me ae Kel Cl ite (Osuy tleua Ls Bias Prfesimsba ‘th La. necand Objectvg, Micon Competes Imeityof Capi Marts Natal Nonpbelnomaron. Mae Manpaion Dito Chae Traders and Cam Eble Sty eter Fsnason Deeereeetel Costly Duricsto Employers ‘ica CopnmionArmgen Response of Supe Ince Asi ices ig Remon a Costa Cera Pepe Clem tedden Confit ‘Noor Bute Cot, iyi fee ee Reapnsbicaa CEA Ine Nene ‘or CFA Candidate 1 May 18) ne 1D) Me) VIA) Conduct at Pardlpan ia CFA lesions i Rel CEA ae th EA tion, andthe CFA Progra Gnd poe one see Dif offi Corporation. bie. oF inn betdonces demas sbedors cy. All faving diceienary portals must be ince int es one campo. eft Opin, ba i chosen eno be cane out by an independent tid poy ‘GIPStandar fof 1 Fandamemal of Compliance 2 Input Dats and Caleltion Methodology 5. Composite and Pooked Fund Maimenance 4 Composite Time Weighed Rewn Report 5. Compete Money Weighed Retin Report 65, Poke Fd Time Weighed Return Repose 7 Pook Fund Money Weighed Ream Report £8. GIPS Advertsing Guidlines, QUANTITATIVE METHODS Holding Peviod Return (HR) Continuously Compounded Recurn R= lott + HER Means ‘Artic mew nf sbscration ae in ‘amplelpopulition. divided by of observations arose Geil) Enimated inecepand slope ems Sem of quar rere (SR) dances berwees predicted Yrs and the mest oY Sur ef guard oor (SSE) = sum of uted dinancesBeeween seal and predicted vues Cocficent of Determination R= SSRUSST = percentage of vation inthe Epenent vatsble coped by veka he Independent vale ars Breseven and Shutdown ‘Breakero: cul everett co. Oper inshore ran otal evens peatr than tou evil cot bt lea than total cot. ‘Shr doin ren tl evens i es than roclaible con ‘Marke races ass cmpsin: Many swith no pricing power: ey low orn brits went Fomogeneousprcic. Meroplc competion Many Fs some ‘pricng power ow bares wo en: differenced product ange advershing expense. Opel Fs: ms tha ay ave igeifcae pricing power high arcs ney procs may tehemogectar er difrentied, MenopSinge rm with since pricing power: icin oeney averting ‘Compete wih bunt produc Ielfimarkersrerrs, profes maximized at he utp ee Br hich sara even marginal cor, Seving, Investment, Foal Bales and Trade Balance Fel budge dei (G-—1) «cx of ewig ‘fe domatic invent (SD) ade bance a) Bauiness Gye Phases Expansion peak corso: ough EconomicIndictors Dag Tersg scatter seed ose tosh oinciden Taig pons coi wth peaks and tionghe “Leg Taring pints fallow peaks and woh ‘Bxpansionaryand Contrationary Poli ‘Moneta poly expansionary when the plicy ie aa eed eestor ‘ate of eonomic growth +faion ge) and Geamcre meen: wed when eating invenment setums over makipl penn orto measure ‘compound growth a. (Geamcre meen en Ryn [0+ R en RSE N Hernia Tonamed mem (4) Exclude highest and lowest 2 perentofobverations Winrar mown) Subsite vale for highest andlowest 2 prcen febraions Variance and Sandard Deviation Varia: anrage of quae dition frm mean. Se-3 spl rine 5! Standoddeviain square oa of ines “Target Downside Deviation Coccien of Variation pea eee eee ena Alapersion exis eltive vo mean of dribuion: lows for det comparion af dispesion oss (Bile datnes CV ncaa by driing bandad devnin of dauibution by the mena of expected val ofthe dsribton: Expected Retur/ Standard Devition ‘Expected eure E{) = FP), E(x) = Playa +P) + Pl) Probie sarince 7()=EPG)n- EO) = PCa) OOF + Plas E00 toot Plate EOR ‘Send dts oe wet oa of ine Coreltionand Covariance Crean cvatiance divided byproduct the ed coW(R.R aiRi}a(R,) Exec, srane of 2k pri E(R,) =w aE) + wgERy) var(R,) = who? (Ry) (Ry) +20 (Ra }o(Ra)P(Re Ra) Roy's Sale Rao ene, See ‘he newt intr re, ‘ice policy isexpansionary when a budget. dei creasing oc surplus decreing and onitctony when a butt deci iden, reals sinceasng. Balance of Payments Gar won merchandise and serie ‘exept wanes pao epi ss pthc Financial acon: oneriment-ee 98 shea foreign ened sein the ety Regional Trading Agreements pe eee ed eel servion uade among members Garin Member ako adap common tae pices wth non-members ‘Common mare: Member alo remove brits labor od ope movements tong members. Economic mn: Member alo eb common Sree ee ‘Meneuary won Member eo adopts common carey Forsign Exchange Rates Forthe cam, FX racer arc expres a pre rnc be caren ad inert the ‘umber of units of dhe price cuteney fr cach nit ofthe be eureny. eal Exchange Rate ar eee coo cia i SS No-Abirage Forward Fachangs Rate foewud 1+ prc cureny inet re ee Tbweemrey inex chang Rate Regimes ‘rman ary ado fren ‘Maney wor eb ap onan cen aed peso margin eu ci cay ok banker frends Tage se Wider ei dh py Ging Pesgntachange teased penta ay eye ee eer ae pate ey ae (eerste fered oy prey fs: Escher tc ‘ermine Tee Financial Starement Analysis Pamework 1Suatthe objective and comest 2. Gather dts 5 Procescthe data 4 Analy and interpret the dats 5 Report conelsions or esommendaions 6. Ups he analysis ‘Auditor Opinions ‘Ungualie svibed, lean): Resonable teranc that Gan watement ae fie fom ‘materi omisions and cto. (Qualifed Eacepons a scouring principles ‘Adbre Sutements aro peed ly do ‘not conform with acnumting eandards Disclrmer efopinion Roden unable expres amepition. AL CONCEPTS FOR THE 2025 CEA® Exam Normal Distributions ‘Neral iets empty red ‘mean and vance, (eof obseraons all hin 10 50% al within = 1.650, 959 al within 196 9986 al within » 2.585 Computing Seores eee ene eet ian ‘cma dstibuon: epee of wandand Aevaronsa given observation is fom populon |= shtemation™ population mean andin devon (Cental Limit Theorem Cora inher wen sci imple rad ‘spl of re fom popula with man And Finite arian the tampling dstbation ofsample mean approaches nama baby Alton with mean and wane equal oo 2s the sample sie hea ge Standard Error Snondard eer fhe somple mess the standard devason oF estrbation of he ample means. sce ren poplin ane: =f ‘unkown popltionvaranec: me =F ‘Technics Pio Caataegereeteen ‘ith one absvtionrmaved: then cleslte Teed devi hear ee ‘Beourap: Dew repeated sample of ie from the fl dase replacing he sampled obervations fachime,dhencalulate the sandard Sevation of the sample means [alland Alternative Hypotheses [Nallnpesiess (hypothesis that contains he gual 2 4,3) Aberatn rps (Ug coeledd i et's ‘aficen evidence 1 rjc te nul hypoes. ‘Type Land Type I Exes «Type enor tection of ull ypoes when es scully ru, Tipe eer fsw ptmlliypothes when sets cally ae Ditiewnceinmens |e [aon Meanditfcences [+ Variance z= [ual varaoce e Coneaion © Independence x Regresion slope Significance F Value ‘ ne? Revenue Recogition Freatep venue tecognion made Ie enti contass 2. dey petfomanceobigrions 3. Decamitevatscton pike 4 Alc price wo aligations 5 Recognne when a) elton ae sail Basicand Diluted EPS ‘ae EPS cleltion dos not consider ec of any iuive seus in computation of EPS vns-=—Btiteomeprcrl dens SACHS ago. of corn shouting = incomes econ, a aaa ea eee ‘Thereor dite EDS is comersle_ comer [e come” S|? ae reed +] de |=) meee fete oe | een ur JS” leme sh ck op ea pects Heder srading iva on ane tec: dividends ict relnd and uealed G/L. recognized on income sateen. Avelabeforade value on blanee sheet ‘vidende incre rind GL rcoized fom income teem ened GIs ther amprehense income “Held emutaiy soz con om balance ‘Shootin, teiaed GIL secgpied on income ‘Cah Flows From Operations (CFO) Dine metho sat with exh collections (exh queen of) cash ips (es equiaent of fest of god sli cash operatingesperses cach meres expense eh as, Tires eed stan with et income, subtscting Ick pais and aig ack ess resing fam Fnanting or imveiercsh Hows, adding bck all ‘oncash charges and adding and subtracting at nd lblity counts hat est fiom operations. ice Cath Faw Fire ca nw (@CP)measares cash avaible er Acrtonary purposes and equal operting fh lw es net eaptlepeniaes (Civica Ratios Common sie ena atone anayic Common ne blence dc expel bulance shet counts a pecenag of wal ses + Commonsise me satomen prose ll Income statement items a percentage of + Commonsive sf tatmentexprenc eh line iter 2+ prcetge ofl ch ino (outflows), or asa pteemae cet ever opel cree fama estate expres eich ie tm elie ale 63 common base ped. Lage rate eerie cash + mkt sects ees ccaCima POs EMMEs arora “alc a hse on rire ping, Derivatives Values ve. Prices “The ie of aoa atures, sap contract isthe forward peice state in the contac ands setsuch that dhe cosets a alo 2403 ‘nian. Vale may change dri enacts Iie with oppesite afl tthe ong ad shore Forward Contract Value Actine VAD = 4 PV cn = Vel ‘Canbe vewed a fowatdconact to borrow! Tend money ata certain ate at same Fru date. reece et a sets eset ‘alc ats ination that sum coz Options 1 Buyer ofall soctcxpante, ns ee eee :eresm ee rin valc fal opion = Max(. 5X) Saheim sta ees one Bees “sprioas can be cxctcsed only cession. fore} erween and gs + Asdfereer between and sock fal. 1+ Asdifrene mao, value of tok ri. eof Ant beget than (rath ll not Mage Mod 12 pao ie Be Price Multiples: leading P= ing Toes EPS nat 2m. save EPS previous 120, PEM -Facaors that Ales Option Values Ire is Cale Pes ‘Aserprice —lnerae Decree Barc pce Decrease ncene Rikfiermte nceae Decne Noluiy nese cen Time Inne cn” ‘expration Hollingcom Inne Dre Holding Dease—_Inctene esa “Tacysome depron Ese Pac all Pay ee rece ‘optionsarcime e +X RDS 4p ‘Each cur the pt uty elaoeship can eexprened a “Theprset vale ofthe fora price ofthe ge Ol eee or St any of he peal pai relinsips atime Ean