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Comparison 2005 to 2004 Study Guide for the Level 1 CFA Exam
Study Session Topic Newly Added Newly Deleted
1 Ethical and Professional Standards 5.g) describe the required verification procedures (including pre-verification procedures).
2 Quantitative Methods 1.A. “The Time Value of Money”
a) explain an interest rate as the sum of a real risk-free rate and premiums that compensate investors for distinct types of risk;
k) explain the cash flow additivity principle in time value of money applications.
B. “Discounted Cash Flow Applications”
The candidate should be able to
a) calculate and interpret the net present value (NPV) and the internal rate of return (IRR) of an investment;
b) contrast the NPV rule to the IRR rule;
c) discuss problems associated with the IRR method;
d) distinguish between money-weighted and time-weighted rates of return;
e) calculate the money-weighted and time-weighted rates of return of a portfolio;
f) calculate the bank discount yield, holding period yield, effective annual yield, and money market yield for a U.S. Treasury bill;
g) convert among holding period yields, money market yields, and effective annual yields;
h) calculate the bond equivalent yield.
C. “Statistical Concepts and Market Returns”
a) differentiate between descriptive statistics and inferential statistics;
c) explain the concept of a sample statistic;
g) calculate cumulative relative frequencies, given a frequency distribution;
i) calculate and interpret measures of central tendency, including harmonic mean;
l) contrast variance to semivariance and target semivariance; C. “Statistical Concepts and Market Returns”
f) define and explain the use of intervals to summarize data;
D. “Probability Concepts”
f) define a joint probability; |
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