as special purpose entities (SPEs) were abused, Subsequently, the Financial

Accounting Standards Board (FASB) and International Accounting Standards Board

(IASB) modified the way that companies must account for SPEs, now known as variable interest entities (VIEs) As a result, some entities that were previously

accounted for off-balance sheet are now shown on the parent company’s

financial statements

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READING ASSIGNMENT

Reading 21 Intercorporate Investments

International Financial Statement Analysis, by Thornas R

Robinson, CFA, Jan Hendrik van Greuning, CFA, R Elaine Henry, CFA, and Michael A Broihahn, CFA

b distinguish between IFRS and U.S GAAP in the classification, measurement, and disclosure of investments in financial assets, investments in associates, joint ventures, business combinations, and special purpose and variable interest

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ecent changes in accounting for pensions and other post-employment benefits require more obligations to be reported on the balance sheet U.S and international accounting standards have both changed in a similar, but not identical fashion

Employee stock options were previously excluded from the income statement but were disclosed in the footnotes International and U.S accounting: standards Now require employee stock/ options tobe expensed

Multinational companies often have subsidiaries in different countries that maintain their books and records in a local currency Floating exchange rates present an additional challenge Transactions and translations in a parent

company's financial statements must be analyzed to evaluate a company’s performance and financial position

International Financial Statement Analysis, by Thomas R

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explain the impact of a defined benefit plan’s assumptions on the defined

benefit obligation and periodic expense;

explain the impact on financial statements of International Financial Reporting Standards (IFRS) and U.S Generally Accepted Accounting Principles (U.S GAAP) for pension and other post-employment benefits that permit iterns to be

reported in the footnotes rather than in the financial statements;

Reading 23: Multinational Operations

a distinguish among presentation currency, functional currency, and local currency;

b analyze the impact of changes in exchange rates on the translated sales of the subsidiary and parent company;

compare and contrast the current rate method and the temporal method,

analyze and evaluate the effects of each on the parent company’s balance sheet and income statement, and determine which method is appropriate in various

scenarios;

calculate the translation effects, evaluate the translation of a subsidiary’s balance sheet and income statement into the parent company’s currency, and analyze the differential effect of the current rate method and the temporal method on the subsidiary’s financial ratios;

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he readings in this study session discuss and illustrate the significance of uncovering a company's true sustainable cash flow performance as well as the

importance of the analyst's comparative and/or economic adjustments to a company’s financial statements prior to applying comparative ratio analysis to

evaluate financial performance and risk The readings also discuss the

identification of red flags and warning signs related to.earnings management The fitst reading includes reminders of same common-sense principles

(lessons) to keep in mind when applying the tools aid techniques of financial analysis The second reading illustrates how an analysis of a company’s financial statements can reveal problems Analysts should be able to critique accruals and other problem areas in the financial statements and footnotes that would suggest that the financial reporting quality of a company has been compromised

Financial ratios may be used to compare a company's risk and return with that

of other companies of various sizes, A financial analyst uses ratio analysis to evaluate a company's profitability, asset utilization, liquidity, and solvency A significant hurdle in applying ratio analysisis the difficulty of comparing

companies that use altemative accounting policies To achieve comparability, the analyst must identify the accounting differences and adjust the financial

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Reading 25 Evaluating Financial Reporting Quality

International Financial Statement Analysis, by Thornas R

Reading 26 Integration of Financial Staternent Analysis Techniques

by Jack T Ciesielski Jr, CFA

LEARNING OUTCOMES

Reading 24: The Lessons We Learn

a distinguish among the various definitions of earnings (e.g., EBITDA, operating

earnings, net income, etc.);

» exposure to changes in the value of assets and liabilities,

» exposure to variable cash flow, and

» a foreign currency exposure of an instrument in a foreign corporation

Reading 25: Evaluating Financial Reporting Quality

a contrast cash-basis and accrual-basis accounting and explain why accounting discretion exists in an accrual accounting system;

describe the relation between the level of accruals and the persistence of

earnings and the relative multiples that the cash and accrual components of earnings should rationally receive in valuation;

discuss problems with the quality of financial reporting, including revenue

recognition, expense recognition, balance sheet issues, and cash flow statement issues, and interpret warning signs of these potential problems

Reading 26: Integration of Financial Statement Analysis Techniques The candidate should be able to:

a demonstrate the use of a framework for the analysis of financial statements, given a particular problem, question, or purpose (e.g., valuing equity based on comparables, critiquing a credit rating, obtaining a comprehensive picture of financial leverage, evaluating the perspectives given in management's discussion

of financial results):

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Study Session 7

identify financial reporting choices and biases that affect the quality and

comparability of companies’ financial statements and illustrate how such biases affect financial decisions;

predict the impact on financial statements and ratios, given a change in

accounting rules, methods, or assumptions;

analyze and interpret the effects of balance sheet modifications, earnings

normalization, and cash-flow-statement-related modifications on a company’s financial statements, financial ratios, and overall financial condition

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These capital budgeting principles are critical for an analyst inside a company preparing capital budgeting recommendations as well as for an external analyst estimating the value of the company

The balance of the Study Session covers capital structure and dividend policy, Induded is a discussion of the Modialiani-Miller propositions relating to capital structure and dividend policy The presentation of capital striture and dividend policy starts with the classic Modigliani-Miller propositions and then relaxes their underlying assumptions by incorporating taxes and other market imperfections Leverage and dividend policies contribute to the risk and return characteristics of corporate stocks and bonds

Corporate Finance: A Practical Approach, by Michelle R

Clayman, CFA, Martin S Fridson, CFA, and George H Troughton, CFA

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Study Session 8

LEARNING OUTCOMES

Reading 27: Capital Budgeting

a compute the yearly cash flows of an expansion capital project and a replacement capital project and evaluate how the choice of depreciation method affects those cash flows;

discuss the effects of inflation on capital budgeting analysis;

evaluate and select the optimal capital project in situations of 1) mutually

exclusive projects with unequal lives, using either the least common multiple of lives approach or the equivalent annual annuity approach, and 2) capital

models: economic profit, residual income, and claims valuation

Reading 28: Capital Structure and Leverage

c calculate the breakeven quantity of sales and determine the company’s net

income at various sales levels;

d describe the effect of financial leverage on a company’s net income and return

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Reading 29: Dividends and Dividend Policy

a discuss cash dividends, stock dividends, stocks splits, and reverse stock splits and evaluate their impact on a shareholder's wealth;

compare the impact on shareholder wealth of a share repurchase with a cash dividend of equal amount;

calculate the earnings per share effect of a share repurchase when the

repurchase is made with borrowed funds and the company’s after-tax cost of debt is greater (less) than its earnings yield;

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his study session presents two major organizational topics of corporate

finance First, corporate governance covers the system of principles and policies used to manage conflicts of interest among various groups of stakeholders

of a corporation Second, mergers and acquisitions and corporate restructurings,

which redistribute ownership and contral, are analyzed

Corporate Finance: A Practical Approach, by Michelle’R

a explain corporate governance, discuss the objectives and the core attributes of

an effective corporate governance system, and evaluate whether a company’s corporate governance has those attributes;

b Compare and contrast the major business forms and describe the conflicts of

interest associated with each;

manager-shareholder conflicts and director-shareholder conflicts;

d describe the responsibilities of the board of directors and explain the

qualifications and core competencies that an investment analyst should look for

in the board of directors;

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e illustrate effective corporate governance practice as it relates to the board of directors and evaluate the strengths and weaknesses of a company’s corporate governance practice;

f describe the elements of a company’s statement of corporate governance

policies that investment analysts should assess;

g discuss the valuation implications of corporate governance

Reading 31: Mergers and Acquisitions

a categorize merger and acquisition (M&A) activities based on forms of integration and types of mergers;

b explain the common motivations behind M&A activity;

c illustrate how earnings per share (EPS) bootstrapping works and calculate a

company’s postmerger EPS;

j calculate free cash flows for a target company and estimate the company’s

intrinsic value based on discounted cash flow analysis;

p discuss the major reasons for divestitures

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his study session examines the well-established methodologies of security analysis, the process an analyst uses in applying these models, and the limitations of each methodology The readings contrast the characteristics of equity markets around the world, The session ends with a presentation of

alternative return concepts, theories, and calculations

by George H Troughton, CFA Equity Asset Valuation, Second Edition, by Jerald Pinto,

CFA, Elaine Henry, CBA, Thomas Robinson, CFA, and John Stowe, CFA

Global Investments, Sixth Edition, by Bruno Solnik and Dennis McLeavey, CFA

Equity Asset Valuation, Second Edition, by Jerald Pinto,

CFA, Elaine Henry, CBA, Thomas Robinson, CFA, and John Stowe, CFA

The candidate should be able to explain how the classic works on asset valuation by Graham and Dodd and John Burr Williams are reflected in

modern techniques of equity valuation

Tiêu đề	Tài liệu CFA 2010 level 2 Outline pptx
Trường học	Hanoi University of Science and Technology
Chuyên ngành	CFA Level 2
Thể loại	Outline
Năm xuất bản	2010
Thành phố	Hanoi

Định dạng
Số trang	53
Dung lượng	4,53 MB