2022 CFA Program Curriculum Level I Corporate Finance, Equity, And Fixed Income

Description

Prepare for success on the 2022 CFA Level I exam with the latest official CFA® Program Curriculum. The 2022 CFA Program Curriculum Level I Box Set contains all the material you need to succeed on the Level I CFA exam in 2022. This set includes the full official curriculum for Level I and is part of the larger CFA Candidate Body of Knowledge (CBOK). Highly visual and intuitively organized, this box set allows you to: Learn from financial thought leaders. Access market-relevant instruction. Gain critical knowledge and skills. The set also includes practice questions to assist with your recall of key terms, concepts, and formulas. Perfect for anyone preparing for the 2022 Level I CFA exam, the 2022 CFA Program Curriculum Level I Box Set is a must-have resource for those seeking the foundational skills required to become a Chartered Financial Analyst®. How to Use the CFA Program Curriculum Background on the CBOK Organization of the Curriculum Features of the Curriculum Designing Your Personal Study Program CFA Institute Learning Ecosystem (LES) Prep Providers Feedback Corporate Issuers 10 Corporate Issuers (2) 30 Cost of Capital-­Foundational Topics Introduction Cost of Capital 2.1 Taxes and the Cost of Capital Costs of the Various Sources of Capital 3.1 Cost of Debt 3.2 Cost of Preferred Stock 3.3 Cost of Common Equity Estimating Beta 4.1 Estimating Beta for Public Companies 4.2 Estimating Beta for Thinly Traded and Nonpublic Companies Flotation Costs Methods in Use Summary Practice Problems Solutions 31 Capital Structure Introduction Capital Structure and Company Life Cycle 2.1 Background 2.2 Start-­Ups 2.3 Growth Businesses 2.4 Mature Businesses 2.5 Unique Situations Modigliani–Miller Propositions 3.1 MM Proposition I without Taxes: Capital Structure Irrelevance 3.2 MM Proposition II without Taxes: Higher Financial Leverage Raises the Cost of Equity 3.3 MM Propositions with Taxes: Taxes, Cost of Capital, and Value of the Company 3.4 Costs of Financial Distress Optimal and Target Capital Structure Factors Affecting Capital Structure Decisions 5.1 Capital Structure Policies and Target Capital Structures 5.2 Financing Capital Investments 5.3 Market Conditions 5.4 Information Asymmetries and Signaling Agency Costs Stakeholder Interests 7.1 Shareholder vs. Stakeholder Theory 7.2 Debt vs. Equity Conflict 7.3 Preferred Shareholders 7.4 Private Equity Investors/Controlling Shareholders 7.5 Bank and Private Lenders 7.6 Other Stakeholders Summary Practice Problems Solutions 32 Measures of Leverage Introduction Leverage Financial Risk, the Degree of Financial Leverage and the Leveraging Role of Debt Breakeven Points and Operating Breakeven Points The Risks of Creditors and Owners Summary Practice Problems Solutions Equity Investments 11 Equity Investments (1) 33 Market Organization and Structure Introduction The Functions of the Financial System 2.1 Helping People Achieve Their Purposes in Using the Financial System 2.2 Determining Rates of Return 2.3 Capital Allocation Efficiency Assets and Contracts 3.1 Classifications of Assets and Markets Securities 4.1 Fixed Income 4.2 Equities 4.3 Pooled Investments Currencies, Commodities, and Real Assets 5.1 Commodities 5.2 Real Assets Contracts 6.1 Forward Contracts 6.2 Futures Contracts 6.3 Swap Contracts 6.4 Option Contracts 6.5 Other Contracts Financial Intermediaries 7.1 Brokers, Exchanges, and Alternative Trading Systems 7.2 Dealers 7.3 Arbitrageurs Securitizers, Depository Institutions and Insurance Companies 8.1 Depository Institutions and Other Financial Corporations 8.2 Insurance Companies Settlement and Custodial Services and Summary 9.1 Summary  Positions and Short Positions 10.1 Short Positions Leveraged Positions Orders and Execution Instructions 12.1 Execution Instructions Validity Instructions and Clearing Instructions 13.1 Stop Orders 13.2 Clearing Instructions Primary Security Markets 14.1 Public Offerings 14.2 Private Placements and Other Primary Market Transactions 14.3 Importance of Secondary Markets to Primary Markets Secondary Security Market and Contract Market Structures 15.1 Trading Sessions 15.2 Execution Mechanisms 15.3 Market Information Systems Well-­functioning Financial Systems Market Regulation Summary Practice Problems Solutions 34 Security Market Indexes Introduction Index Definition and Calculations of Value and Returns 2.1 Calculation of Single-­Period Returns 2.2 Calculation of Index Values over Multiple Time Periods Index Construction 3.1 Target Market and Security Selection 3.2 Index Weighting Index Management: Rebalancing and Reconstitution 4.1 Rebalancing 4.2 Reconstitution Uses of Market Indexes 5.1 Gauges of Market Sentiment 5.2 Proxies for Measuring and Modeling Returns, Systematic Risk, and Risk-­Adjusted Performance 5.3 Proxies for Asset Classes in Asset Allocation Models 5.4 Benchmarks for Actively Managed Portfolios 5.5 Model Portfolios for Investment Products Equity indexes 6.1 Broad Market Indexes 6.2 Multi-­Market Indexes 6.3 Sector Indexes 6.4 Style Indexes Fixed-­income indexes 7.1 Construction 7.2 Types of Fixed-­Income Indexes Indexes for Alternative Investments 8.1 Commodity Indexes 8.2 Real Estate Investment Trust Indexes 8.3 Hedge Fund Indexes Summary Practice Problems Solutions 35 Market Efficiency Introduction The Concept of Market Efficiency 2.1 The Description of Efficient Markets 2.2 Market Value versus Intrinsic Value Factors Affecting Market Efficiency Including Trading Costs 3.1 Market Participants 3.2 Information Availability and Financial Disclosure 3.3 Limits to Trading 3.4 Transaction Costs and Information-­Acquisition Costs Forms of Market Efficiency 4.1 Weak Form 4.2 Semi-­Strong Form 4.3 Strong Form Implications of the Efficient Market Hypothesis 5.1 Fundamental Analysis 5.2 Technical Analysis 5.3 Portfolio Management Market Pricing Anomalies - Time Series and Cross-­Sectional 6.1 Time-­Series Anomalies 6.2 Cross-­Sectional Anomalies Other Anomalies, Implications of Market Pricing Anomalies 7.1 Closed-­End Investment Fund Discounts 7.2 Earnings Surprise 7.3 Initial Public Offerings (IPOs) 7.4 Predictability of Returns Based on Prior Information 7.5 Implications for Investment Strategies Behavioral Finance 8.1 Loss Aversion 8.2 Herding 8.3 Overconfidence 8.4 Information Cascades 8.5 Other Behavioral Biases 8.6 Behavioral Finance and Investors 8.7 Behavioral Finance and Efficient Markets Summary Practice Problems Solutions 12 Equity Investments (2) 36 Overview of Equity Securities Importance of Equity Securities 1.1 Equity Securities in Global Financial Markets Characteristics of Equity Securities 2.1 Common Shares 2.2 Preference Shares Private Versus Public Equity Securities Non-­Domestic Equity Securities 4.1 Direct Investing 4.2 Depository Receipts Risk and Return Characteristics 5.1 Return Characteristics of Equity Securities 5.2 Risk of Equity Securities Equity and Company Value 6.1 Accounting Return on Equity 6.2 The Cost of Equity and Investors’ Required Rates of Return Summary Practice Problems Solutions 37 Introduction to Industry and Company Analysis Introduction Uses of Industry Analysis Approaches to Identifying Similar Companies 3.1 Products and/or Services Supplied 3.2 Business-­Cycle Sensitivities 3.3 Statistical Similarities Industry Classification Systems 4.1 Commercial Industry Classification Systems 4.2 Constructing a Peer Group Describing and Analyzing an Industry and Principles of Strategic Analysis 5.1 Principles of Strategic Analysis 5.2 Barriers to Entry 5.3 Industry Concentration 5.4 Industry Capacity 5.5 Market Share Stability 5.6 Price Competition 5.7 Industry Life Cycle External Influences on Industry 6.1 Macroeconomic Influences 6.2 Technological Influences 6.3 Demographic Influences 6.4 Governmental Influences 6.5 Social Influences 6.6 Environmental Influences 6.7 Industry Comparison Company Analysis 7.1 Elements That Should Be Covered in a Company Analysis 7.2 Spreadsheet Modeling Summary Practice Problems Solutions 38 Equity Valuation: Concepts and Basic Tools Introduction Estimated Value and Market Price Categories of Equity Valuation Models Background for the Dividend Discount Model 4.1 Dividends: Background for the Dividend Discount Model Dividend Discount Model (DDM) and Free-­Cash-­Flow-­to-­Equity Model (FCFE) Preferred Stock Valuation The Gordon Growth Model Multistage Dividend Discount Models Multipler Models and Relationship Among Price Multiples, Present Value Models, and Fundamentals 9.1 Relationships among Price Multiples, Present Value Models, and Fundamentals Method of Comparables and Valuation Based on Price Multiples 10.1 Illustration of a Valuation Based on Price Multiples Enterprise Value Asset-­Based Valuation Summary Practice Problems Solutions Fixed Income 13 Fixed Income (1) 39 Fixed-­Income Securities: Defining Elements Introduction and Overview of a Fixed-­Income Security 1.1 Overview of a Fixed-­Income Security Bond Indenture 2.1 Bond Indenture Legal, Regulatory, and Tax Considerations 3.1 Tax Considerations Principal Repayment Structures 4.1 Principal Repayment Structures Coupon Payment Structures 5.1 Floating-­Rate Notes 5.2 Step-­Up Coupon Bonds 5.3 Credit-­Linked Coupon Bonds 5.4 Payment-­in-­Kind Coupon Bonds 5.5 Deferred Coupon Bonds 5.6 Index-­Linked Bonds Callable and Putable Bonds 6.1 Callable Bonds 6.2 Putable Bonds Convertible Bonds Summary Practice Problems Solutions 40 Fixed-­Income Markets: Issuance, Trading, and Funding Introduction Classification of Fixed-­Income Markets 2.1 Classification of Fixed-­Income Markets 2.2 Fixed-­Income Indexes 2.3 Investors in Fixed-­Income Securities Primary Bond Markets 3.1 Primary Bond Markets Secondary Bond Markets Sovereign Bonds 5.1 Characteristics of Sovereign Bonds 5.2 Credit Quality of Sovereign Bonds 5.3 Types of Sovereign Bonds Non-­Sovereign, Quasi-­Government, and Supranational Bonds 6.1 Non-­Sovereign Bonds 6.2 Quasi-­Government Bonds 6.3 Supranational Bonds Corporate Debt: Bank Loans, Syndicated Loans, and Commercial Paper 7.1 Bank Loans and Syndicated Loans 7.2 Commercial Paper Corporate Debt: Notes and Bonds 8.1 Maturities 8.2 Coupon Payment Structures 8.3 Principal Repayment Structures 8.4 Asset or Collateral Backing 8.5 Contingency Provisions 8.6 Issuance, Trading, and Settlement Structured Financial Instruments 9.1 Capital Protected Instruments 9.2 Yield Enhancement Instruments 9.3 Participation Instruments 9.4 Leveraged Instruments Short-­Term Bank Funding Alternatives 10.1 Retail Deposits 10.2 Short-­Term Wholesale Funds Repurchase and Reverse Repurchase Agreements 11.1 Structure of Repurchase and Reverse Repurchase Agreements 11.2 Credit Risk Associated with Repurchase Agreements Summary Practice Problems Solutions 41 Introduction to Fixed-­Income Valuation Introduction Bond Prices and the Time Value of Money 2.1 Bond Pricing with a Market Discount Rate 2.2 Yield-­to-­Maturity 2.3 Relationships between the Bond Price and Bond Characteristics 2.4 Pricing Bonds Using Spot Rates Prices and Yields: Conventions For Quotes and Calculations 3.1 Flat Price, Accrued Interest, and the Full Price 3.2 Matrix Pricing 3.3 Annual Yields for Varying Compounding Periods in the Year 3.4 Yield Measures for Fixed-­Rate Bonds 3.5 Yield Measures for Floating-­Rate Notes 3.6 Yield Measures for Money Market Instruments The Maturity Structure of Interest Rates Yield Spreads 5.1 Yield Spreads over Benchmark Rates 5.2 Yield Spreads over the Benchmark Yield Curve Summary Practice Problems Solutions 42 Introduction to Asset-­Backed Securities Introduction: Benefits of Securitization 1.1 Benefits of Securitization for Economies and Financial Markets How Securitization Works 2.1 An Example of a Securitization Structure of a Securitization 3.1 Key Role of the Special Purpose Entity Residential Mortgage Loans 4.1 Maturity 4.2 Interest Rate Determination 4.3 Amortization Schedule 4.4 Prepayment Options and Prepayment Penalties 4.5 Rights of the Lender in a Foreclosure Mortgage Pass-­Through Securities 5.1 Mortgage Pass-­Through Securities Collateralized Mortgage Obligations and Non-­Agency RMBS 6.1 Sequential-­Pay CMO Structures 6.2 CMO Structures Including Planned Amortization Class and Support Tranches 6.3 Other CMO Structures 6.4 Non-­Agency Residential Mortgage-­Backed Securities Commercial Mortgage-­Backed Securities 7.1 Credit Risk 7.2 CMBS Structure Non-­Mortgage Asset-­Backed Securities 8.1 Auto Loan ABS 8.2 Credit Card Receivable ABS Collateralized Debt Obligations 9.1 CDO Structure 9.2 An Example of a CDO Transaction Covered Bonds Summary Practice Problems Solutions