1. LO 5-1
Compute various measures of return on multi-year investments.
LO 5-2
Use either historical data on the past performance of stocks and bonds or forward-looking scenario analysis to characterize the risk and return features of these investments.
LO 5-3
Determine the expected return and risk of portfolios that are constructed by combining risky assets with risk-free investments in Treasury bills.
LO 5-4
Use the Sharpe ratio to evaluate the performance of a portfolio and provide a guide for capital allocation.

2. LO 6-1
Show how covariance and correlation affect the power of diversification to reduce portfolio risk.
LO 6-2
Calculate mean, variance, and covariance using either historical data or scenario analysis.
LO 6-3
Construct efficient portfolios and use the Sharpe ratio to evaluate portfolio efficiency.
LO 6-4
Calculate the composition of the optimal risky portfolio.
LO 6-5
Use index models to analyze the risk and return characteristics of securities and portfolios.
LO 6-6
Understand the effect of investment horizon on portfolio risk.

3. LO 7-1
Use the implications of capital market theory to estimate security risk premiums.
LO 7-2
Construct and use the security market line.
LO 7-3
Specify and use a multifactor security market line.
LO 7-4
Take advantage of an arbitrage opportunity with a portfolio that includes mispriced securities.
LO 7-5
Use arbitrage pricing theory with more than one factor to identify mispriced securities.

4. LO 8-1
Demonstrate why security price changes should be essentially unpredictable in an efficient market.
LO 8-2
Cite evidence that supports and contradicts the efficient market hypothesis.
LO 8-3
Provide interpretations of various stock market “anomalies.”
LO 8-4
Formulate investment strategies that make sense in informationally efficient markets.

5. LO 10-1
Explain the general terms of a bond contract and how bond prices are quoted in the financial press.
LO 10-2
Compute a bond's price given its yield to maturity, and compute its yield to maturity given its price.
LO 10-3
Calculate how bond prices will change over time for a given interest rate projection.
LO 10-4
Describe call, convertibility, and sinking fund provisions, and analyze how these provisions affect a bond's price and yield to maturity.
LO 10-5
Identify the determinants of bond safety and rating and how credit risk is reflected in bond yields and the prices of credit default swaps.
LO 10-6
Calculate several measures of bond return, and demonstrate how these measures may be affected by taxes.
LO 10-7
Analyze the factors likely to affect the shape of the yield curve at any time, and impute forward rates from the yield curve.

6. LO 11-1
Analyze the features of a bond that affect the sensitivity of its price to interest rates.
LO 11-2
Compute the duration of bonds, and use duration to measure interest rate sensitivity.
LO 11-3
Show how convexity affects the response of bond prices to changes in interest rates.
LO 11-4
Formulate fixed-income immunization strategies for various investment horizons.
LO 11-5
Analyze the choices to be made in an actively managed bond portfolio.

7. LO 13-1
Use financial statements and market comparable to estimate firm value.
LO 13-2
Calculate the intrinsic value of a firm using either a constant-growth or multistage dividend discount model.
LO 13-3
Assess the growth prospects of a firm, and relate growth opportunities to the P/E ratio.
LO 13-4
Value a firm using free cash flow models.

8. LO 15-1
Calculate the profit to various option positions as a function of ultimate security prices.
LO 15-2
Formulate option strategies to modify portfolio risk-return attributes.
LO 15-3
Identify embedded options in various securities and determine how option characteristics affect the prices of those securities.

9. LO 16-1
Identify the features of an option that affect its market value.
LO 16-2
Compute an option value in two-scenario and binomial models of the economy.
LO 16-3
Compute the Black-Scholes value and implied volatility of an option.
LO 16-4
Compute the proper relationship between call and put prices.
LO 16-5
Compute the hedge ratio of an option, and use that ratio to manage risk.

10. LO 17-1
Calculate the profit on futures positions as a function of current and eventual futures prices.
LO 17-2
Formulate futures market strategies for hedging or speculative purposes.
LO 17-3
Compute the futures price appropriate to a given price on the underlying asset.
LO 17-4
Design arbitrage strategies to exploit futures market mispricing.
LO 17-5
Determine how swaps can be used to mitigate interest rate risk.

11. LO 18-1
Compute risk-adjusted rates of return, and use them to evaluate investment performance.
LO 18-2
Determine which risk-adjusted performance measure is appropriate in a variety of investment contexts.
LO 18-3
Apply style analysis to assess portfolio strategy.
LO 18-4
Decompose portfolio returns into components attributable to asset allocation choices versus security selection choices.
LO 18-5
Assess the presence and value of market-timing ability.