CFA Level 1 Curriculum Updates

Jeremy Sanders Finance Grid Limited, UK 1/1/2011

2011 CFA® is a Registered Trademark of the CFA Institute. This Document has been produced by an independent financial training company – Finance Grid Limited, U.K., to facilitate students using the study notes and study guides from third party providers, including Finance Grid. This update is based on an analysis of the CFA Institute’s curriculum updates between 2010 and 2011, which are available in detail on the website of the CFA Institute: www.cfainstitute.org Please visit the CFA Institute’s website for a detailed look at the Learning Tasks set by the CFA Institute. Finance Grid Limited is not linked with the CFA Institute, and is not liable for its interpretation of the updates. www.finance-grid.com

CFA Level 1 Curriculum Updates 2|Page

CFA® Level 1 Curriculum Changes Updates for the June 2011 CFA® Level 1 Exam CFA® is a Registered Trademark of the CFA Institute. Finance Grid Ltd. U.K. is an independent Financial Training Provider.

Study Session 1 Ethical and Professional Standards: Reading 1: No Change Reading 2: No Change Reading 3: No Change Reading 4: Minor change, now there are 9 provisions of GIPS Study Session 2 Quantitative Methods – Basic Concepts: Reading 5: No Change Reading 6: No Change, except previous LOS a) has been split into two parts; a) and b) Reading 7: No Change Reading 8: No Change Study Session 3 Quantitative Methods – Applications: Reading 9: Only 1 new LOS: relating to the definition, calculation and interpretation of tracking error Reading 10: No Change Reading 11: No Change Reading 12: Technical Analysis Chapter has total new content with focus on actual use of Technical Analysis Tools, Charts and Theories. Previous Reading and LOS statements are almost entirely to be discarded. A new focus is on applications and real use of tools and techniques, chart patterns, trend lines, study of cycles, wave theory and Fibonacci Numbers in market prediction. This goes alongside with commonly used technical analysis indicators as well. Study Session 4 Microeconomic Analysis: Reading 13: No Change Reading 14: No Change Reading 15: No Change

Reading 16: No Change Reading 17: No Change Study Session 5 Market Structure and Macroeconomic Analysis: Reading 18: No Change Reading 19: No Change Reading 20: 1 new LOS: relating to a comparison and contrast between Perfect Competition and Monopolistic Competition Reading 21: No Change Reading 22: No Change Reading 23: No Change 3 | P a g e Study Session 6 Monetary and Fiscal Economics: Reading 24: No Change Reading 25: No Change Reading 26: No Change Reading 27: No Change Reading 28: No Change Study Session 7 Financial Reporting and Analysis – An Introduction: Reading 29: No Change Reading 30: No Change Reading 31: No Change Study Session 8 Financial Reporting and Analysis – Income Statement, Balance Sheet, and Cash Flow Statement: Reading 32: No Change Reading 33: No Change Reading 34: No Change (Minor wording change in 1 LOS, which does not change learning approach or content) Reading 35: No Change Study Session 9 Financial Reporting and Analysis – Inventories, Long-Lived Assets, Income Taxes, and Non-Current Liabilities Important: Major reorganisation in the structure of the chapter Reading 36: Major Reorganization in the structure of the chapter, and new LOS related to Periodic versus Perpetual Inventory Valuation. Previous LOS on conversion between methods seems to be absent (Check in Chapter Content) Reading 37: Major Reorganization in the structure of the chapter Reading 38: No Change Reading 39: Major reorganisation in the structure of the chapter; defined contribution and defined benefit pension plans have been included, as well as de-recognition of debt. Other LOS statements have been simplified. Study Session 10 Financial Reporting and Analysis – Applications and International Convergence Reading 40: 2 LOS Statements have been removed; the specific accounting warning signs for Enron and Sunbeam have been removed, and only the general accounting warning signs therefore become the focus. Reading 41: No Change Reading 42: No Change Reading 43: No Change 4|Page

Study Session 11 Corporate Finance Important: 2 New Readings; Measures of Leverage, and Dividends and Share Repurchases Basics Reading 44: No Change Reading 45: No Change Reading 46: This is a new reading on ‘Measures of Leverage’. Reading 47: This is a new reading on ‘Dividends and Share Repurchases – Basics’. Reading 48: No Change; This reading on ‘Working Capital’ was numbered ‘46’ in 2010 Reading 49: No Change; This reading on ‘Financial Statement Analysis’ was number ‘47’ in 2010 Reading 50: No Change; This reading on ‘Corporate Governance’ was number ‘48’ in 2010 Study Session 12 Portfolio Management Important: There has been a major revamping of this study session. There are 4 chapters in 2011, instead of 3 chapters in 2011 Reading 51: This is essentially a new reading with slightly different focus than before. Reading 52: This is essentially a new reading; however retains some core concepts from previous reading 50. Reading 53: Again, this is a new reading which however, retains the core concepts from previous reading 51. LOS below; Reading 54: New Reading. Study Session 13 Market Organisation, Market Indices and Market Efficiency Important: This study session has one less reading (3) instead of (4) previously. The content covers similar topics however the content has been re-authored and vastly reorganised, with new focus areas. Reading 55: New Reading, however it has a limited correspondence with previous reading 52. Reading 56: New Reading, however roughly corresponds to previous reading 53. Reading 57: This is a new reading; however it corresponds roughly to previous readings (54 and 55 from 2010). Study Session 14 Equity Analysis and Valuation Important: This study session has been reorganised completely and the content has been reauthored. There is one reading less than last year (3 instead of 4). Reading 58: New Reading. Reading 59: Reorganized, hence we would say, a new reading, but it has rough correspondence with previous readings number (57 plus 58). Reading 60: Reorganised, hence we would again consider it a new reading. It has broad correspondence with the content in previous readings (56 plus 59). Study Session 15 Fixed Income Basic Concepts: Reading 61: No Change; this reading on ‘Features of Debt Securities’ was number ‘60’ previously Reading 62: Minor Change. The last LOS (LOS ‘O’), requires an additional concept relating to the description of ‘The origin of sovereign risk’. The reading otherwise exactly corresponds to previous reading ‘61’ Reading 63: No Change; this reading was previously number ‘62’ in 2010. Reading 64: No Change; this reading was previously number ‘63’ in 2010 5|Page Study Session 16 Fixed Income - Analysis and Valuation: Reading 65: No Change. It was previously number ‘64’ in 2010 Reading 66: No Change. It was previously number ‘65’ in 2010 Reading 67: Minor Change: one extra LOS at the end of the reading requiring a ‘discussion on the impact of yield volatility on the interest rate risk of a bond’. Also, the previous LOS (d) has been split up into two parts (d) and (e) to separately focus, and clarify the LOS. Study Session 17 Derivatives Reading 68: No Change, was previously number ‘67’ in 2010 Reading 69: No Change, was previously number ‘68’ in 2010

Reading 70: Very Minor Change; the last LOS adds the description of characteristics of T-Bill futures contract. This reading was previously number ‘69’ in 2010 Reading 71: Minor Change. First LOS requires a clear description of a Call Option and a Put Option. The remainder constitute slight re-wordings or splitting up of LOS statements for clarity. These do not constitute a change. The reading was previously number ‘70’ in 2010. Reading 72: No Change, was previously number ‘71’ in 2010 Reading 73: No Change, was previously number ‘72’ in 2010 Study Session 18 Alternative Investments Reading 74: Very minor change; The LOS related to Hedge Funds is stated in terms of discuss rather than define, as was previously stated for 2010, which implies a slightly broader focus in 2011 on this LOS. Also in the same LOS, the candidate is required to describe the various classifications of hedge funds. This reading was previously number ‘73’ in 2010. Reading 75: No Change, was previously number ‘74’ in 2010 Summary: There are a total of 75 readings in the CFA Level 1 curriculum for 2011, whereas the total number of readings was 74 in 2010, for the CFA Level 1 Exam