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Preparing for CFA® Exams?

Don't get surprised on the CFA exams. Access 2,200 questions and 400+ pages of notes authored by a CFA charterholder.

Sharpe ratio, Treynor ratio, M2 and Jensen's alpha
portfolio performance measures
Four ratios that are commonly used in performance appraisal include the Sharpe ratio, Treynor ratio, M2: risk-adjusted performance, and Jensen’s alpha ...
Functions and definitions of money
Economics
Money acts as a medium of exchange, a store of value and a measure of value. Narrow money means the currency in circulation plus very highly liquid de ...
Structure of bond cash flows
Fixed Income
The most common bond cash flow structure is that of a conventional (plain vanilla) bond, regular fixed coupon payments and a single principal repaymen ...
Basic and diluted EPS
earnings per share
EPS is presented for ordinary shares (also called common stock or common share), shares which are subordinate to all other types of equity, and which ...
Company's stakeholder groups and their interests
corporate governance
The primary stakeholder groups of a company include shareholders, creditors, managers, other employees, the board of directors, customers, suppliers, ...
Accounting for defined contribution and defined benefit plans
Financial Reporting and Analysis
In a defined contribution plan, an asset or liability arises from whether contribution paid exceeds the agreed amounts. But in a defined benefit plan, ...
Functions of the financial system
functions of financial system
A core objective of a financial system is to allow individuals, firms, and others to exchange money and risk with each other, and move it across time ...
Use of financial statement analysis in screening potential equity investments
screening for equity investments
Ratios derived from a company’s financial statements together with other information can be used to filter stocks of different companies to identify a ...
Difference between inflation, deflation, hyperinflation and disinflation
inflation
Inflation refers to a sustained rise in the price level. Deflation represents a sustained decrease in the price level, i.e. negative inflation. Hyperi ...
Systematic risk vs unsystematic risk
beta coefficient
A portfolio’s total risk is composed of systematic risk and unsystematic risk. Systematic risk (also called non-diversifiable risk or market risk) is ...
Components of shareholders equity
understanding the balance sheet
Shareholders equity (or just equity) represents the claim of owners against a company. It equals total assets minus total liabilities. Its components ...
Types of corporate debt
Fixed Income
Corporate debts includes bank loans (bilateral loans or syndicated loans), commercial paper, and bonds and notes. ...
Non-current liabilities
Financial Reporting and Analysis
Non-current liabilities are obligations which are not classified as current liabilities. These primarily include long-term financial liabilities and d ...
Audits of financial statements
audits of financial statements
Financial statements are generally required to be audited by an independent firm of auditors in accordance with applicable auditing standards who prov ...
Risk and return characteristics of equity securities
Equity
Different equity securities have different risk and return characteristics depending on their features such as whether they are plain-vanilla, callabl ...
Stakeholder management
Corporate Finance
Companies want to balance the interest of different stakeholders using the legal, contractual, organizational, and governmental infrastructure. Legal ...
Bonds with contingency provisions
Fixed Income
A bond with contingency provision is bond which entitles either the issuer or the bondholder to take some action on occurrence of some event. A contin ...
Return-generating models
single-factor model
A return-generating model is a model that provides estimates of expected return given certain parameters, such as the level of systematic risk. ...
Board of directors and its committees
board committees
Board of directors acts as shareholders’ monitoring tool. One-tier boards have executive and non-executive directors. Non-executive directors may be i ...
Matrix pricing
matrix pricing
When bonds are not yet issued or where they are not actively traded, their yield and price are determined using comparable bonds, bonds whose time to ...
Minimum variance portfolio and efficient frontier
Portfolio Managment
Minimum-variance portfolios are portfolios included in the investment opportunity set which have the minimum variance. The part of the minimum-varianc ...
Capital allocation line vs capital market line
capital allocation line
The capital market line is a special case of capital allocation line based on the capital asset pricing model. ...
Bond convexity
approximate convexity
The relationship between bond price and bond yield is convex. It means that given a yield y, if we decrease the yield, the increase in bond price is m ...
Level and volatility of yield spread
yield spread volatility
In general, lower the credit quality and hence higher the credit risk, the higher will be quoted yield. Even though the realized yield is different fr ...
Behavioral finance and market anomalies
behavioral finance
Behavioral finance is the study of investor behavior, individually and collectively, as it is observed in the market. Traditional finance assumes that ...
LIFO method: LIFO reserve and liquidiation
LIFO reserve
Under the LIFO method, ending inventories comprise of units that are the oldest and hence have carrying values lower than the current replacement cost ...
Presentation and disclosure of long-lived assets
Financial Reporting and Analysis
Under IFRS, a company is required to prepare a reconciliation between the gross carrying amount of the asset and associated accumulated depreciation a ...
Types of derivatives
types of derivatives
Derivative contracts are broadly categorized into (a) forward commitments, and (b) contingent claims. Forward commitments include forward contracts, f ...
Weak, semi-strong, and strong forms of market efficiency and its implications
semi-strong form efficiency
Eugene Fama defined three forms of efficiency depending on which information is reflected in market prices: weak, semi-strong and strong. A market is ...
Credit risk, default probability, and loss severity
loss given default
Credit risk is the risk of loss that would occur if an issuer fails to make full and timely payments of interest and principal. It has two components: ...