CFA basics the schweser study guide to getting started

Schweser Study Program A Kaplan Professional Company The Schweser Study Guide to Getting Started Information about becoming a Chartered Financial Analyst" By In-depth review of fundamental financial Dr concepts Study questions with complete explanations Bruce Kuhlman Edited by Dr Greg Filbeck, CFA, and Dr Andrew Temte, C and CFA Program " are registered trademarks of the Association for and Research® (AIMR®), which neither sponsors nor endorses this product CFA®, Chartered Financial Analyst ," In agement SATISFACTION GUARANTEE Kaplan has helped more than million students reach We invest products make more than $4.5 million annually We know that research and support in for our our test-taking techniques and strategies work, and we every attempt to keep our materials completely up-to-date However, you are not satisfied with this book for any reason, you may return your original purchase price hack, exclusive of sales In their educational goals tax shipping, it and il get and handling order to receive a refund, yon must return this hook, along with your original sales receipt with the purchase price and dale of purchase (50 words or less) Send Simon & Schuster to: explanation of why you circled, and a brief did not find the hook helpful Inc Customer Service Department 100 Front Street Riverside, NJ 08075 All claims for refunds the date of this One I S book offer per person s must he received by Simon cV Schuster w ithin 90 days of purchase Excludes hook postage, handling, and sales tax and address Refunds w residents only Void ill he issued in six to eight where prohibited —_ KIRSTF.IN BUSINESS BRANCH T weeks A Schweser CFA @ Basics Pre-Level The Schweser Study Guide to Getting Started By Dr Bruce Kuhlman Associate Professor of Finance University of Toledo Edited by Dr Greg CFA Filbeck, Senior Vice President Schweser Study Program and Dr Andrew Temte CFA # President and Chief Executive Officer Schweser Study Program Simon New York • London • & Schuster Singapore • Sydney • Toronto Kaplan Publishing Published by Simon & Schuster 1230 Avenue of the Americas New York, New York Copyright © 10020 2001 by Schweser Study Program, a Kaplan Professional Company No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage All rights reserved and retrieval system, Kaplan® is without written permission, except where permitted by law a registered trademark of Kaplan, Inc CFA®, Chartered Financial Analyst™, CFA Program™, AIMR®, and the Association for Investment Management and Research® are trademarks owned by the Association for Investment Management and Research (AIMR®) AIMR® does not endorse, promote, review, or warrant the accuracy of the products or services offered by Schweser Study Program or verify or endorse the pass rates claimed by Schweser Study Program Schweser Study Program is not affiliated with AIMR® The Texas Instruments (TI) Business Analyst II Plus® is a trademark of Texas Instruments For bulk sales to schools, colleges, and universities, please contact: Order Department, Simon & Schuster, 100 Front Street, Riverside, Phone: (800) 223-2336 Fax: (800) 943-9831 Contributing Editor: Project Editor: Eileen Jeff Manzi, Ph.D Mager Cover Design: Cheung Tai Interior Page Layout: Laurel Production Editor: Maude Douglas Spekes Production Manager: Michael Shevlin Editorial Coordinator: Dea Alessandro Executive Editor: Del Franz Special thanks to Karen Manufactured in the Quackenbush United States of America Published simultaneously in Canada September 2001 10 987654321 ISBN 0-7432-2472-8 NJ 08075 Contents Foreword CFA® v Basics Chapter 1: Economics Chapter 2: Financial Statement Analysis 45 Chapter 3: Quantitative Methods 89 Chapter 4: Corporate Finance 133 Chapter 5: Capital Markets 185 Chapter 6: Security Valuation 225 Chapter 7: Portfolio Theory 275 Appendixes Appendix A: Ethics 311 Appendix Acronyms and Abbreviations 321 B: Appendix C: Glossary 323 Appendix D: Index 343 Digitized by the Internet Archive in 2013 http://archive.org/details/kaplancfabasicsOObruc_0 Foreword CFA® Each year, students and investment professionals from around the world invest considerable time and energy in their quest to include those three letters behind their names Those who are able to achieve this goal show that they have acquired a well-rounded understanding of the tools of investment finance and have made a pledge to the investing public to uphold the highest ethical conduct If you are reading book, chances are that you, too, are considering joining the thousands of students and this professionals Who who are currently working toward their Charter Should Use this Book? This book is for those who are interested in not be prepared to enter the CFA Program™ also enter the is becoming CFA Program™ a bachelor's degree from a Chartered Financial right away One Analyst™ but who might of the requirements for entry into the a four-year college or university (graduating seniors program, but their graduation date must be no later than the summer term may following CFA® Level examination) But what if you received your degree in chemistry Or what if you have been out of school for 10 years and cannot recall much from their first crack at the or political science? your undergraduate days? The purpose of this economic, and financial background that What Is is text is to help you gain (or regain) the basic accounting, necessary to begin your studies in the the Structure of the CFA CFA Program™ Program™? The CFA Program™ is a series of three examinations that are given once per year on the first Saturday after Memorial Day (typically the first Saturday in June) by the Association for Investment Management and Research® (AIMR®) Each exam is a six-hour experience (three hours in the morning and three hours in the afternoon) In your first year of the program, you prepare for the CFA® Level examination If you pass the Level exam, you are allowed to take the Level exam the following year Pass the Level exam, and you can take the Level exam However, if you fail an examination along the way, you must wait until the next year to retake it It takes a minimum of three years and a maximum of seven years to pass by re-registering • all three levels (although the seven-year deadline may be extended for the program) Level 1-Investment Tools (100 percent multiple-choice): tools of investment finance The five main The Level curriculum focuses on the topic areas that are covered are: ethical and profes- sional standards; quantitative methods; economics; financial accounting/corporate finance; asset valuation (includes equity, debt, derivatives, exam management The relatively short and focuses on Level exam is an exercise in is all and alternative investments); about breadth, not depth As a a particular concept — almost result, to the point of minutiae There are 240 multiple-choice questions and portfolio each question seeming on the - like Level is the exam MA Schweser Study Program- Foreword and Valuation (combination essay and multiple-choice): The purpose of the and expand upon the tools that were introduced at Level For example, at Level 1, you learn about the basics of derivative securities in the asset valuation section The Level derivatives curriculum is much more in depth, introducing additional tools and instruments and applying those tools to investment analysis The primary areas of Level 2-Analysis • Level exam is to apply coverage are: ethics; quantitative methods; economics; financial accounting; asset valuation; and portfolio management Also, the questions focus on a deeper treatment of the material and are much more difficult in comparison to the Level exam and Portfolio Management (combination essay and multiple-choice): The main focus of the Level exam is portfolio management Here, you will use the tools and analysis from the previous two levels to develop investment policies and appropriate portfolios for both individual and institutional investors (pension funds, endowments, and life insurance companies) Also, you will learn to protect existing investment positions from the effects of market volatility through the use of debt and derivative instruments (hedging) Level 3-Synthesis • on an annual basis, we urge you to visit download informational pamphlets and learn more about the specifics of the CFA Since the structure of the www.aimr.org to exam subject to change is Program™ In addition to passing the three exams, you must also have accrued three years of relevant rience prior to the award of your Charter (though rience while How Do you I are taking the CFA® Register for the Registration for the CFA Program™ from AIMR® After registering, you not have to have exams) CFA Program™? which can be obtained take the Level exam The eas- involves completing an application form, you will have three years in which to iest way to contact AIMR® is by visiting their Website at www.aimr.org Charlottesville, Virginia, and Hong Kong, SAR What Can If you work expe- any relevant work expe- the CFA® Designation Do for AIMR® has offices in Me? are serious about a career as an investment analyst, portfolio manager, high- net worth money manager, credit analyst, or any of several other careers that deal primarily with the "investment deci- sion-making process," the CFA® designation is for you There are many firms that require their employ- ees to attain the designation Just look in the Wall Street Journal at the job listings that are posted Most of the positions that you will see will ask for or require that the applicant hold the Charter In addition, AIMR® periodically publishes a survey of its members regarding their income The global median more about the median in the Quantitative Methods chapter of this book) of an AIMR® member with more than 10 years of experience is well over $200,000 The bottom line is that income (you'll learn your investment VI in the JSchweser „ Study Program- CFA Program™ will pay off in the long run Foreword How Can Schweser Study Program™ Help Schweser is the premier provider of study tools for the Study Notes, but we also provide live Me CFA® Achieve examination my Our preferred learning method, Schweser can help you pass the for How Use this our CFA® No exams Please matter what your visit our Website at Book? This study guide will help you understand the basics of the the is more information www.schweser.com I core product seminars around the world, produce instructional videos, audiotapes, and flashcards, and host a world-class online educational program Should Goals? CFA Program™ The chapters are broken down by critical topic: content areas that are covered in economics; financial statement analysis; quantitative methods; corporate finance; capital markets; security valuation; and portfolio theory Depending on your educational background and work experience, you can start to build an understanding of the fundamentals by working through the book chapter by chapter, or you can target your particular areas of weakness by going straight to the relevant chapters or sections You can further target your studying by using the glossary in the back of the book to learn or review important concepts The learning objectives outlined in each chapter and the practice questions and answers at the end of every chapter will help to reinforce the concepts you are studying Make no mistake, the road to success in the marathon: training and pace are From preparation process We critical CFA Program™ is not easy Each exam is like running a Dedication and hard work are the hallmarks of CFA® exam breakdown given above, you can see that the CFA Program™ is a growth when you are finished with all three exams, you will not only breathe of relief, but you will also have grown significantly-both professionally and aca- the are confident that a well-deserved sigh demically Best regards, Dr Carl Schweser, CFA Dr Andrew Temte, CFA Chairman President and Chief Executive Officer Schweser Study Program Schweser Study Program Schwesei Stud) Program" VII Appendix C Fourth market The direct ices of a broker as an intermediary exchange of securities between investors without using the serv- unemployment is caused by the inability It is due to lack of information Frictional Frictional unemployment the available jobs Full employment The the natural level of work employment resulting to connect the workers to from the efficient utilization of force Future value The value Futures Standardized contracts traded on organized exchanges for the delivery of a in the future commodity Futures contracts at some of a cash flow received or paid today future date Futures contracts on commodities, currencies, and other financial instru- ments are liquid, standardized contracts traded on futures markets ed by a clearing corporation General ledger The book "of original entry" It Geometric mean which all accounts are kept and maintained usually has a separate page for each account Geometric mean It is GNMA in is used for the calculation of interest rates and growth a multiplicative mean that shows the historical return to strip rates an investment The Government National Mortgage Association (Ginnie Mae) ment organization that assists in housing finance Government facilitat- is a govern- With U.S government strips, the interest and principal payments of notes or bonds are stripped apart and sold individually Hedging The reduction of risk Holder of record date The date on which the shareholders of record are designated for receipt of a declared dividend Holding-period yield The change in value as a percentage of the original value (i.e., the price you paid for the investment) over the period of time the investment was held The holding period yield is the total change in value over the period divided by the price paid Human capital I Study Program- The people employed in the supply of goods or services Glossary Hybrid security Technically an equity security, preferred stock a hybrid because it is a hybrid security has characteristics of both equity and debt It is called stocks (i.e., and bonds) Implicit growth During the implicit growth period, the firm performs period long-term rate of growth Income statement The income statement, sometimes at a more sustainable, shows called the statement of earnings, the firm's operating results for a period of time Indenture The written contract between the firm Inflation The when spending general increase in prices and the bondholders increases relative to the sup- ply of goods Inflation can also be thought of as too too few goods and is macroeconomic a many dollars chasing variable that affects all stocks to varying degrees Initial public offering The first offering when a firm sells shares publicly (IPO) Interest expense Since interest expense reduces taxable income, it income also reduces taxes This reduces the effective cost of borrowed funds Investment bankers Professionals who help firms to raise capital through public or private secu- rity offerings Invisible hand Adam Smith's concept describing market pressure, the unseen force that due affects individuals' choices to activities that benefit society as a market prices to direct whole while pursuing their efforts into their own interests Keynes, lohn Maynard In The General Theory of Employment, Interest, and Money, John Maynard Keynes changed the way we look at macroeconomics Unlike classical economists, Keynes believed that the recession by increasing its employment is in a society government should intervene during expenditures Keynes believed the level a of determined by the aggregate spending of con- sumers, investors, government, and foreigners Limit order An order to buy at a price below the current market price or sell a price higher than the current market price 333 Appendix C Limited liability Owners of corporations enjoy what they have Long-term assets or Long-term liabilities expected Lump sum A single limited liability because they can lose only invested assets and long-term than one year liabilities generally those with are lives greater cash flow Macroeconomic shocks Economy-wide events that affect all stocks to varying degrees Macroeconomics Macroeconomics MACRS In 1986, the U.S Congress approved the modified accelerated cost recovery deals with economy-wide system (MACRS), which mandates the rate Market order An Market pressure The tendency of market order to buy or ests into sell at market to Market-risk which assets are depreciated prices to direct individuals pursuing their own inter- productive activities that also promote the economic well-being of The process of determining premium The at such as inflation the best available price the society Market pressure Marked factors, is the same hand principle the market price of a security or portfolio premium measures market-risk as the invisible the average degree of risk aversion in the market Marx, Karl Karl Marx believed in a natural social decay toward communism that capitalism leads to class struggle, which leads He argued and socialrevolution and commu- to revolution ism; unequal distribution within socialism leads to nism Matching principle According to the matching principle, revenues and expenses are matched to each other and the appropriate accounting period Mature market A mature market petition fierce, is is the longest phase of an industry's industry growth rates have slowed of the aggregate economy, profit margins are at a Mean 334 deviation ^Schweser I Study Program- normal tight, life cycle, down to when com- the growth rate and return on equity is level for the industry The average of the absolute values of tion and the mean the distances between each observa- Glossary Median The middle value in a distribution, above and below which lie an equal number of values Microeconomics Microeconomics deals with household factors within a single firm or wages) Generally, individuals or single firms have at least (e.g., some degree of control over microeconomic factors Mode The value Monetary policy Monetary policy refers to the government's use of changes supply to attain macroeconomic goals Money markets Securities with initial maturities less than that appears markets All most often money market high liquidity (e.g., T-bills, in a set of Natural rate of The long-run average unemployment unemployment frictional factors In the Negative covenants The one supplier controls the restrictions (i.e., money in the money instruments have short maturities, low In a monopoly, 5% one year are traded in the risk, and CDs, banker's acceptances, and commercial paper) Monopoly approximately sample observations United entire supply of a rate on the borrower of a the full fixed service caused by structural and States, the natural rate 100% minus good or of unemployment employment income security is rate) that prohibit the borrower from doing certain things Net income Total sales less total costs Nominal The annual rate and expenses rate of interest promised or stated on the security or in the con- tract Non-cash expenses Expenses that have no associated cash outflow Non-cash expenses on the income statement include prepaid items and depreciation Oligopoly A Operating expenses Costs associated with keeping the business open and putting together and small group of suppliers who collectively enjoy a monopoly selling the final product Operating leverage The percentage change in earnings before interest and taxes (EBIT), given a percentage change in revenues Operating leverage is caused by the use of fixed assets 335 Appendix C Ordinary annuity When payments come at the end of the period, the annuity is called an ordinary annuity Owners' equity Owners' equity equals portion of total assets total assets owned "free minus total liabilities It represents the and clear" after deducting what is owed to others Partnership A business with two or more owners Legally, a partnership is very similar to a proprietorship Payment date Perfect correlation The date that the dividend checks are distributed to shareholders Perfect correlation refers to a correlation coefficient of -1 or +1 coefficient of perfect unison stocks move A correlation +1 indicates that the returns of two stocks move together A correlation coefficient of -1 in perfect in indicates that the returns of two unison but in opposite directions Perpetual preferred Perpetual preferred stock has no maturity stock forever Perpetuity A Physical capital The equipment, buildings, and other goods and services Population A Population variance A Portfolio beta The weighted average of the Portfolio expected The weighted average of the expected returns return stocks in the portfolio Portfolio standard The deviation of each stock, the weight of each stock in the portfolio, and the correlations series expected to pay dividends of equal cash flows occurring at the same interval forever collection of all physical items used in the supply of possible individuals, objects, or other items measure of dispersion based on the deviation from the mean The ance is defined as the mean of the squared deviations from the mean vari- betas of the individual stocks in the portfolio portfolio standard deviation between each Preemptive right It is is for the individual based upon the standard deviations stock Current stockholders must be given the right to purchase new shares in proportion to their current ownership before they are offered to the general public 55b ^jMcStudy Program" I Glossary Preferred stock Although preferred stock is technically an equity security, it has both debt and equity characteristics Preferred stock usually has a maturity date It can have a sinking fund and can be Prepaid items callable Expenses that are paid before they are recognized as operating expenses The balance of the item, which has not been expensed, is considered a current asset Present value The value today of a cash flow Primary market The primary market is where the sale of new issues of bonds, preferred stock, and common stock are sold, often with the aid of an underwriter Principal Principal represents the face value of an obligation that must be repaid to be received or paid in the future (e.g., a bond or loan) at maturity Principal financial The four statements statement, statement of cash flows, and statement of owners' equity Private placement An principal financial statements are the balance sheet, income investment offered for sale to a small group of investors, generally under exemptions to registration allowed by the Securities and Exchange Commission In a private placement, the investment banker acts like a broker and brings the firm and the investors together The issue is not underwritten Probability A distribution an event and the probability associated with each of these outcomes Proprietorship A business owned by a single individual probability distribution represents all the different possible outcomes of Legally, the business and the owner are indistinguishable Prospectus A written document that offers the financial details about an investment To sell securities publicly, the firm Publicly traded Refers to stock of a Publicly traded An corporations shares of are must company ownership (equity) claim not common usually stock first that in is get the prospectus available for purchase some companies These companies, with involved with approved by the SEC business is by the public obtained by purchasing many who known as outside owners operations, are publicly traded corporations Qualitative Qualitative variables describe attributes of the sample Quantitative Quantitative variables measure numerical values of the sample Schweser Study Program- „ JJ'7 Appendix C Randomness drawn from a population using no detectable plan Observations are drawn in a random manner with no preference Refers to a sample that was or pattern given to any particular value, Range The Rational investor When or location size, "distance" between the largest and the smallest observations choosing investments, a rational investor will minimize the given level of return or maximize the return for a given level of Real income increase An increase in real in a sample risk for a risk income means the percentage increase in income (i.e., buying power has increased) is greater than the rate of inflation A Repo repo, or repurchase agreement, marketable securities (e.g., is a common short-term loan collateralized by or preferred stock, money market instruments, or Treasurv securities) Retained earnings The portion of net income retained Revenue recognition According to the revenue recognition principle, only the portion of revenue principle that has actually Revenues The cash inflows generated by operations (i.e., the sale of goods or services) Risk The will occur for investment been earned can be recognized on the income statement possibility that an unfavorable event (i.e., the possibility- the return on the investment will be lower than expected) Risk microeconomic and macroeconomic factors Risk aversion sary risk which means that they will always avoid unnecesGiven the choice between two assets with the same rate of return, will choose the asset with the lowest A securities portion of a population that make Secondary market inferences about ) ^Schweser Study Program- of is risk and have a limited cannot be publicly traded used to estimate characteristics of (i.e., the population In secondary markets, investors trade securities that have been previously issued in the primary market 350 level S corporations are legally very similar to partnerships number of owners Their Sample caused by Investors are risk averse, an investor S corporation is Glossary A Security market line model (CAPM), showing the relationship between return and systematic (or market) risk, which is referred to as beta Seniority Seniority specifies the order in which bondholders will be paid in case of graphical representation of the capital asset pricing bankruptcy Serial bonds Serial bonds are retired in portions according to their serial numbers (their market at the registration numbers) Settlement price During every trading day, all futures contracts are marked to settlement price Sinking fund The money that is accumulated on a regular basis account used to redeem debt that sufficient funds will be available Smith, Adam Adam He was a classical government should not with the natural working of the economy) Smith economist interfere Socialism With in a separate custodial The sinking fund provides assurance to retire the bond issue as specified securities is who considered the father of free enterprise believed in strict laissez-faire (i.e., government owns all income-producing is done according to effort socialism, the assets Allocation of wages and goods Specialist The specialist acts as a specialist market maker Every stock on the who buys and sells stocks for their own NYSE has only one accounts and the accounts of others They maintain order and provide liquidity to the market Spot market The spot market for Stand-alone risk immediate is where securities, commodities, and other goods are traded delivery Stand-alone risk microeconomic the (i.e., total risk) is forces and the risk particular security is sum of the security's risk caused by caused by macroeconomic forces If a the only investment you hold, you are subject to that security's stand-alone risk Standard deviation The mean of the squared deviations from the mean The standard deviation is also the square root of the variance flows shows changes in the cash account caused by Statement of cash The statement of cash flows cash flows from operations, investments, or financing Schweser Study Program- 33Q 333 Appendix C equity The statement of owners' equity shows the value of any money (or other capital) the owner has invested in the business Stock index A stock index Stop order A defensive trading strategy used to Statement of owners' is used to estimate movements in the overall market buy above the market or sell below the market Stop-loss order A sell order placed below the current market price Stop-loss orders are usually placed to protect a gain Strict equality Strict equality means other possibility a exists a future price reversal number or symbol is equal to something else and no For example, a = is a strict equality because no value other than could equal Strips from a Coupon payments from bonds that have been stripped off the bond and sold separately This usually occurs with Treasury bonds, resulting in Treasury strips unemployment is due to changes in the structure of the economy occurs when workers are not qualified for the available jobs Structural Structural unemployment It Supply The amount of a good or Systematic risk Systematic risk is caused by macroeconomic factors diversifiable risk or Third market market risk because it It is also known as non- cannot be diversified away A segment of the over-the-counter market (OTC) where investment firms who are not members of an exchange trade registered securities to the public Timeline service available for purchase A through dealers graphical representation of timeline is when cash flows occur in relation to money calculations such as the used for time value of time A present value and future value of varying cash flows Tombstone The tombstone, found in the Wall Street Journal, contains the investment banking firms involved in a sale, the main names of the characteristics of the and the date of the sale The tombstone will direct interested which is available through any of the listed investment banking firms security, investors to the prospectus, 341) ^_^M Study Program- Glossary Treasury Direct The Website maintained by government Trend analysis the U.S Treasury to facilitate trading in U.S securities Trend analysis is performed to detect general patterns in operating results or other accounting measures from one period to the next Trustee The trustee represents the interests of bondholders in assuring that the issu- ing corporation honors the provisions of the Underwriter spread The issue difference between the price investment bankers pay for the securities and the price Underwriting bond at which they sell them to investors By underwriting an issue of securities, investment bankers guarantee the and the proceeds to the issuing firm sale Underwriting The group of firms syndicate is Unemployed To be classified as unemployed, an individual must be actively seeking employment or waiting to return to work after being laid off Unsystematic risk that provide the underwriting services for a security that issued Unsystematic risk also called is unique risk (or firm-specific risk) and can be reduced or even eliminated through diversification Utils Units used in measuring Value intensive If a finished product is utility considered value intensive, handling, packaging, and shipping are only a small portion of Variable costs Variable costs duction Working capital rises (e.g., and in final value wages and raw materials) move up and down as pro- falls In the long run, Current assets and current (decreases) its asset liabilities all costs are variable are called working capital Increases accounts are outflows (inflows), while increases (decreases) in liability accounts are inflows (outflows) of Zero coupon bond A zero coupon bond pays no interest value and the face value is paid It is purchased at a working capital discount from face at maturity Schweser Study Program* oA * DH APPENDIX D Index Accrual basis accounting, 70-72 Compounding Accrued Constant growth interest, 247 rate, 226 255 , Adjusting entries, 72-75 Convergence, 190 Agency Conversion price, 149 costs, 170-172 Annuity, 226, 234-242 Conversion Annuity due, 234-240 Corporation, 139-142 Arithmetic mean, 113 Correlation, 163-167, 283-286 Balance sheet, 52-55 Cost of goods sold, 48 Bank discount, 207 Coupon payments, Banker's acceptances, 210 Covariance, 164-165, 284 297-298 Beta, 292-294, Broker market, Business risk, ratio, Dealer market, 187 Debt markets, 201-206 157-158 model (CAPM), 295-298 Declaration date, 146 Capital assets, 50 Demand, 15-18 Capitalism, Depreciation, 49 8, 12 basis accounting, 70 Central tendency, 113-119 Certificates of deposit Characteristic line, 148 Debentures, 148 86 Capital asset pricing Cash 149 (CD), 209 291-296 Direct market, 186 Discount rate, 226 Diversification, 163-167, 275, 285-286 Dividends, 140 Classical economics, 25 Dollar discount, 207-208 Clearing corporation, 190-191 Commercial paper, 210 Economies of scale, 27 Effective interest rate, 232-234 Communism, Empirical rule, 281 13 Compounding, 228-232 Equilibrium, 7, 25-26 A Schweser ProgramStudy iAo l*** — i BOSTON PUBLIC LIBRARY 9999 04418 098 Appendix D % Equity markets, 193-201 Pi rr\r1 r\] a rc 910 i - li t »- 740—74? Orrlirmrv pnnnitv ; idlLliClolllLJ) L*sO hxpected return, ZU£ FpHpral fnnrk 711 rcrpciuiiy, zzo ' HpHpt*cjl Rpcpi*a/p JrllyblLdl Ldpildl, nicrniint rotf* ^ 1 rinanciai leverage, iDy— iou rreempiive rinancia.i iisk, iz>y rnncipai, 110 Pirm ri^k lolx, fir* oL'CClllC 11X11 -p 40 788— L07 789 LOO Ri^iolict QQ 900 opeciansL, 77- zuu interest expense, dl Limn Q9 iu rruspecius, 100-107 (~i Tni1"icil initial r ropneiorsnip, 19/ niaiKCi, rioiQing 187 980—989 Pmhahilitv IDUaUllll V Hictrihntinn Uloll 1UU11U11, Z.OU — Z.OZ, r riscai year, o/ rlXcCl COolS, ZO 0Q— 1U7 — 11 1U Prmnlatinn r UptlldLUJll) oraer, zuu Macroeconomics, ll—lj, zo7— zvu \/lor-rrir->ci1 utilitl/ 977 978 utility, li i—lio iviargmai AirA Qevidiion, A&\r\it\r\r\ izu 190 — 199 98^ — zoo 98^, izz, loj oianuarci \/fdrLr pt lllaKCXo, mcib'prc 1177 QQ IVldlKCL OLalClllClll Ul Caoll 11UWS, iviarKei oruer, zuu ividiKci riSK prciTiiurn, Kylatrnino' i^nn^ifilp iviaLCiiiiig UIIIIC1UIC5 z^o opoi marKet, loo J>0 ^tnrlf inrlpv uo JJ oiaiemeni 01 owners ecjuuy, jo —oz Qtdticti^- 1U7 OQ oiausuc, Q4 oiop oraer, zuu \/fo/1iin lift ivicaidn, 1 ouppiy, 19- ID IVltJU.C) 1 ridlf i loix, Tnmhstnnp HJlllL/olVJIlC, o ivnjiicidiy L^^iicy Money ^vctpm^tir o y oiciiid lie — z.^ 1V11C1 ^JCV^UlUJllllCO) TnHprwntincT Q9 W 1 lllltl L.\JJ y rnctQ CvJolo, 9^\ Z,\J OUaonolv 79—^0 111—119 Variahlps V dl IdUlt O5 111 1L npn Tn^rVpt WUCll llldllxCL \/iiriiinpp V dl IdllCC ( ) r^r^pr^tir^nc ^11 tJL'Ci dllvJllO) J nm nJ ( r> 1 1 \Ls\JLJ\J.lCXlLVJll y Operating expenses, 48 Variance (sample), 121 Operating leverage, 158-159 Zero coupon bond, 202 344 170 ILu — Study Aids Learn the basics Before entering the CFA Program," you need to acquire an understanding of a broad array of basic financial concepts CFA® Basics: The Schweser Study Guide to Getting Started helps you groundwork CFA® exam preparation by providing a comprehensive review of the fundamentals to equip you with all the tools you need to become a successful CFA® candidate lay the for your e Schweser Study Guide to Getting Started features: In-depth review of critical content areas: Economics; Financial Statement Analysis; Quantitative Methods; Corporate Finance; Capital Markets; Security Valuation; Portfolio Theory Definitions of key terms and explanations of difficult concepts Learning objectives to target study and detailed summaries to reinforce learning Practice questions with explanations of answers A Schweser C Study Program A Kaplan Professional Company Schweser Study Program™ A Kaplan Professional Company Schweser Study Program, a Kaplan Professional Company, preparation, offering a full is the world's leader in expert faculty and staff, Schweser Study Program is based in more information, contact us (internationally, KAPLAN Publish\l by Simon VISIT | & Schuster US oVrHE WORLD WIDE WEB http://iiiniiw.tlinontays.com I Cover design by\heung Front & back Tai cove\photos: copyright © 2001 PhotoDisc, at 1-888-325-5072 608-779-5599) or www.schweser.com 5k- Inc $60.00 Can $91.50 U.S its La Crosse, Wisconsin, and offers seminars throughout North America, Europe, and Asia For CFA® exam range of study materials, seminars, and online programs Recognized for ... investment VI in the JSchweser „ Study Program- CFA Program™ will pay off in the long run Foreword How Can Schweser Study Program™ Help Schweser is the premier provider of study tools for the Study Notes,... only Void ill he issued in six to eight where prohibited —_ KIRSTF.IN BUSINESS BRANCH T weeks A Schweser CFA @ Basics Pre-Level The Schweser Study Guide to Getting Started By Dr Bruce Kuhlman Associate... in the middle of the block worth the potential benefit? There is much corner, wait for the signal, less risk if we take the time to walk to the and use the crosswalk, but it takes longer to get