1. I nvestment A nalysis II Investment Analysis II - © 2012 Houman Younessi MGMT-6330 Investment Analysis II 1 An Overview of the CFA Program

2. I nvestment A nalysis II 2 Investment Analysis II - © 2012 Houman Younessi The CFA Institute CFA Institute is the global, not-for-profit association of investment professionals that awards the CFA (Chartered Financial Analyst) and the CIPM (Certificate in Investment Performance Measurement) designations. Number of members: 107,028 Countries with members: 138 Number of societies: 135 Countries with societies: 58 Number of Charterholders: 97,890

3. I nvestment A nalysis II 3 Investment Analysis II - © 2012 Houman Younessi The CFA Program To qualify for the CFA designation, a candidate must:  Be at least an affiliate member of the CFA Institute in good standing,  Have successfully passed the three examinations (collectively called the CFA Exam) given by the CFA institute  Have completed 48 months of related and qualifying work experience  Lodge a successful application for conversion to a Charterholder status You do not need to be a member or affiliate member of the CFA to sit the examination. You may become an affiliate member of the CFA Institute without registering to sit an examination. The current fees are $275 per year You may apply to convert your status to Full Member when you accrue 48 months of qualifying work experience

4. I nvestment A nalysis II 4 Investment Analysis II - © 2012 Houman Younessi There are four principal topic areas: The CFA Examination The examination is conducted in three stages. Candidates must pass each stage in sequence (you cannot take two exams at the same time).  Ethical and professional standards  Investment tools  Asset classes  Portfolio management and wealth planning There is a first time enrollment fee (currently $420) and an examination fee (currently $650) for each examination. The fees cover the cost of the study materials

5. I nvestment A nalysis II 5 Investment Analysis II - © 2012 Houman Younessi The CFA Examination Topic AreaLevel 1Level 2Level 3 Ethical and professional standards1510 Investment tools5030-600 Asset classes3035-7535-45 Portfolio management and wealth planning55-1545-55 TOTAL100 Distribution of topic areas

6. I nvestment A nalysis II 6 Investment Analysis II - © 2012 Houman Younessi The CFA Examination The Body of Knowledge I.Ethical and Professional Standards A.Professional Standards of PracticeB. Ethical Practices II. Quantitative Methods A.Time Value of Money B. Probability C. Probability Distributions D. Sampling and Estimation E. Hypothesis TestingF. Correlation Analysis and Regression G. Time Series AnalysisH. Simulation Analysis I. Technical Analysis

7. I nvestment A nalysis II 7 Investment Analysis II - © 2012 Houman Younessi The CFA Examination The Body of Knowledge III. Economics A.Supply and DemandB. The Firm and Industry Organization C. National Income and GrowthD. Business Cycles E. The Monetary SystemF. Inflation G. Trade and Capital FlowsH. Currency Exchange Rates I.Monetary and Fiscal PolicyJ. Economic Growth and Development K. Government Regulation L. Impact of Economic Factors on Investment Markets

8. I nvestment A nalysis II 8 Investment Analysis II - © 2012 Houman Younessi The CFA Examination The Body of Knowledge IV. Financial Reporting and Analysis A.Financial Reporting System B. Principal Financial Statements C. Financial Reporting QualityD. Analysis of Inventories E. Analysis of Long-Lived AssetsF. Analysis of Taxes G. Analysis of DebtH. Off-Balance-Sheet Analysis I.Analysis of Pensions, Stock Compensation, and Other Employee Benefits J. Analysis of Inter-Corporate Investments K. Analysis of Business Combinations L. Analysis of Global Operations M. Ratio and Financial Analysis

9. I nvestment A nalysis II 9 Investment Analysis II - © 2012 Houman Younessi The CFA Examination The Body of Knowledge V. Corporate Finance A.Corporate GovernanceB. Dividend Policy C. Capital Investment DecisionsD. Business and Financial Risk E. Long-Term Financial PolicyF. Short-Term Financial Policy G. Mergers and Acquisitions and Corporate Restructuring VI. Equity Investments A.Types of EquityB. Equity Markets C. Fundamental AnalysisD. Equity Market Valuation E. Residual EarningsF. Equity Hybrid Investment Vehicles

10. I nvestment A nalysis II 10 Investment Analysis II - © 2012 Houman Younessi The CFA Examination The Body of Knowledge VII. Fixed Income A.Fixed-Income SecuritiesB. Fixed-Income Markets C. Fixed-Income ValuationD. Term Structure and Yield Spreads E. Analysis of Interest Rate RiskF. Analysis of Credit Risk G. Valuing Bonds with Embedded OptionsH. Structured Products VIII. Derivatives A.Derivative InstrumentsB. Forward Markets and Instruments C. Futures Markets and InstrumentsD. Options Markets and Instruments E. Swaps Markets and InstrumentsF. Credit Derivatives Markets

11. I nvestment A nalysis II 11 Investment Analysis II - © 2012 Houman Younessi The CFA Examination The Body of Knowledge X. Portfolio Management and Wealth Planning A.Portfolio Concepts B. Management of Individual Portfolios C. Management of Institutional Portfolios D. Pension Plans and Employee Benefit Funds E. Investment Manager Selection F. Other Institutional Investors G. Mutual Funds, Pooled Funds, and ETFs H. Economic Analysis and Setting Capital Market Expectations I. Tax Efficiency

12. I nvestment A nalysis II 12 Investment Analysis II - © 2012 Houman Younessi J. Asset Allocation (including Currency Overlay) K. Portfolio Construction and Revision L. Equity Portfolio Management Strategies M. Fixed-Income Portfolio Management Strategies The CFA Examination The Body of Knowledge N. Alternative Investments Management Strategies O. Risk Management P. Execution of Portfolio Decisions (Trading) Q. Performance Evaluation R. Presentation of Performance Results

13. I nvestment A nalysis II 13 Investment Analysis II - © 2012 Houman Younessi The CFA Examination Examination Format LevelFormat Level 1240 multiple choice questions Level 220 mini-cases (item sets) each with 6 multiple choice questions Level 310-15 short essays in the morning, 10 mini- cases (item sets) in the afternoon. Each examination is six hours in duration and follows the following format: