quicksheet-2018 cfa level 2 schweser's quicksheet

1、LEVELIISCHWESERCriticalConceptsforthe2018CFAExamETHICALPROFESSIONALSTARDSII(A)I(B)I(C)I(D)IIII(A)II(B)IIIHI(A)HI(B)HI(C)HI(D)HI(E)IVIV(A)IV(B)IV(C)Vv(A)V(B)V(C)VIVI(A)VI(B)VI(C)VIIVII(A)VII(B)ProfessionalismKnowledgeofth

2、eLawIndependenceObjectivityMisrepresentationMisconductIntegrityofCapitalMarketsMaterialNonpublicInfmationMarketManipulationDutiestoClientsLoyaltyPrudenceCareFairDealingSuitabilityPerfmancePresentationPreservationofConfid

3、entialityDutiestoEmployersLoyaltyAdditionalCompensationArrangementsResponsibilitiesofSupervissInvestmentAnalysisRecommendationsActionDiligenceReasonableBasisCommunicationwithClientsProspectiveClientsRecdRetentionConflict

4、sofInterestDisclosureofConflictsPriityofTransactionsReferralFeesResponsibilitiesasaCFAInstituteMemberCFACidateConductintheCFAProgramReferencetoCFAInstituteCFADesignationCFAProgramQUANTITATIVEMETHODSSimpleLinearRegression

5、Crelation:covXYrXY=(sx)(sy)ttestfr(n2df):t=rVn—2Estimatedslopecoefficient:covxycriticaltpvalueXbid.BCofferAXBV^TxXofferbidBC^offerCurrencyarbitrage:“Upthebiddowntheask.”Fwardpremium=(fwardprice)(spotprice)Valueoffwdcurre

6、ncycontractpritoexpiration:(FPt—FP)(contractsize)Vt=1RAdays360Coveredinterestrateparity:1RaF=^days360?01RBdays360Uncoveredinterestrateparity:e(%asw=RKFisherrelation:R=R.E(inflation)nominalrealInternationalFisherRelation:

7、R.—R.=E(inflation.)nominalAnominalBvAE(inflationB)RelativePurchasingPowerParity:Highinflationratesleadstocurrencydepreciation.%AS(AB)=inflationXjinflationB)where:%AS(AB)=changeinspotprice(AB)ProfitonFXCarryTrade=interest

8、differentialchangeinthespotrateofinvestmentcurrency.MundellFlemingmodel:Impactofmoaryfiscalpoliciesoninterestratesunexpectedchangesininflationaffectprojectprofitabilityreducestherealtaxsavingsfromdepreciationdecreasesval

9、ueoffixedpaymentstobondholdersaffectscostsrevenuesdifferently.CapitalRationing?IfpositiveNPVprojectsavailablecapitalchoosethecombinationwiththehighestNPV.RealOptions?Timingabonmentexpansionflexibilityfundamentaloptions.E

10、conomicAccountingIncome?Econincome=ATCFAinproject’sMV.?Econdep.basedonAininvestment’sMV.?Econincomeiscalculatedbefeinterestexpense(costofcapitalisreflectedindiscountrate).?Accountingincome=revenuesexpenses.?Acc.dep’nbase

11、doniginalinvestmentcost.?Interest(financingcosts)deductedbefecalculatingaccountingincome.ValuationModels?Economicprofit=NOPAT$WACC?MarketValueAdded=t=i(1WACC)r?Residualincome:=NI—equitygediscountedatrequiredreturnonequit

12、y.?ClaimsvaluationseparatesCFsbasedonequityclaims(discountedatcostofequity)debtholders(discountedatcostofdebt).MMPropI(NoTaxes):capitalstructureirrelevant(notaxestransactionbankruptcycosts).V=VVLVUMMPropII(NoTaxes):incre

13、aseduseofcheaperdebtincreasescostofequitynochangeinWACC.re=1800).nHHI=^(MSiXl00)2i=lMethodstoDetermineTargetValueDCFmethod:targetprofmaFCFdiscountedatadjustedparablecompanyanalysistargetvaluefromrelativevaluationmetricso

14、nsimilarfirmstakeoverparabletransactionanalysis:targetvaluefromtakeovertransactiontakeoverpremiumincluded.MergerValuationsCombinedfirm:Yat=VaVtS—CTakeoverpremium(totarget):GainT=TP=PT—VTSynergies(toacquirer):GainA=S—TP=S

15、—(PT—VT)MergerRiskacquirerpreferscash&targetprefersstock.Fmsofdivestitures:equitycarveoutsspinoffssplitoffsliquidations.EQUITYHoldingperiodreturn:=r=Pl~p0cfi=p1cflxPoPequiredreturn:Minimumexpectedreturnaninvestrequiresgi

16、venanasset’sacteristics.Internalrateofreturn(IRR):Equatesdiscountedcashflowstothecurrentprice.Equityriskpremium:requiredreturn=riskfreerate((3xERP)Gdongrowthmodelequityriskpremium:=1yrfecasteddividendyieldonmarketindexco

17、nsensuslongtermearningsgrowthratelongtermgovernmentbondyieldIbbotsonChenequityriskpremium[1i]x[1rEg]x[1PEg]1Y—RF^SMB.jX^Modelsofrequiredequityreturn:?CAPM:r.=RF(equityriskpremiumx0.)?Multifiactmodel:requiredreturn=RF(ris

18、kpremium)j...(riskpremium)n?FamaFrench:r.=RF0.x(R—RF)j1mktjxmkt“small_Pyg)^HML.jX~~PastStambaughmodel:AddsaliquidityfacttotheFamaFrenchmodel.?Macroeconomicmultifiactmodels:Usesfactsassociatedwitheconomicvariables.?Buildu

19、pmethod:r=RFequityriskpremiumsizepremiumspecificcompanypremiumBlumeadjustment:adjustedbeta=(23xrawbeta)(13x1.0)WACC=weightedaveragecostofcapitalMVdebt^^debtequityrd(lT)MV.equityMVdebtequityDiscountcashflowstofirmatWACCca

20、shflowstoequityattherequiredreturnonequity.DiscountedCashFlow(DCF)MethodsUsedividenddiscountmodels(DDM)when:?Firmhasdividendhisty.?Dividendpolicyisrelatedtoearnings.?Minityshareholderperspective.Usefreecashflow(FCF)model