Chapter 1 - Introduction to investments
Chapter 2 - Economics
Chapter 3 - Security
Chapter 4 - Individual security risk and return
Chapter 5 - Portfolio risk and return
Chapter 6 - Fundamental analysis of stocks
Chapter 7 - Stock valuation techniques
Chapter 8 - Technical analysis
Chapter 9 - Efficient market hypothesis
Chapter 10 - Bond valuation
Chapter 11 - Investment companies
Chapter 12 - Markets and transactions
Chapter 13 - Options
Chapter 14 - Futures
TOPIC 1 - INVESTMENT OVERVIEW
- Define the term "investments"
- Discuss how investments are created in the financial markets by the interaction of suppliers (typically households) and users of funds (typically governments and firms)
- List the dimensions that often differentiate financial markets and the securities created - maturity and risk
- Give broad characteristics of three categories of investments
- Debt is a fixed claim on the income and assets
- Equity is an ownership and residual claim on income and assets
- Derivatives derive value from underlying assets but have no claim on a company's physical assets
- Distinguish the goals for individual and institutional investors
- Explain the need for financial intermediaries in financial markets and how their introduction increases the variety and type of investments available (direct vs. indirect investments)
- Outline the steps involved in the investment process especially:
- types of goals for individual investors
- differentiating asset allocation and security selection
- recognizing typical constraints for investors
- If given a tax table, calculate taxable income for individuals
- Determine taxes on investment returns including capital gains, dividends, and interest income
TOPIC 2 - ECONOMY
- Explain top-down investment analysis and the sequence of decisions made
- List items that affect the growth of an economy (spending, capacity, etc.)
- Show how changes in currency values affect competition among domestic and international companies
- Discuss the importance of interest rates to the economy and the effects that the federal government has on interest rates
- Describe the fed funds market
- Explain a typical business cycle and the approximate sequence of events
- Explain the tradeoff between economic growth and inflation
- Differentiate cyclical and defensive stocks and provide examples of each
- Indicate how sector rotation strategies attempt to earn higher returns
TOPIC 3 - OVERVIEW OF SECURITIES
- Compute the total dollar and percentage returns on investments and separate returns into their income and capital gains components
- Calculate HPRs
- Annualize HPRs using APR and EAR
- Set up the equation that determines IRR and use an excel to find IRR
- Determine the cash flows of a bond - ALWAYS ASSUME SEMIANNUAL COUPONS UNLESS OTHERWISE STATED
- Distinguish secured vs. unsecured bonds, notes vs. bonds, term vs. serial/sinking fund bonds, and senior vs. junior bonds
- Compute current yield of bonds
- Identify the major issuers of bonds, explaining the key characteristics of each
- Explain the role of US government agencies in raising funds in the financial markets
- Find the equivalent tax-exempt yield of taxable bonds given an investor's tax rate
- List the rights of stockholders
- Differentiate important dates related to dividend payments on stock
- Determine the market capitalization of companies
- Distinguish common stock, treasury stock, and classified stock
- Describe characteristics of different types of stocks: income vs. growth, cyclical vs. defensive, hi tech, speculative, blue chip, small vs. large vs. mid-cap
- Understand all the information provided in a stock quote - e.g., Yahoo Finance quote (P/E ratio and div yield)
- Construct price-weighted and value-weighted indices
