Download CFA Level I - LOS Changes 2016 - 2017

CFA Level I - LOS Changes 2016 - 2017
Topic
Ethics
LOS
Level I - 2016 (549 LOS)
LOS
1.1.a
Ethics
1.1.b
Ethics
1.1.c
Ethics
1.1.d
Ethics
1.1.e
Ethics
1.1.f
Ethics
1.1.a
Ethics
1.1.b
Ethics
1.1.c
Ethics
1.2.a
Ethics
1.2.b
Ethics
1.2.c
Ethics
1.3.a
describe the structure of the CFA
Institute Professional Conduct Program
and the process for the enforcement of
the Code and Standards
state the six components of the Code of
Ethics and the seven Standards of
Professional Conduct
explain the ethical responsibilities
required by the Code and Standards,
including the sub-sections of each
Standard
demonstrate the application of the
Code of Ethics and Standards of
Professional Conduct to situations
involving issues of professional integrity
distinguish between conduct that
conforms to the Code and Standards
and conduct that violates the Code and
Standards
recommend practices and procedures
designed to prevent violations of the
Code of Ethics and Standards of
Professional Conduct
explain why the GIPS standards were
created, what parties the GIPS
standards apply to, and who is served
by the standards
1.2.a
1.2.b
1.2.c
1.3.a
1.3.b
1.3.c
1.4.a
Level I - 2017 (534 LOS)
Compared
explain ethics
New
describe the role of a code of ethics in
New
defining a profession
identify challenges to ethical behavior
New
describe the need for high ethical
New
standards in the investment industry
distinguish between ethical and legal
New
standards
describe and apply a framework for
New
ethical decision making
describe the structure of the CFA
Institute Professional Conduct Program
and the process for the enforcement of
the Code and Standards
state the six components of the Code of
Ethics and the seven Standards of
Professional Conduct
explain the ethical responsibilities
required by the Code and Standards,
including the sub-sections of each
Standard
demonstrate the application of the Code
of Ethics and Standards of Professional
Conduct to situations involving issues of
professional integrity
distinguish between conduct that
conforms to the Code and Standards
and conduct that violates the Code and
Standards
recommend practices and procedures
designed to prevent violations of the
Code of Ethics and Standards of
Professional Conduct
explain why the GIPS standards were
created, what parties the GIPS
standards apply to, and who is served
by the standards
Finance or Accounting Questions? Go to passingscoreforum.com
1
Topic
LOS
Ethics
1.3.b
Ethics
1.3.c
Ethics
1.4.a
Ethics
1.4.b
Ethics
1.4.c
Ethics
1.4.d
Quantitative
2.5.a
Quantitative
2.5.b
Quantitative
2.5.c
Quantitative
2.5.d
Quantitative
2.5.e
Quantitative
2.5.f
Level I - 2016 (549 LOS)
explain the construction and purpose of
composites in performance reporting
explain the requirements for
verification
describe the key features of the GIPS
standards and the fundamentals of
compliance
describe the scope of the GIPS
standards with respect to an
investment firm’s definition and
historical performance record
explain how the GIPS standards are
implemented in countries with existing
standards for performance reporting
and describe the appropriate response
when the GIPS standards and local
regulations conflict
describe the nine major sections of the
GIPS standards
interpret interest rates as required
rates of return, discount rates, or
opportunity costs
explain an interest rate as the sum of a
real risk-free rate, and premiums that
compensate investors for bearing
distinct types of risk
calculate and interpret the effective
annual rate, given the stated annual
interest rate and the frequency of
compounding
solve time value of money problems for
different frequencies of compounding
calculate and interpret the future value
(FV) and present value (PV) of a single
sum of money, an ordinary annuity, an
annuity due, a perpetuity (PV only),
and a series of unequal cash flows
demonstrate the use of a time line in
modeling and solving time value of
money problems
LOS
1.4.b
1.4.c
1.5.a
1.5.b
1.5.c
1.5.d
2.6.a
2.6.b
2.6.c
2.6.d
2.6.e
2.6.f
Level I - 2017 (534 LOS)
Compared
explain the construction and purpose of
composites in performance reporting
explain the requirements for verification
describe the key features of the GIPS
standards and the fundamentals of
compliance
describe the scope of the GIPS
standards with respect to an investment
firm’s definition and historical
performance record
explain how the GIPS standards are
implemented in countries with existing
standards for performance reporting
and describe the appropriate response
when the GIPS standards and local
regulations conflict
describe the nine major sections of the
GIPS standards
interpret interest rates as required rates
of return, discount rates, or opportunity
costs
explain an interest rate as the sum of a
real risk-free rate and premiums that
compensate investors for bearing
distinct types of risk
calculate and interpret the effective
annual rate, given the stated annual
interest rate and the frequency of
compounding
solve time value of money problems for
different frequencies of compounding
calculate and interpret the future value
(FV) and present value (PV) of a single
sum of money, an ordinary annuity, an
annuity due, a perpetuity (PV only), and
a series of unequal cash flows
demonstrate the use of a time line in
modeling and solving time value of
money problems
Finance or Accounting Questions? Go to passingscoreforum.com
2
Topic
LOS
Quantitative
2.6.a
Quantitative
2.6.b
Quantitative
2.6.c
Quantitative
2.6.d
Quantitative
2.6.e
Quantitative
2.6.f
Quantitative
2.7.a
Quantitative
2.7.b
Quantitative
2.7.c
Quantitative
2.7.d
Quantitative
2.7.e
Level I - 2016 (549 LOS)
calculate and interpret the net present
value (NPV) and the internal rate of
return (IRR) of an investment
contrast the NPV rule to the IRR rule,
and identify problems associated with
the IRR rule
calculate and interpret a holding period
return (total return)
calculate and compare the moneyweighted and time-weighted rates of
return of a portfolio and evaluate the
performance of portfolios based on
these measures
calculate and interpret the bank
discount yield, holding period yield,
effective annual yield, and money
market yield for U.S. Treasury bills and
other money market instruments
convert among holding period yields,
money market yields, effective annual
yields, and bond equivalent yields
distinguish between descriptive
statistics and inferential statistics,
between a population and a sample,
and among the types of measurement
scales
define a parameter, a sample statistic,
and a frequency distribution
calculate and interpret relative
frequencies and cumulative relative
frequencies, given a frequency
distribution
describe the properties of a data set
presented as a histogram or a
frequency polygon
calculate and interpret measures of
central tendency, including the
population mean, sample mean,
arithmetic mean, weighted average or
mean, geometric mean, harmonic
mean, median, and mode
LOS
2.7.a
2.7.b
2.7.c
2.7.d
2.7.e
2.7.f
2.8.a
2.8.b
2.8.c
2.8.d
2.8.e
Level I - 2017 (534 LOS)
Compared
calculate and interpret the net present
value (NPV) and the internal rate of
return (IRR) of an investment
contrast the NPV rule to the IRR rule,
and identify problems associated with
the IRR rule
calculate and interpret a holding period
return (total return)
calculate and compare the moneyweighted and time-weighted rates of
return of a portfolio and evaluate the
performance of portfolios based on
these measures
calculate and interpret the bank
discount yield, holding period yield,
effective annual yield, and money
market yield for US Treasury bills and
other money market instruments
convert among holding period yields,
money market yields, effective annual
yields, and bond equivalent yields
distinguish between descriptive
statistics and inferential statistics,
between a population and a sample,
and among the types of measurement
scales
define a parameter, a sample statistic,
and a frequency distribution
calculate and interpret relative
frequencies and cumulative relative
frequencies, given a frequency
distribution
describe the properties of a data set
presented as a histogram or a
frequency polygon
calculate and interpret measures of
central tendency, including the
population mean, sample mean,
arithmetic mean, weighted average or
mean, geometric mean, harmonic
mean, median, and mode
Finance or Accounting Questions? Go to passingscoreforum.com
3
Topic
LOS
Quantitative
2.7.f
Quantitative
2.7.g
Quantitative
2.7.h
Quantitative
2.7.i
Quantitative
2.7.j
Quantitative
2.7.k
Quantitative
2.7.l
Quantitative
2.7.m
Quantitative
2.8.a
Quantitative
2.8.b
Quantitative
2.8.c
Quantitative
2.8.d
Quantitative
2.8.e
Level I - 2016 (549 LOS)
calculate and interpret quartiles,
quintiles, deciles, and percentiles
calculate and interpret 1) a range and a
mean absolute deviation and 2) the
variance and standard deviation of a
population and of a sample
calculate and interpret the proportion
of observations falling within a specified
number of standard deviations of the
mean using Chebyshev’s inequality
calculate and interpret the coefficient of
variation and the Sharpe ratio
explain skewness and the meaning of a
positively or negatively skewed return
distribution
describe the relative locations of the
mean, median, and mode for a
unimodal, nonsymmetrical distribution
explain measures of sample skewness
and kurtosis
compare the use of arithmetic and
geometric means when analyzing
investment returns
define a random variable, an outcome,
an event, mutually exclusive events,
and exhaustive events
state the two defining properties of
probability and distinguish among
empirical, subjective, and a priori
probabilities
state the probability of an event in
terms of odds for and against the event
distinguish between unconditional and
conditional probabilities
explain the multiplication, addition, and
total probability rules
LOS
2.8.f
2.8.g
2.8.h
2.8.i
2.8.j
2.8.k
2.8.l
2.8.m
2.9.a
2.9.b
2.9.c
2.9.d
2.9.e
Level I - 2017 (534 LOS)
Compared
calculate and interpret quartiles,
quintiles, deciles, and percentiles
calculate and interpret 1) a range and a
mean absolute deviation and 2) the
variance and standard deviation of a
population and of a sample
calculate and interpret the proportion of
observations falling within a specified
number of standard deviations of the
mean using Chebyshev’s inequality
calculate and interpret the coefficient of
variation and the Sharpe ratio
explain skewness and the meaning of a
positively or negatively skewed return
distribution
describe the relative locations of the
mean, median, and mode for a
unimodal, nonsymmetrical distribution
explain measures of sample skewness
and kurtosis
compare the use of arithmetic and
geometric means when analyzing
investment returns
define a random variable, an outcome,
an event, mutually exclusive events,
and exhaustive events
state the two defining properties of
probability and distinguish among
empirical, subjective, and a priori
probabilities
state the probability of an event in
terms of odds for and against the event
distinguish between unconditional and
conditional probabilities
explain the multiplication, addition, and
total probability rules
Finance or Accounting Questions? Go to passingscoreforum.com
4
Topic
LOS
Quantitative
2.8.f
Quantitative
2.8.g
Quantitative
2.8.h
Quantitative
2.8.i
Quantitative
2.8.j
Quantitative
2.8.k
Quantitative
2.8.l
Quantitative
2.8.m
Quantitative
2.8.n
Quantitative
2.8.o
Quantitative
3.9.a
Quantitative
3.9.b
Quantitative
3.9.c
Quantitative
3.9.d
Level I - 2016 (549 LOS)
LOS
calculate and interpret 1) the joint
probability of two events, 2) the
probability that at least one of two
events will occur, given the probability
2.9.f
of each and the joint probability of the
two events, and 3) a joint probability of
any number of independent events
distinguish between dependent and
2.9.g
independent events
calculate and interpret an unconditional
probability using the total probability
2.9.h
rule
explain the use of conditional
2.9.i
expectation in investment applications
explain the use of a tree diagram to
2.9.j
represent an investment problem
calculate and interpret covariance and
2.9.k
correlation
calculate and interpret the expected
value, variance, and standard deviation
2.9.l
of a random variable and of returns on
a portfolio
calculate and interpret covariance given
2.9.m
a joint probability function
calculate and interpret an updated
2.9.n
probability using Bayes’ formula
identify the most appropriate method
to solve a particular counting problem,
and solve counting problems using
2.9.o
factorial, combination, and permutation
concepts
define a probability distribution and
distinguish between discrete and
3.10.a
continuous random variables and their
probability functions
describe the set of possible outcomes
3.10.b
of a specified discrete random variable
interpret a cumulative distribution
3.10.c
function
calculate and interpret probabilities for
a random variable, given its cumulative
3.10.d
distribution function
Finance or Accounting Questions? Go to
Level I - 2017 (534 LOS)
Compared
calculate and interpret 1) the joint
probability of two events, 2) the
probability that at least one of two
events will occur, given the probability
of each and the joint probability of the
two events, and 3) a joint probability of
any number of independent events
distinguish between dependent and
independent events
calculate and interpret an unconditional
probability using the total probability
rule
explain the use of conditional
expectation in investment applications
explain the use of a tree diagram to
represent an investment problem
calculate and interpret covariance and
correlation
calculate and interpret the expected
value, variance, and standard deviation
of a random variable and of returns on
a portfolio
calculate and interpret covariance given
a joint probability function
calculate and interpret an updated
probability using Bayes’ formula
identify the most appropriate method to
solve a particular counting problem and
solve counting problems using factorial,
combination, and permutation concepts
define a probability distribution and
distinguish between discrete and
continuous random variables and their
probability functions
describe the set of possible outcomes of
a specified discrete random variable
interpret a cumulative distribution
function
calculate and interpret probabilities for
a random variable, given its cumulative
distribution function
passingscoreforum.com
5
Topic
LOS
Quantitative
3.9.e
Quantitative
3.9.f
Quantitative
3.9.g
Quantitative
3.9.h
Quantitative
3.9.i
Quantitative
3.9.j
Quantitative
3.9.k
Quantitative
3.9.l
Quantitative
3.9.m
Quantitative
3.9.n
Quantitative
3.9.o
Quantitative
3.9.p
Level I - 2016 (549 LOS)
define a discrete uniform random
variable, a Bernoulli random variable,
and a binomial random variable
calculate and interpret probabilities
given the discrete uniform and the
binomial distribution functions
construct a binomial tree to describe
stock price movement
calculate and interpret tracking error
define the continuous uniform
distribution and calculate and interpret
probabilities, given a continuous
uniform distribution
explain the key properties of the
normal distribution
distinguish between a univariate and a
multivariate distribution, and explain
the role of correlation in the
multivariate normal distribution
determine the probability that a
normally distributed random variable
lies inside a given interval
define the standard normal distribution,
explain how to standardize a random
variable, and calculate and interpret
probabilities using the standard normal
distribution
define shortfall risk, calculate the safetyfirst ratio, and select an optimal
portfolio using Roy’s safety-first
criterion
explain the relationship between
normal and lognormal distributions and
why the lognormal distribution is used
to model asset prices
distinguish between discretely and
continuously compounded rates of
return, and calculate and interpret a
continuously compounded rate of
return, given a specific holding period
return
LOS
3.10.e
3.10.f
3.10.g
3.10.h
3.10.i
3.10.j
3.10.k
3.10.l
3.10.m
3.10.n
3.10.o
3.10.p
Level I - 2017 (534 LOS)
Compared
define a discrete uniform random
variable, a Bernoulli random variable,
and a binomial random variable
calculate and interpret probabilities
given the discrete uniform and the
binomial distribution functions
construct a binomial tree to describe
stock price movement
calculate and interpret tracking error
define the continuous uniform
distribution and calculate and interpret
probabilities, given a continuous
uniform distribution
explain the key properties of the normal
distribution
distinguish between a univariate and a
multivariate distribution and explain the
role of correlation in the multivariate
normal distribution
determine the probability that a
normally distributed random variable
lies inside a given interval
define the standard normal distribution,
explain how to standardize a random
variable, and calculate and interpret
probabilities using the standard normal
distribution
define shortfall risk, calculate the safetyfirst ratio, and select an optimal
portfolio using Roy’s safety-first
criterion
explain the relationship between normal
and lognormal distributions and why the
lognormal distribution is used to model
asset prices
distinguish between discretely and
continuously compounded rates of
return and calculate and interpret a
continuously compounded rate of
return, given a specific holding period
return
Finance or Accounting Questions? Go to passingscoreforum.com
6
Topic
LOS
Quantitative
3.9.q
Quantitative
3.9.r
Quantitative
3.10.a
Quantitative
3.10.b
Quantitative
3.10.c
Quantitative
3.10.d
Quantitative
3.10.e
Quantitative
3.10.f
Quantitative
3.10.g
Quantitative
3.10.h
Quantitative
3.10.i
Quantitative
3.10.j
Quantitative
3.10.k
Quantitative
3.11.a
Quantitative
3.11.b
Level I - 2016 (549 LOS)
explain Monte Carlo simulation and
describe its applications and limitations
compare Monte Carlo simulation and
historical simulation
define simple random sampling and a
sampling distribution
explain sampling error
distinguish between simple random and
stratified random sampling
distinguish between time-series and
cross-sectional data
explain the central limit theorem and
its importance
calculate and interpret the standard
error of the sample mean
identify and describe desirable
properties of an estimator
distinguish between a point estimate
and a confidence interval estimate of a
population parameter
describe properties of Student’s tdistribution and calculate and interpret
its degrees of freedom
calculate and interpret a confidence
interval for a population mean, given a
normal distribution with 1) a known
population variance, 2) an unknown
population variance, or 3) an unknown
variance and a large sample size
describe the issues regarding selection
of the appropriate sample size, datamining bias, sample selection bias,
survivorship bias, look-ahead bias, and
time-period bias
define a hypothesis, describe the steps
of hypothesis testing, and describe and
interpret the choice of the null and
alternative hypotheses
distinguish between one-tailed and twotailed tests of hypotheses
LOS
3.10.q
3.10.r
3.11.a
3.11.b
3.11.c
3.11.d
3.11.e
3.11.f
3.11.g
3.11.h
3.11.i
3.11.j
3.11.k
3.12.a
3.12.b
Level I - 2017 (534 LOS)
Compared
explain Monte Carlo simulation and
describe its applications and limitations
compare Monte Carlo simulation and
historical simulation
define simple random sampling and a
sampling distribution
explain sampling error
distinguish between simple random and
stratified random sampling
distinguish between time-series and
cross-sectional data
explain the central limit theorem and its
importance
calculate and interpret the standard
error of the sample mean
identify and describe desirable
properties of an estimator
distinguish between a point estimate
and a confidence interval estimate of a
population parameter
describe properties of Student’s tdistribution and calculate and interpret
its degrees of freedom
calculate and interpret a confidence
interval for a population mean, given a
normal distribution with 1) a known
population variance, 2) an unknown
population variance, or 3) an unknown
variance and a large sample size
describe the issues regarding selection
of the appropriate sample size, datamining bias, sample selection bias,
survivorship bias, look-ahead bias, and
time-period bias
define a hypothesis, describe the steps
of hypothesis testing, and describe and
interpret the choice of the null and
alternative hypotheses
distinguish between one-tailed and twotailed tests of hypotheses
Finance or Accounting Questions? Go to passingscoreforum.com
7
Topic
LOS
Quantitative
3.11.c
Quantitative
3.11.d
Quantitative
3.11.e
Quantitative
3.11.f
Quantitative
3.11.g
Quantitative
3.11.h
Quantitative
3.11.i
Quantitative
3.11.j
Level I - 2016 (549 LOS)
explain a test statistic, Type I and Type
II errors, a significance level, and how
significance levels are used in
hypothesis testing
explain a decision rule, the power of a
test, and the relation between
confidence intervals and hypothesis
tests
distinguish between a statistical result
and an economically meaningful result
explain and interpret the p-value as it
relates to hypothesis testing
identify the appropriate test statistic
and interpret the results for a
hypothesis test concerning the
population mean of both large and
small samples when the population is
normally or approximately normally
distributed and the variance is 1)
known or 2) unknown
identify the appropriate test statistic
and interpret the results for a
hypothesis test concerning the equality
of the population means of two at least
approximately normally distributed
populations, based on independent
random samples with 1) equal or 2)
unequal assumed variances
identify the appropriate test statistic
and interpret the results for a
hypothesis test concerning the mean
difference of two normally distributed
populations
identify the appropriate test statistic
and interpret the results for a
hypothesis test concerning 1) the
variance of a normally distributed
population, and 2) the equality of the
variances of two normally distributed
populations based on two independent
random samples
LOS
3.12.c
3.12.d
3.12.e
3.12.f
3.12.g
3.12.h
3.12.i
3.12.j
Level I - 2017 (534 LOS)
Compared
explain a test statistic, Type I and Type
II errors, a significance level, and how
significance levels are used in
hypothesis testing
explain a decision rule, the power of a
test, and the relation between
confidence intervals and hypothesis
tests
distinguish between a statistical result
and an economically meaningful result
explain and interpret the p-value as it
relates to hypothesis testing
identify the appropriate test statistic
and interpret the results for a
hypothesis test concerning the
population mean of both large and small
samples when the population is
normally or approximately normally
distributed and the variance is 1) known
or 2) unknown
identify the appropriate test statistic
and interpret the results for a
hypothesis test concerning the equality
of the population means of two at least
approximately normally distributed
populations, based on independent
random samples with 1) equal or 2)
unequal assumed variances
identify the appropriate test statistic
and interpret the results for a
hypothesis test concerning the mean
difference of two normally distributed
populations
identify the appropriate test statistic
and interpret the results for a
hypothesis test concerning 1) the
variance of a normally distributed
population, and 2) the equality of the
variances of two normally distributed
populations based on two independent
random samples
Finance or Accounting Questions? Go to passingscoreforum.com
8
Topic
LOS
Quantitative
3.11.k
Quantitative
3.12.a
Quantitative
3.12.b
Quantitative
3.12.c
Quantitative
3.12.d
Quantitative
3.12.e
Quantitative
3.12.f
Quantitative
3.12.g
Quantitative
3.12.h
Economics
4.13.a
Economics
4.13.b
Economics
4.13.c
Economics
4.13.d
Economics
4.13.e
Economics
4.13.f
Level I - 2016 (549 LOS)
distinguish between parametric and
nonparametric tests and describe
situations in which the use of
nonparametric tests may be
appropriate
explain principles of technical analysis,
its applications, and its underlying
assumptions
describe the construction of different
types of technical analysis charts and
interpret them
explain uses of trend, support,
resistance lines, and change in polarity
describe common chart patterns
describe common technical analysis
indicators (price-based, momentum
oscillators, sentiment, and flow of
funds)
explain how technical analysts use
cycles
describe the key tenets of Elliott Wave
Theory and the importance of Fibonacci
numbers
describe intermarket analysis as it
relates to technical analysis and asset
allocation
distinguish among types of markets
explain the principles of demand and
supply
describe causes of shifts in and
movements along demand and supply
curves
describe the process of aggregating
demand and supply curves
describe the concept of equilibrium
(partial and general), and mechanisms
by which markets achieve equilibrium
distinguish between stable and
unstable equilibria, including price
bubbles, and identify instances of such
equilibria
LOS
3.12.k
3.13.a
3.13.b
3.13.c
3.13.d
3.13.e
3.13.f
3.13.g
3.13.h
Level I - 2017 (534 LOS)
Compared
distinguish between parametric and
nonparametric tests and describe
situations in which the use of
nonparametric tests may be appropriate
explain principles of technical analysis,
its applications, and its underlying
assumptions
describe the construction of different
types of technical analysis charts and
interpret them
explain uses of trend, support,
resistance lines, and change in polarity
describe common chart patterns
describe common technical analysis
indicators (price-based, momentum
oscillators, sentiment, and flow of
funds)
explain how technical analysts use
cycles
describe the key tenets of Elliott Wave
Theory and the importance of Fibonacci
numbers
describe intermarket analysis as it
relates to technical analysis and asset
allocation
Finance or Accounting Questions? Go to passingscoreforum.com
Removed
Removed
Removed
Removed
Removed
Removed
9
Topic
LOS
Economics
4.13.g
Economics
4.13.h
Economics
4.13.i
Economics
4.13.j
Economics
4.13.k
Economics
4.13.l
Economics
4.13.m
Economics
4.14.a
Economics
4.14.b
Economics
4.14.c
Economics
4.14.d
Economics
4.14.e
Economics
4.14.f
Level I - 2016 (549 LOS)
LOS
Level I - 2017 (534 LOS)
calculate and interpret individual and
aggregate demand, and inverse
demand and supply functions, and
interpret individual and aggregate
demand and supply curves
calculate and interpret the amount of
excess demand or excess supply
associated with a non-equilibrium price
describe types of auctions and calculate
the winning price(s) of an auction
calculate and interpret consumer
surplus, producer surplus, and total
surplus
describe how government regulation
and intervention affect demand and
supply
forecast the effect of the introduction
and the removal of a market
interference (e.g., a price floor or
ceiling) on price and quantity
calculate and interpret price, income,
and cross-price elasticities of demand
and describe factors that affect each
measure
describe consumer choice theory and
utility theory
describe the use of indifference curves,
opportunity sets, and budget
constraints in decision making
calculate and interpret a budget
constraint
determine a consumer’s equilibrium
bundle of goods based on utility
analysis
compare substitution and income
effects
distinguish between normal goods and
inferior goods, and explain Giffen goods
and Veblen goods in this context
Compared
Removed
Removed
Removed
Removed
Removed
Removed
4.14.a
calculate and interpret price, income,
and cross-price elasticities of demand
and describe factors that affect each
measure
Removed
Removed
Removed
Removed
4.14.b
4.14.c
compare substitution and income effects
distinguish between normal goods and
inferior goods
Finance or Accounting Questions? Go to passingscoreforum.com
Wording
Change
10
Topic
LOS
Economics
4.15.a
Economics
4.15.b
Economics
4.15.c
Economics
4.15.d
Economics
4.15.f
Economics
4.15.h
Economics
4.15.i
Economics
4.15.j
Economics
4.15.l
Economics
4.15.k
Economics
4.15.e
Economics
4.15.g
Economics
4.16.a
Economics
4.16.b
Economics
4.16.c
Economics
4.16.d
Level I - 2016 (549 LOS)
calculate, interpret, and compare
accounting profit, economic profit,
normal profit, and economic rent
calculate and interpret and compare
total, average, and marginal revenue
describe a firm’s factors of production
calculate and interpret total, average,
marginal, fixed, and variable costs
describe approaches to determining the
profit-maximizing level of output
distinguish between short-run and longrun profit maximization
distinguish among decreasing-cost,
constant-cost, and increasing-cost
industries and describe the long-run
supply of each
calculate and interpret total, marginal,
and average product of labor
determine the optimal combination of
resources that minimizes cost
describe the phenomenon of
diminishing marginal returns and
calculate and interpret the profitmaximizing utilization level of an input
determine and describe breakeven and
shutdown points of production
describe how economies of scale and
diseconomies of scale affect costs
describe characteristics of perfect
competition, monopolistic competition,
oligopoly, and pure monopoly
explain relationships between price,
marginal revenue, marginal cost,
economic profit, and the elasticity of
demand under each market structure
describe a firm’s supply function under
each market structure
describe and determine the optimal
price and output for firms under each
market structure
LOS
Level I - 2017 (534 LOS)
Compared
Removed
Removed
Removed
Removed
Removed
Removed
Removed
Removed
Removed
4.14.d
4.14.e
4.14.f
4.15.a
4.15.b
4.15.c
4.15.d
describe the phenomenon of diminishing
marginal returns
determine and describe breakeven and
shutdown points of production
describe how economies of scale and
diseconomies of scale affect costs
describe characteristics of perfect
competition, monopolistic competition,
oligopoly, and pure monopoly
explain relationships between price,
marginal revenue, marginal cost,
economic profit, and the elasticity of
demand under each market structure
describe a firm’s supply function under
each market structure
describe and determine the optimal
price and output for firms under each
market structure
Finance or Accounting Questions? Go to passingscoreforum.com
Wording
Change
11
Topic
LOS
Economics
4.16.e
Economics
4.16.f
Economics
4.16.g
Economics
4.16.h
Economics
5.17.a
Economics
5.17.b
Economics
5.17.c
Economics
5.17.d
Economics
5.17.e
Economics
5.17.f
Economics
5.17.g
Economics
5.17.h
Economics
5.17.i
Economics
5.17.j
Level I - 2016 (549 LOS)
explain factors affecting long-run
equilibrium under each market
structure
describe pricing strategy under each
market structure
describe the use and limitations of
concentration measures in identifying
market structure
identify the type of market structure
within which a firm operates
calculate and explain gross domestic
product (GDP) using expenditure and
income approaches
compare the sum-of-value-added and
value-of-final-output methods of
calculating GDP
LOS
4.15.e
4.15.f
4.15.g
4.15.h
4.16.a
4.16.b
compare nominal and real GDP and
4.16.c
calculate and interpret the GDP deflator
compare GDP, national income,
personal income, and personal
4.16.d
disposable income
explain the fundamental relationship
among saving, investment, the fiscal
4.16.e
balance, and the trade balance
explain the IS and LM curves and how
they combine to generate the
4.16.f
aggregate demand curve
explain the aggregate supply curve in
4.16.g
the short run and long run
explain causes of movements along and
shifts in aggregate demand and supply
4.16.h
curves
describe how fluctuations in aggregate
demand and aggregate supply cause
4.16.i
short-run changes in the economy and
the business cycle
distinguish between the following types
of macroeconomic equilibria: long-run
full employment, short-run
4.16.j
recessionary gap, short-run inflationary
gap, and short-run stagflation
Finance or Accounting Questions? Go to
Level I - 2017 (534 LOS)
Compared
explain factors affecting long-run
equilibrium under each market structure
describe pricing strategy under each
market structure
describe the use and limitations of
concentration measures in identifying
market structure
identify the type of market structure
within which a firm operates
calculate and explain gross domestic
product (GDP) using expenditure and
income approaches
compare the sum-of-value-added and
value-of-final-output methods of
calculating GDP
compare nominal and real GDP and
calculate and interpret the GDP deflator
compare GDP, national income, personal
income, and personal disposable income
explain the fundamental relationship
among saving, investment, the fiscal
balance, and the trade balance
explain the IS and LM curves and how
they combine to generate the aggregate
demand curve
explain the aggregate supply curve in
the short run and long run
explain causes of movements along and
shifts in aggregate demand and supply
curves
describe how fluctuations in aggregate
demand and aggregate supply cause
short-run changes in the economy and
the business cycle
distinguish between the following types
of macroeconomic equilibria: long-run
full employment, short-run recessionary
gap, short-run inflationary gap, and
short-run stagflation
passingscoreforum.com
12
Topic
LOS
Economics
5.17.k
Economics
5.17.l
Economics
5.17.m
Economics
5.17.n
Economics
5.17.o
Economics
5.18.a
Economics
5.18.b
Economics
5.18.c
Economics
5.18.d
Economics
5.18.e
Economics
5.18.f
Economics
5.18.g
Economics
5.18.h
Economics
5.18.i
Economics
5.19.a
Economics
5.19.b
Economics
5.19.c
Economics
5.19.d
Economics
5.19.e
Level I - 2016 (549 LOS)
explain how a short-run
macroeconomic equilibrium may occur
at a level above or below full
employment
analyze the effect of combined changes
in aggregate supply and demand on the
economy
describe sources, measurement, and
sustainability of economic growth
describe the production function
approach to analyzing the sources of
economic growth
distinguish between input growth and
growth of total factor productivity as
components of economic growth
describe the business cycle and its
phases
describe how resource use, housing
sector activity, and external trade
sector activity vary as an economy
moves through the business cycle
describe theories of the business cycle
describe types of unemployment and
measures of unemployment
explain inflation, hyperinflation,
disinflation, and deflation
explain the construction of indices used
to measure inflation
compare inflation measures, including
their uses and limitations
distinguish between cost-push and
demand-pull inflation
describe economic indicators, including
their uses and limitations
compare monetary and fiscal policy
describe functions and definitions of
money
explain the money creation process
describe theories of the demand for
and supply of money
describe the Fisher effect
LOS
4.16.k
4.16.l
4.16.m
4.16.n
4.16.o
4.17.a
4.17.b
4.17.c
4.17.d
4.17.e
4.17.f
4.17.g
4.17.h
4.17.i
5.18.a
5.18.b
5.18.c
5.18.d
5.18.e
Level I - 2017 (534 LOS)
Compared
explain how a short-run macroeconomic
equilibrium may occur at a level above
or below full employment
analyze the effect of combined changes
in aggregate supply and demand on the
economy
describe sources, measurement, and
sustainability of economic growth
describe the production function
approach to analyzing the sources of
economic growth
distinguish between input growth and
growth of total factor productivity as
components of economic growth
describe the business cycle and its
phases
describe how resource use, housing
sector activity, and external trade sector
activity vary as an economy moves
through the business cycle
describe theories of the business cycle
describe types of unemployment and
Wording
compare measures of unemployment
Change
explain inflation, hyperinflation,
disinflation, and deflation
explain the construction of indices used
to measure inflation
compare inflation measures, including
their uses and limitations
distinguish between cost-push and
demand-pull inflation
interpret a set of economic indicators
Wording
and describe their uses and limitations
Change
compare monetary and fiscal policy
describe functions and definitions of
money
explain the money creation process
describe theories of the demand for and
supply of money
describe the Fisher effect
Finance or Accounting Questions? Go to passingscoreforum.com
13
Topic
LOS
Economics
5.19.f
Economics
5.19.g
Economics
5.19.h
Economics
5.19.i
Economics
5.19.j
Economics
5.19.k
Economics
5.19.l
Economics
5.19.m
Economics
5.19.n
Economics
5.19.o
Economics
5.19.p
Economics
5.19.q
Economics
5.19.r
Economics
5.19.s
Economics
5.19.t
Economics
6.20.a
Economics
6.20.b
Economics
6.20.c
Level I - 2016 (549 LOS)
describe roles and objectives of central
banks
contrast the costs of expected and
unexpected inflation
describe tools used to implement
monetary policy
describe the monetary transmission
mechanism
describe qualities of effective central
banks
explain the relationships between
monetary policy and economic growth,
inflation, interest, and exchange rates
contrast the use of inflation, interest
rate, and exchange rate targeting by
central banks
determine whether a monetary policy is
expansionary or contractionary
describe limitations of monetary policy
describe roles and objectives of fiscal
policy
describe tools of fiscal policy, including
their advantages and disadvantages
describe the arguments about whether
the size of a national debt relative to
GDP matters
explain the implementation of fiscal
policy and difficulties of implementation
determine whether a fiscal policy is
expansionary or contractionary
explain the interaction of monetary and
fiscal policy
compare gross domestic product and
gross national product
describe benefits and costs of
international trade
distinguish between comparative
advantage and absolute advantage
LOS
5.18.f
5.18.g
5.18.h
5.18.i
5.18.j
5.18.k
5.18.l
5.18.m
5.18.n
5.18.o
5.18.p
5.18.q
5.18.r
5.18.s
5.18.t
5.19.a
5.19.b
5.19.c
Level I - 2017 (534 LOS)
Compared
describe roles and objectives of central
banks
contrast the costs of expected and
unexpected inflation
describe tools used to implement
monetary policy
describe the monetary transmission
mechanism
describe qualities of effective central
banks
explain the relationships between
monetary policy and economic growth,
inflation, interest, and exchange rates
contrast the use of inflation, interest
rate, and exchange rate targeting by
central banks
determine whether a monetary policy is
expansionary or contractionary
describe limitations of monetary policy
describe roles and objectives of fiscal
policy
describe tools of fiscal policy, including
their advantages and disadvantages
describe the arguments about whether
the size of a national debt relative to
GDP matters
explain the implementation of fiscal
policy and difficulties of implementation
determine whether a fiscal policy is
expansionary or contractionary
explain the interaction of monetary and
fiscal policy
compare gross domestic product and
gross national product
describe benefits and costs of
international trade
distinguish between comparative
advantage and absolute advantage
Finance or Accounting Questions? Go to passingscoreforum.com
14
Topic
LOS
Economics
6.20.d
Economics
6.20.e
Economics
6.20.f
Economics
6.20.g
Economics
6.20.h
Economics
6.20.i
Economics
6.20.j
Economics
6.21.a
Economics
6.21.b
Economics
6.21.c
Economics
6.21.d
Economics
6.21.e
Economics
6.21.f
Economics
6.21.g
Level I - 2016 (549 LOS)
LOS
explain the Ricardian and
Heckscher–Ohlin models of trade and
5.19.d
the source(s) of comparative advantage
in each model
compare types of trade and capital
restrictions and their economic
5.19.e
implications
explain motivations for and advantages
of trading blocs, common markets, and
5.19.f
economic unions
describe common objectives of capital
5.19.g
restrictions imposed by governments
describe the balance of payments
5.19.h
accounts including their components
explain how decisions by consumers,
firms, and governments affect the
5.19.i
balance of payments
describe functions and objectives of the
international organizations that
facilitate trade, including the World
5.19.j
Bank, the International Monetary Fund,
and the World Trade Organization
define an exchange rate, and
distinguish between nominal and real
5.20.a
exchange rates and spot and forward
exchange rates
describe functions of and participants in
5.20.b
the foreign exchange market
calculate and interpret the percentage
change in a currency relative to
5.20.c
another currency
calculate and interpret currency cross5.20.d
rates
convert forward quotations expressed
on a points basis or in percentage
5.20.e
terms into an outright forward
quotation
explain the arbitrage relationship
between spot rates, forward rates, and
5.20.f
interest rates
calculate and interpret a forward
5.20.g
discount or premium
Finance or Accounting Questions? Go to
Level I - 2017 (534 LOS)
Compared
explain the Ricardian and
Heckscher–Ohlin models of trade and
the source(s) of comparative advantage
in each model
compare types of trade and capital
restrictions and their economic
implications
explain motivations for and advantages
of trading blocs, common markets, and
economic unions
describe common objectives of capital
restrictions imposed by governments
describe the balance of payments
accounts including their components
explain how decisions by consumers,
firms, and governments affect the
balance of payments
describe functions and objectives of the
international organizations that facilitate
trade, including the World Bank, the
International Monetary Fund, and the
World Trade Organization
define an exchange rate and distinguish
between nominal and real exchange
rates and spot and forward exchange
rates
describe functions of and participants in
the foreign exchange market
calculate and interpret the percentage
change in a currency relative to another
currency
calculate and interpret currency crossrates
convert forward quotations expressed
on a points basis or in percentage terms
into an outright forward quotation
explain the arbitrage relationship
between spot rates, forward rates, and
interest rates
calculate and interpret a forward
discount or premium
passingscoreforum.com
15
Topic
LOS
Economics
6.21.h
Economics
6.21.i
Economics
6.21.j
Financial
Reporting
7.22.a
Financial
Reporting
7.22.b
Financial
Reporting
7.22.c
Financial
Reporting
7.22.d
Financial
Reporting
7.22.e
Financial
Reporting
7.22.f
Financial
Reporting
7.23.a
Financial
Reporting
7.23.b
Financial
Reporting
7.23.c
Level I - 2016 (549 LOS)
calculate and interpret the forward rate
consistent with the spot rate and the
interest rate in each currency
describe exchange rate regimes
explain the effects of exchange rates on
countries’ international trade and
capital flows
describe the roles of financial reporting
and financial statement analysis
describe the roles of the statement of
financial position, statement of
comprehensive income, statement of
changes in equity, and statement of
cash flows in evaluating a company’s
performance and financial position
describe the importance of financial
statement notes and supplementary
information—including disclosures of
accounting policies, methods, and
estimates— and management’s
commentary
describe the objective of audits of
financial statements, the types of audit
reports, and the importance of effective
internal controls
identify and describe information
sources that analysts use in financial
statement analysis besides annual
financial statements and supplementary
information
describe the steps in the financial
statement analysis framework
describe how business activities are
classified for financial reporting
purposes
explain the relationship of financial
statement elements and accounts, and
classify accounts into the financial
statement elements
explain the accounting equation in its
basic and expanded forms
LOS
5.20.h
5.20.i
5.20.j
6.21.a
6.21.b
6.21.c
6.21.d
6.21.e
6.21.f
6.22.a
6.22.b
6.22.c
Level I - 2017 (534 LOS)
Compared
calculate and interpret the forward rate
consistent with the spot rate and the
interest rate in each currency
describe exchange rate regimes
explain the effects of exchange rates on
countries’ international trade and capital
flows
describe the roles of financial reporting
and financial statement analysis
describe the roles of the statement of
financial position, statement of
comprehensive income, statement of
changes in equity, and statement of
cash flows in evaluating a company’s
performance and financial position
describe the importance of financial
statement notes and supplementary
information—including disclosures of
accounting policies, methods, and
estimates— and management’s
commentary
describe the objective of audits of
financial statements, the types of audit
reports, and the importance of effective
internal controls
identify and describe information
sources that analysts use in financial
statement analysis besides annual
financial statements and supplementary
information
describe the steps in the financial
statement analysis framework
describe how business activities are
classified for financial reporting
purposes
explain the relationship of financial
statement elements and accounts, and
classify accounts into the financial
statement elements
explain the accounting equation in its
basic and expanded forms
Finance or Accounting Questions? Go to passingscoreforum.com
16
Topic
LOS
Financial
Reporting
7.23.d
Financial
Reporting
7.23.e
Financial
Reporting
7.23.f
Financial
Reporting
Financial
Reporting
7.23.g
7.23.h
Financial
Reporting
7.24.a
Financial
Reporting
7.24.b
Financial
Reporting
7.24.c
Financial
Reporting
7.24.d
Level I - 2016 (549 LOS)
describe the process of recording
business transactions using an
accounting system based on the
accounting equation
describe the need for accruals and
valuation adjustments in preparing
financial statements
describe the relationships among the
income statement, balance sheet,
statement of cash flows, and statement
of owners’ equity
describe the flow of information in an
accounting system
describe the use of the results of the
accounting process in security analysis
describe the objective of financial
statements and the importance of
financial reporting standards in security
analysis and valuation
describe roles and desirable attributes
of financial reporting standard-setting
bodies and regulatory authorities in
establishing and enforcing reporting
standards, and describe the role of the
International Organization of Securities
Commissions
describe the status of global
convergence of accounting standards
and ongoing barriers to developing one
universally accepted set of financial
reporting standards
describe the International Accounting
Standards Board’s conceptual
framework, including the objective and
qualitative characteristics of financial
statements, required reporting
elements, and constraints and
assumptions in preparing financial
statements
LOS
6.22.d
6.22.e
6.22.f
6.22.g
6.22.h
6.23.a
6.23.b
6.23.c
6.23.d
Level I - 2017 (534 LOS)
Compared
describe the process of recording
business transactions using an
accounting system based on the
accounting equation
describe the need for accruals and
valuation adjustments in preparing
financial statements
describe the relationships among the
income statement, balance sheet,
statement of cash flows, and statement
of owners’ equity
describe the flow of information in an
accounting system
describe the use of the results of the
accounting process in security analysis
describe the objective of financial
statements and the importance of
financial reporting standards in security
analysis and valuation
describe roles and desirable attributes
of financial reporting standard-setting
bodies and regulatory authorities in
establishing and enforcing reporting
standards, and describe the role of the
International Organization of Securities
Commissions
describe the status of global
convergence of accounting standards
and ongoing barriers to developing one
universally accepted set of financial
reporting standards
describe the International Accounting
Standards Board’s conceptual
framework, including the objective and
qualitative characteristics of financial
statements, required reporting
elements, and constraints and
assumptions in preparing financial
statements
Finance or Accounting Questions? Go to passingscoreforum.com
17
Topic
LOS
Financial
Reporting
7.24.e
Financial
Reporting
7.24.f
Financial
Reporting
7.24.g
Financial
Reporting
7.24.h
Financial
Reporting
7.24.i
Financial
Reporting
8.25.a
Financial
Reporting
8.25.b
Financial
Reporting
8.25.c
Financial
Reporting
8.25.d
Level I - 2016 (549 LOS)
describe general requirements for
financial statements under
International Financial Reporting
Standards (IFRS)
compare key concepts of financial
reporting standards under IFRS and US
generally accepted accounting
principles (US GAAP) reporting systems
identify characteristics of a coherent
financial reporting framework and the
barriers to creating such a framework
describe implications for financial
analysis of differing financial reporting
systems and the importance of
monitoring developments in financial
reporting standards
analyze company disclosures of
significant accounting policies
describe the components of the income
statement and alternative presentation
formats of that statement
describe general principles of revenue
recognition and accrual accounting,
specific revenue recognition
applications (including accounting for
long-term contracts, installment sales,
barter transactions, gross and net
reporting of revenue), and implications
of revenue recognition principles for
financial analysis
calculate revenue given information
that might influence the choice of
revenue recognition method
describe key aspects of the converged
accounting standards issued by the
International Accounting Standards
Board and Financial Accounting
Standards Board in May 2014
LOS
6.23.e
6.23.f
6.23.g
6.23.h
6.23.i
7.24.a
7.24.b
7.24.c
7.24.d
Level I - 2017 (534 LOS)
Compared
describe general requirements for
financial statements under International
Financial Reporting Standards (IFRS)
compare key concepts of financial
reporting standards under IFRS and US
generally accepted accounting principles
(US GAAP) reporting systems
identify characteristics of a coherent
financial reporting framework and the
barriers to creating such a framework
describe implications for financial
analysis of differing financial reporting
systems and the importance of
monitoring developments in financial
reporting standards
analyze company disclosures of
significant accounting policies
describe the components of the income
statement and alternative presentation
formats of that statement
describe general principles of revenue
recognition and accrual accounting,
specific revenue recognition applications
(including accounting for long-term
contracts, installment sales, barter
transactions, gross and net reporting of
revenue), and implications of revenue
recognition principles for financial
analysis
calculate revenue given information that
might influence the choice of revenue
recognition method
describe key aspects of the converged
accounting standards for revenue
recognition issued by the International
Wording
Accounting Standards Board and
Change
Financial Accounting Standards Board in
May 2014
Finance or Accounting Questions? Go to passingscoreforum.com
18
Topic
Financial
Reporting
LOS
8.25.e
Financial
Reporting
8.25.f
Financial
Reporting
8.25.g
Financial
Reporting
8.25.h
Financial
Reporting
8.25.i
Financial
Reporting
8.25.j
Financial
Reporting
8.25.k
Financial
Reporting
8.25.l
Financial
Reporting
8.25.m
Financial
Reporting
Financial
Reporting
Financial
Reporting
8.26.a
8.26.b
8.26.c
Level I - 2016 (549 LOS)
describe general principles of expense
recognition, specific expense
recognition applications, and
implications of expense recognition
choices for financial analysis
describe the financial reporting
treatment and analysis of non-recurring
items (including discontinued
operations, extraordinary items,
unusual or infrequent items) and
changes in accounting policies
distinguish between the operating and
non-operating components of the
income statement
describe how earnings per share is
calculated and calculate and interpret a
company’s earnings per share (both
basic and diluted earnings per share)
for both simple and complex capital
structures
distinguish between dilutive and
antidilutive securities, and describe the
implications of each for the earnings
per share calculation
convert income statements to commonsize income statements
evaluate a company’s financial
performance using common-size
income statements and financial ratios
based on the income statement
describe, calculate, and interpret
comprehensive income
describe other comprehensive income,
and identify major types of items
included in it
describe the elements of the balance
sheet: assets, liabilities, and equity
describe uses and limitations of the
balance sheet in financial analysis
describe alternative formats of balance
sheet presentation
LOS
7.24.e
7.24.f
7.24.g
7.24.h
7.24.i
7.24.j
7.24.k
7.24.l
7.24.m
7.25.a
7.25.b
7.25.c
Level I - 2017 (534 LOS)
Compared
describe general principles of expense
recognition, specific expense recognition
applications, and implications of
expense recognition choices for financial
analysis
describe the financial reporting
treatment and analysis of non-recurring Wording
items (including discontinued
Change
operations, unusual or infrequent items)
and changes in accounting policies
distinguish between the operating and
non-operating components of the
income statement
describe how earnings per share is
calculated and calculate and interpret a
company’s earnings per share (both
basic and diluted earnings per share)
for both simple and complex capital
structures
distinguish between dilutive and
antidilutive securities and describe the
implications of each for the earnings per
share calculation
convert income statements to commonsize income statements
evaluate a company’s financial
performance using common-size income
statements and financial ratios based on
the income statement
describe, calculate, and interpret
comprehensive income
describe other comprehensive income
and identify major types of items
included in it
describe the elements of the balance
sheet: assets, liabilities, and equity
describe uses and limitations of the
balance sheet in financial analysis
describe alternative formats of balance
sheet presentation
Finance or Accounting Questions? Go to passingscoreforum.com
19
Topic
LOS
Financial
Reporting
8.26.d
Financial
Reporting
8.26.e
Financial
Reporting
8.26.f
Financial
Reporting
8.26.g
Financial
Reporting
8.26.h
Financial
Reporting
8.27.a
Financial
Reporting
8.27.b
Financial
Reporting
8.27.c
Financial
Reporting
8.27.d
Financial
Reporting
8.27.e
Financial
Reporting
8.27.f
Financial
Reporting
Financial
Reporting
8.27.g
8.27.h
Level I - 2016 (549 LOS)
distinguish between current and noncurrent assets, and current and noncurrent liabilities
describe different types of assets and
liabilities and the measurement bases
of each
describe the components of
shareholders’ equity
convert balance sheets to common-size
balance sheets and interpret commonsize balance sheets
calculate and interpret liquidity and
solvency ratios
compare cash flows from operating,
investing, and financing activities and
classify cash flow items as relating to
one of those three categories given a
description of the items
describe how non-cash investing and
financing activities are reported
contrast cash flow statements prepared
under International Financial Reporting
Standards (IFRS) and U.S. generally
accepted accounting principles (U.S.
GAAP)
distinguish between the direct and
indirect methods of presenting cash
from operating activities and describe
arguments in favor of each method
describe how the cash flow statement
is linked to the income statement and
the balance sheet
describe the steps in the preparation of
direct and indirect cash flow
statements, including how cash flows
can be computed using income
statement and balance sheet data
convert cash flows from the indirect to
direct method
analyze and interpret both reported
and common-size cash flow statements
LOS
7.25.d
7.25.e
7.25.f
7.25.g
7.25.h
7.26.a
7.26.b
7.26.c
7.26.d
7.26.e
7.26.f
7.26.g
7.26.h
Level I - 2017 (534 LOS)
Compared
distinguish between current and noncurrent assets and current and noncurrent liabilities
describe different types of assets and
liabilities and the measurement bases of
each
describe the components of
shareholders’ equity
convert balance sheets to common-size
balance sheets and interpret commonsize balance sheets
calculate and interpret liquidity and
solvency ratios
compare cash flows from operating,
investing, and financing activities and
classify cash flow items as relating to
one of those three categories given a
description of the items
describe how non-cash investing and
financing activities are reported
contrast cash flow statements prepared
under International Financial Reporting
Standards (IFRS) and US generally
accepted accounting principles (US
GAAP)
distinguish between the direct and
indirect methods of presenting cash
from operating activities and describe
arguments in favor of each method
describe how the cash flow statement is
linked to the income statement and the
balance sheet
describe the steps in the preparation of
direct and indirect cash flow
statements, including how cash flows
can be computed using income
statement and balance sheet data
convert cash flows from the indirect to
direct method
analyze and interpret both reported and
common-size cash flow statements
Finance or Accounting Questions? Go to passingscoreforum.com
20
Topic
LOS
Financial
Reporting
8.27.i
Financial
Reporting
8.28.a
Financial
Reporting
8.28.b
Financial
Reporting
8.28.c
Financial
Reporting
8.28.d
Financial
Reporting
8.28.e
Financial
Reporting
8.28.f
Financial
Reporting
8.28.g
Financial
Reporting
9.29.a
Financial
Reporting
9.29.b
Financial
Reporting
9.29.c
Financial
Reporting
9.29.d
Level I - 2016 (549 LOS)
calculate and interpret free cash flow to
the firm, free cash flow to equity, and
performance and coverage cash flow
ratios
describe tools and techniques used in
financial analysis, including their uses
and limitations
classify, calculate, and interpret
activity, liquidity, solvency, profitability,
and valuation ratios
describe relationships among ratios and
evaluate a company using ratio analysis
demonstrate the application of DuPont
analysis of return on equity, and
calculate and interpret effects of
changes in its components
calculate and interpret ratios used in
equity analysis and credit analysis
explain the requirements for segment
reporting, and calculate and interpret
segment ratios
describe how ratio analysis and other
techniques can be used to model and
forecast earnings
distinguish between costs included in
inventories and costs recognised as
expenses in the period in which they
are incurred
describe different inventory valuation
methods (cost formulas)
calculate and compare cost of sales,
gross profit, and ending inventory using
different inventory valuation methods
and using perpetual and periodic
inventory systems
calculate and explain how inflation and
deflation of inventory costs affect the
financial statements and ratios of
companies that use different inventory
valuation methods
LOS
7.26.i
7.27.a
7.27.b
7.27.c
7.27.d
7.27.e
7.27.f
7.27.g
8.28.a
8.28.b
8.28.c
8.28.d
Level I - 2017 (534 LOS)
Compared
calculate and interpret free cash flow to
the firm, free cash flow to equity, and
performance and coverage cash flow
ratios
describe tools and techniques used in
financial analysis, including their uses
and limitations
classify, calculate, and interpret activity,
liquidity, solvency, profitability, and
valuation ratios
describe relationships among ratios and
evaluate a company using ratio analysis
demonstrate the application of DuPont
analysis of return on equity and
calculate and interpret effects of
changes in its components
calculate and interpret ratios used in
equity analysis and credit analysis
explain the requirements for segment
reporting and calculate and interpret
segment ratios
describe how ratio analysis and other
techniques can be used to model and
forecast earnings
distinguish between costs included in
inventories and costs recognised as
expenses in the period in which they are
incurred
describe different inventory valuation
methods (cost formulas)
calculate and compare cost of sales,
gross profit, and ending inventory using
different inventory valuation methods
and using perpetual and periodic
inventory systems
calculate and explain how inflation and
deflation of inventory costs affect the
financial statements and ratios of
companies that use different inventory
valuation methods
Finance or Accounting Questions? Go to passingscoreforum.com
21
Topic
LOS
Financial
Reporting
9.29.e
Financial
Reporting
9.29.f
Financial
Reporting
9.29.g
Financial
Reporting
9.29.h
Financial
Reporting
9.29.i
Financial
Reporting
9.29.j
Financial
Reporting
9.29.k
Financial
Reporting
9.29.l
Financial
Reporting
9.30.a
Financial
Reporting
9.30.b
Financial
Reporting
9.30.c
Financial
Reporting
9.30.d
Level I - 2016 (549 LOS)
explain LIFO reserve and LIFO
liquidation and their effects on financial
statements and ratios
convert a company’s reported financial
statements from LIFO to FIFO for
purposes of comparison
describe the measurement of inventory
at the lower of cost and net realisable
value
describe implications of valuing
inventory at net realisable value for
financial statements and ratios
describe the financial statement
presentation of and disclosures relating
to inventories
explain issues that analysts should
consider when examining a company’s
inventory disclosures and other sources
of information
calculate and compare ratios of
companies, including companies that
use different inventory methods
analyze and compare the financial
statements of companies, including
companies that use different inventory
methods
distinguish between costs that are
capitalised and costs that are expensed
in the period in which they are incurred
compare the financial reporting of the
following types of intangible assets:
purchased, internally developed,
acquired in a business combination
explain and evaluate how capitalising
versus expensing costs in the period in
which they are incurred affects financial
statements and ratios
describe the different depreciation
methods for property, plant, and
equipment and calculate depreciation
expense
LOS
8.28.e
8.28.f
8.28.g
8.28.h
8.28.i
8.28.j
8.28.k
8.28.l
8.29.a
8.29.b
8.29.c
8.29.d
Level I - 2017 (534 LOS)
Compared
explain LIFO reserve and LIFO
liquidation and their effects on financial
statements and ratios
convert a company’s reported financial
statements from LIFO to FIFO for
purposes of comparison
describe the measurement of inventory
at the lower of cost and net realisable
value
describe implications of valuing
inventory at net realisable value for
financial statements and ratios
describe the financial statement
presentation of and disclosures relating
to inventories
explain issues that analysts should
consider when examining a company’s
inventory disclosures and other sources
of information
calculate and compare ratios of
companies, including companies that
use different inventory methods
analyze and compare the financial
statements of companies, including
companies that use different inventory
methods
distinguish between costs that are
capitalised and costs that are expensed
in the period in which they are incurred
compare the financial reporting of the
following types of intangible assets:
purchased, internally developed,
acquired in a business combination
explain and evaluate how capitalising
versus expensing costs in the period in
which they are incurred affects financial
statements and ratios
describe the different depreciation
methods for property, plant, and
equipment and calculate depreciation
expense
Finance or Accounting Questions? Go to passingscoreforum.com
22
Topic
LOS
Financial
Reporting
9.30.e
Financial
Reporting
9.30.f
Financial
Reporting
9.30.g
Financial
Reporting
9.30.h
Financial
Reporting
9.30.i
Financial
Reporting
9.30.j
Financial
Reporting
9.30.k
Financial
Reporting
9.30.l
Financial
Reporting
9.30.m
Financial
Reporting
9.30.n
Financial
Reporting
9.30.o
Level I - 2016 (549 LOS)
describe how the choice of depreciation
method and assumptions concerning
useful life and residual value affect
depreciation expense, financial
statements, and ratios
describe the different amortisation
methods for intangible assets with
finite lives and calculate amortisation
expense
describe how the choice of amortisation
method and assumptions concerning
useful life and residual value affect
amortisation expense, financial
statements, and ratios
describe the revaluation model
explain the impairment of property,
plant, and equipment and intangible
assets
explain the derecognition of property,
plant, and equipment and intangible
assets
explain and evaluate how impairment,
revaluation, and derecognition of
property, plant, and equipment and
intangible assets affect financial
statements and ratios
describe the financial statement
presentation of and disclosures relating
to property, plant, and equipment and
intangible assets
analyze and interpret financial
statement disclosures regarding
property, plant, and equipment and
intangible assets
compare the financial reporting of
investment property with that of
property, plant, and equipment
explain and evaluate how leasing rather
than purchasing assets affects financial
statements and ratios
LOS
8.29.e
8.29.f
8.29.g
8.29.h
8.29.i
8.29.j
8.29.k
8.29.l
8.29.m
8.29.n
8.29.o
Level I - 2017 (534 LOS)
Compared
describe how the choice of depreciation
method and assumptions concerning
useful life and residual value affect
depreciation expense, financial
statements, and ratios
describe the different amortisation
methods for intangible assets with finite
lives and calculate amortisation expense
describe how the choice of amortisation
method and assumptions concerning
useful life and residual value affect
amortisation expense, financial
statements, and ratios
describe the revaluation model
explain the impairment of property,
plant, and equipment and intangible
assets
explain the derecognition of property,
plant, and equipment and intangible
assets
explain and evaluate how impairment,
revaluation, and derecognition of
property, plant, and equipment and
intangible assets affect financial
statements and ratios
describe the financial statement
presentation of and disclosures relating
to property, plant, and equipment and
intangible assets
analyze and interpret financial
statement disclosures regarding
property, plant, and equipment and
intangible assets
compare the financial reporting of
investment property with that of
property, plant, and equipment
explain and evaluate how leasing rather
than purchasing assets affects financial
statements and ratios
Finance or Accounting Questions? Go to passingscoreforum.com
23
Topic
Financial
Reporting
LOS
9.30.p
Financial
Reporting
9.31.a
Financial
Reporting
9.31.b
Financial
Reporting
9.31.c
Financial
Reporting
9.31.d
Financial
Reporting
9.31.e
Financial
Reporting
9.31.f
Financial
Reporting
9.31.g
Financial
Reporting
9.31.h
Level I - 2016 (549 LOS)
explain and evaluate how finance
leases and operating leases affect
financial statements and ratios from
the perspective of both the lessor and
the lessee
describe the differences between
accounting profit and taxable income,
and define key terms, including
deferred tax assets, deferred tax
liabilities, valuation allowance, taxes
payable, and income tax expense
explain how deferred tax liabilities and
assets are created and the factors that
determine how a company’s deferred
tax liabilities and assets should be
treated for the purposes of financial
analysis
calculate the tax base of a company’s
assets and liabilities
calculate income tax expense, income
taxes payable, deferred tax assets, and
deferred tax liabilities, and calculate
and interpret the adjustment to the
financial statements related to a
change in the income tax rate
evaluate the impact of tax rate changes
on a company’s financial statements
and ratios
distinguish between temporary and
permanent differences in pre-tax
accounting income and taxable income
describe the valuation allowance for
deferred tax assets—when it is required
and what impact it has on financial
statements
explain recognition and measurement
of current and deferred tax items
LOS
8.29.p
8.30.a
8.30.b
8.30.c
8.30.d
8.30.e
8.30.f
8.30.g
8.30.h
Level I - 2017 (534 LOS)
Compared
explain and evaluate how finance leases
and operating leases affect financial
statements and ratios from the
perspective of both the lessor and the
lessee
describe the differences between
accounting profit and taxable income
and define key terms, including deferred
tax assets, deferred tax liabilities,
valuation allowance, taxes payable, and
income tax expense
explain how deferred tax liabilities and
assets are created and the factors that
determine how a company’s deferred
tax liabilities and assets should be
treated for the purposes of financial
analysis
calculate the tax base of a company’s
assets and liabilities
calculate income tax expense, income
taxes payable, deferred tax assets, and
deferred tax liabilities, and calculate and
interpret the adjustment to the financial
statements related to a change in the
income tax rate
evaluate the impact of tax rate changes
on a company’s financial statements
and ratios
distinguish between temporary and
permanent differences in pre-tax
accounting income and taxable income
describe the valuation allowance for
deferred tax assets—when it is required
and what impact it has on financial
statements
explain recognition and measurement of
current and deferred tax items
Finance or Accounting Questions? Go to passingscoreforum.com
24
Topic
LOS
Financial
Reporting
9.31.i
Financial
Reporting
9.31.j
Financial
Reporting
9.32.a
Financial
Reporting
9.32.b
Financial
Reporting
Financial
Reporting
9.32.c
9.32.d
Financial
Reporting
9.32.e
Financial
Reporting
9.32.f
Financial
Reporting
9.32.g
Financial
Reporting
9.32.h
Financial
Reporting
9.32.i
Financial
Reporting
9.32.j
Level I - 2016 (549 LOS)
analyze disclosures relating to deferred
tax items and the effective tax rate
reconciliation, and explain how
information included in these
disclosures affects a company’s
financial statements and financial ratios
identify the key provisions of and
differences between income tax
accounting under International
Financial Reporting Standards (IFRS)
and US generally accepted accounting
principles (GAAP)
determine the initial recognition, initial
measurement and subsequent
measurement of bonds
describe the effective interest method
and calculate interest expense,
amortisation of bond
discounts/premiums, and interest
payments
LOS
8.30.i
8.30.j
8.31.a
8.31.b
8.31.c
explain the derecognition of debt
describe the role of debt covenants in
8.31.d
protecting creditors
describe the financial statement
presentation of and disclosures relating
8.31.e
to debt
explain motivations for leasing assets
8.31.f
instead of purchasing them
distinguish between a finance lease and
an operating lease from the
8.31.g
perspectives of the lessor and the
lessee
determine the initial recognition, initial
measurement, and subsequent
8.31.h
measurement of finance leases
compare the disclosures relating to
8.31.i
finance and operating leases
compare the presentation and
disclosure of defined contribution and
8.31.j
defined benefit pension plans
Finance or Accounting Questions? Go to
Level I - 2017 (534 LOS)
Compared
analyze disclosures relating to deferred
tax items and the effective tax rate
reconciliation and explain how
information included in these
disclosures affects a company’s financial
statements and financial ratios
identify the key provisions of and
differences between income tax
accounting under International Financial
Reporting Standards (IFRS) and US
generally accepted accounting principles
(GAAP)
determine the initial recognition, initial
measurement and subsequent
measurement of bonds
describe the effective interest method
and calculate interest expense,
amortisation of bond
discounts/premiums, and interest
payments
explain the derecognition of debt
describe the role of debt covenants in
protecting creditors
describe the financial statement
presentation of and disclosures relating
to debt
explain motivations for leasing assets
instead of purchasing them
distinguish between a finance lease and
an operating lease from the
perspectives of the lessor and the
lessee
determine the initial recognition, initial
measurement, and subsequent
measurement of finance leases
compare the disclosures relating to
finance and operating leases
compare the presentation and
disclosure of defined contribution and
defined benefit pension plans
passingscoreforum.com
25
Topic
LOS
Financial
Reporting
9.32.k
Financial
Reporting
10.33.a
Financial
Reporting
Financial
Reporting
10.33.b
10.33.c
Financial
Reporting
10.33.d
Financial
Reporting
10.33.e
Financial
Reporting
10.33.f
Financial
Reporting
10.33.g
Financial
Reporting
10.33.h
Financial
Reporting
10.33.i
Financial
Reporting
10.34.a
Financial
Reporting
10.34.b
Financial
Reporting
10.34.c
Level I - 2016 (549 LOS)
calculate and interpret leverage and
coverage ratios
distinguish between financial reporting
quality and quality of reported results
(including quality of earnings, cash
flow, and balance sheet items)
describe a spectrum for assessing
financial reporting quality
distinguish between conservative and
aggressive accounting
describe motivations that might cause
management to issue financial reports
that are not high quality
describe conditions that are conducive
to issuing low-quality, or even
fraudulent, financial reports
describe mechanisms that discipline
financial reporting quality and the
potential limitations of those
mechanisms
describe presentation choices, including
non-GAAP measures, that could be
used to influence an analyst’s opinion
describe accounting methods (choices
and estimates) that could be used to
manage earnings, cash flow, and
balance sheet items
describe accounting warning signs and
methods for detecting manipulation of
information in financial reports
evaluate a company’s past financial
performance and explain how a
company’s strategy is reflected in past
financial performance
forecast a company’s future net income
and cash flow
describe the role of financial statement
analysis in assessing the credit quality
of a potential debt investment
LOS
8.31.k
9.32.a
9.32.b
9.32.c
9.32.d
9.32.e
9.32.f
9.32.g
9.32.h
9.32.i
9.33.a
9.33.b
9.33.c
Level I - 2017 (534 LOS)
Compared
calculate and interpret leverage and
coverage ratios
distinguish between financial reporting
quality and quality of reported results
(including quality of earnings, cash flow,
and balance sheet items)
describe a spectrum for assessing
financial reporting quality
distinguish between conservative and
aggressive accounting
describe motivations that might cause
management to issue financial reports
that are not high quality
describe conditions that are conducive
to issuing low-quality, or even
fraudulent, financial reports
describe mechanisms that discipline
financial reporting quality and the
potential limitations of those
mechanisms
describe presentation choices, including
non-GAAP measures, that could be used
to influence an analyst’s opinion
describe accounting methods (choices
and estimates) that could be used to
manage earnings, cash flow, and
balance sheet items
describe accounting warning signs and
methods for detecting manipulation of
information in financial reports
evaluate a company’s past financial
performance and explain how a
company’s strategy is reflected in past
financial performance
forecast a company’s future net income
and cash flow
describe the role of financial statement
analysis in assessing the credit quality
of a potential debt investment
Finance or Accounting Questions? Go to passingscoreforum.com
26
Topic
LOS
Financial
Reporting
10.34.d
Financial
Reporting
10.34.e
Level I - 2016 (549 LOS)
describe the use of financial statement
analysis in screening for potential
equity investments
explain appropriate analyst
adjustments to a company’s financial
statements to facilitate comparison
with another company
LOS
9.33.d
9.33.e
Financial
Reporting
10.34.a
Financial
Reporting
10.34.b
Financial
Reporting
10.34.c
Financial
Reporting
10.34.d
Financial
Reporting
10.34.e
Financial
Reporting
10.34.f
Financial
Reporting
10.34.g
Financial
Reporting
10.34.h
Financial
Reporting
10.34.i
Financial
Reporting
10.34.j
Financial
Reporting
10.34.k
Level I - 2017 (534 LOS)
Compared
describe the use of financial statement
analysis in screening for potential equity
investments
explain appropriate analyst adjustments
to a company’s financial statements to
facilitate comparison with another
company
describe corporate governance
describe a company’s stakeholder
groups and compare interests of
stakeholder groups
describe principal–agent and other
relationships in corporate governance
and the conflicts that may arise in these
relationships
describe stakeholder management
describe mechanisms to manage
stakeholder relationships and mitigate
associated risks
describe functions and responsibilities of
a company’s board of directors and its
committees
describe market and non-market factors
that can affect stakeholder relationships
and corporate governance
identify potential risks of poor corporate
governance and stakeholder
management and identify benefits from
effective corporate governance and
stakeholder management
describe factors relevant to the analysis
of corporate governance and
stakeholder management
describe environmental and social
considerations in investment analysis
describe how environmental, social, and
governance factors may be used in
investment analysis
Finance or Accounting Questions? Go to passingscoreforum.com
New
New
New
New
New
New
New
New
New
New
New
27
Topic
LOS
Level I - 2016 (549 LOS)
LOS
Financial
Reporting
10.35.a
Financial
Reporting
10.35.b
Financial
Reporting
10.35.c
Financial
Reporting
10.35.d
Financial
Reporting
10.35.e
Financial
Reporting
10.35.f
Corporate
Finance
11.35.a
Corporate
Finance
11.35.b
Corporate
Finance
11.35.c
Corporate
Finance
11.35.d
Level I - 2017 (534 LOS)
describe the capital budgeting process
and distinguish among the various
categories of capital projects
describe the basic principles of capital
budgeting
explain how the evaluation and
selection of capital projects is affected
by mutually exclusive projects, project
sequencing, and capital rationing
calculate and interpret net present
value (NPV), internal rate of return
(IRR), payback period, discounted
payback period, and profitability index
(PI) of a single capital project
explain the NPV profile, compare the
NPV and IRR methods when evaluating
independent and mutually exclusive
projects, and describe the problems
associated with each of the evaluation
methods
describe expected relations among an
investment’s NPV, company value, and
share price
describe the capital budgeting process
and distinguish among the various
categories of capital projects
describe the basic principles of capital
budgeting
explain how the evaluation and
selection of capital projects is affected
by mutually exclusive projects, project
sequencing, and capital rationing
calculate and interpret net present
value (NPV), internal rate of return
(IRR), payback period, discounted
payback period, and profitability index
(PI) of a single capital project
Finance or Accounting Questions? Go to passingscoreforum.com
Compared
New
New
New
New
New
New
Removed
Removed
Removed
Removed
28
Topic
LOS
Corporate
Finance
11.35.e
Corporate
Finance
11.35.f
Corporate
Finance
11.36.a
Corporate
Finance
11.36.b
Corporate
Finance
11.36.c
Corporate
Finance
11.36.d
Corporate
Finance
11.36.e
Corporate
Finance
11.36.f
Corporate
Finance
11.36.g
Corporate
Finance
11.36.h
Corporate
Finance
Corporate
Finance
11.36.i
11.36.j
Level I - 2016 (549 LOS)
explain the NPV profile, compare the
NPV and IRR methods when evaluating
independent and mutually exclusive
projects, and describe the problems
associated with each of the evaluation
methods
describe expected relations among an
investment’s NPV, company value, and
share price
calculate and interpret the weighted
average cost of capital (WACC) of a
company
describe how taxes affect the cost of
capital from different capital sources
describe the use of target capital
structure in estimating WACC and how
target capital structure weights may be
determined
explain how the marginal cost of capital
and the investment opportunity
schedule are used to determine the
optimal capital budget
explain the marginal cost of capital’s
role in determining the net present
value of a project
calculate and interpret the cost of debt
capital using the yield-to-maturity
approach and the debt-rating approach
calculate and interpret the cost of
noncallable, nonconvertible preferred
stock
calculate and interpret the cost of
equity capital using the capital asset
pricing model approach, the dividend
discount model approach, and the bondyield-plus risk-premium approach
calculate and interpret the beta and
cost of capital for a project
describe uses of country risk premiums
in estimating the cost of equity
LOS
Level I - 2017 (534 LOS)
Compared
Removed
Removed
10.36.a
10.36.b
10.36.c
10.36.d
10.36.e
10.36.f
10.36.g
10.36.h
10.36.i
10.36.j
calculate and interpret the weighted
average cost of capital (WACC) of a
company
describe how taxes affect the cost of
capital from different capital sources
describe the use of target capital
structure in estimating WACC and how
target capital structure weights may be
determined
explain how the marginal cost of capital
and the investment opportunity
schedule are used to determine the
optimal capital budget
explain the marginal cost of capital’s
role in determining the net present
value of a project
calculate and interpret the cost of debt
capital using the yield-to-maturity
approach and the debt-rating approach
calculate and interpret the cost of
noncallable, nonconvertible preferred
stock
calculate and interpret the cost of
equity capital using the capital asset
pricing model approach, the dividend
discount model approach, and the bondyield-plus risk-premium approach
calculate and interpret the beta and
cost of capital for a project
describe uses of country risk premiums
in estimating the cost of equity
Finance or Accounting Questions? Go to passingscoreforum.com
29
Topic
LOS
Corporate
Finance
11.36.k
Corporate
Finance
11.36.l
Corporate
Finance
11.37.a
Corporate
Finance
11.37.b
Corporate
Finance
11.37.c
Corporate
Finance
11.37.d
Corporate
Finance
11.37.e
Corporate
Finance
11.38.a
Corporate
Finance
11.38.b
Corporate
Finance
11.38.c
Corporate
Finance
11.38.d
Corporate
Finance
11.38.e
Level I - 2016 (549 LOS)
describe the marginal cost of capital
schedule, explain why it may be
upward-sloping with respect to
additional capital, and calculate and
interpret its break-points
explain and demonstrate the correct
treatment of flotation costs
define and explain leverage, business
risk, sales risk, operating risk, and
financial risk, and classify a risk
calculate and interpret the degree of
operating leverage, the degree of
financial leverage, and the degree of
total leverage
analyze the effect of financial leverage
on a company’s net income and return
on equity
calculate the breakeven quantity of
sales and determine the company’s net
income at various sales levels
calculate and interpret the operating
breakeven quantity of sales
describe regular cash dividends, extra
dividends, liquidating dividends, stock
dividends, stock splits, and reverse
stock splits, including their expected
effect on shareholders’ wealth and a
company’s financial ratios
describe dividend payment chronology,
including the significance of
declaration, holder-of-record, exdividend, and payment dates
LOS
10.36.k
10.36.l
11.37.a
11.37.b
11.37.c
11.37.d
11.37.e
11.38.a
11.38.b
11.38.c
compare share repurchase methods
calculate and compare the effect of a
share repurchase on earnings per share
when 1) the repurchase is financed
11.38.d
with the company’s excess cash and 2)
the company uses debt to finance the
repurchase
calculate the effect of a share
11.38.e
repurchase on book value per share
Finance or Accounting Questions? Go to
Level I - 2017 (534 LOS)
Compared
describe the marginal cost of capital
schedule, explain why it may be upwardsloping with respect to additional
capital, and calculate and interpret its
break-points
explain and demonstrate the correct
treatment of flotation costs
define and explain leverage, business
risk, sales risk, operating risk, and
financial risk and classify a risk
calculate and interpret the degree of
operating leverage, the degree of
financial leverage, and the degree of
total leverage
analyze the effect of financial leverage
on a company’s net income and return
on equity
calculate the breakeven quantity of
sales and determine the company’s net
income at various sales levels
calculate and interpret the operating
breakeven quantity of sales
describe regular cash dividends, extra
dividends, liquidating dividends, stock
dividends, stock splits, and reverse
stock splits, including their expected
effect on shareholders’ wealth and a
company’s financial ratios
describe dividend payment chronology,
including the significance of declaration,
holder-of-record, ex-dividend, and
payment dates
compare share repurchase methods
calculate and compare the effect of a
share repurchase on earnings per share
when 1) the repurchase is financed with
the company’s excess cash and 2) the
company uses debt to finance the
repurchase
calculate the effect of a share
repurchase on book value per share
passingscoreforum.com
30
Topic
LOS
Corporate
Finance
11.38.f
Corporate
Finance
11.39.a
Corporate
Finance
11.39.b
Corporate
Finance
11.39.c
Corporate
Finance
11.39.d
Corporate
Finance
11.39.e
Corporate
Finance
11.39.f
Corporate
Finance
11.39.g
Corporate
Finance
11.40.a
Corporate
Finance
11.40.b
Level I - 2016 (549 LOS)
explain why a cash dividend and a
share repurchase of the same amount
are equivalent in terms of the effect on
shareholders’ wealth, all else being
equal
describe primary and secondary
sources of liquidity and factors that
influence a company’s liquidity position
compare a company’s liquidity
measures with those of peer companies
evaluate working capital effectiveness
of a company based on its operating
and cash conversion cycles, and
compare the company’s effectiveness
with that of peer companies
describe how different types of cash
flows affect a company’s net daily cash
position
calculate and interpret comparable
yields on various securities, compare
portfolio returns against a standard
benchmark, and evaluate a company’s
short-term investment policy guidelines
evaluate a company’s management of
accounts receivable, inventory, and
accounts payable over time and
compared to peer companies
evaluate the choices of short-term
funding available to a company and
recommend a financing method
LOS
11.38.f
11.39.a
11.39.b
11.39.c
11.39.d
11.39.e
11.39.f
11.39.g
Level I - 2017 (534 LOS)
Compared
explain why a cash dividend and a share
repurchase of the same amount are
equivalent in terms of the effect on
shareholders’ wealth, all else being
equal
describe primary and secondary sources
of liquidity and factors that influence a
company’s liquidity position
compare a company’s liquidity
measures with those of peer companies
evaluate working capital effectiveness of
a company based on its operating and
cash conversion cycles and compare the
company’s effectiveness with that of
peer companies
describe how different types of cash
flows affect a company’s net daily cash
position
calculate and interpret comparable
yields on various securities, compare
portfolio returns against a standard
benchmark, and evaluate a company’s
short-term investment policy guidelines
evaluate a company’s management of
accounts receivable, inventory, and
accounts payable over time and
compared to peer companies
evaluate the choices of short-term
funding available to a company and
recommend a financing method
define corporate governance
describe practices related to board and
committee independence, experience,
compensation, external consultants,
and frequency of elections, and
determine whether they are supportive
of shareowner protection
Finance or Accounting Questions? Go to passingscoreforum.com
Removed
Removed
31
Topic
LOS
Corporate
Finance
11.40.c
Corporate
Finance
11.40.d
Corporate
Finance
11.40.e
Corporate
Finance
11.40.f
Corporate
Finance
11.40.g
Portfolio
Management
12.41.a
Portfolio
Management
12.41.b
Portfolio
Management
Portfolio
Management
Portfolio
Management
Portfolio
Management
Portfolio
Management
Portfolio
Management
Portfolio
Management
12.41.c
12.41.d
12.41.e
12.42.a
12.42.b
12.42.c
12.42.d
Level I - 2016 (549 LOS)
describe board independence and
explain the importance of independent
board members in corporate
governance
identify factors that an analyst should
consider when evaluating the
qualifications of board members
describe responsibilities of the audit,
compensation, and nominations
committees and identify factors an
investor should consider when
evaluating the quality of each
committee
describe provisions that should be
included in a strong corporate code of
ethics
evaluate, from a shareowner’s
perspective, company policies related
to voting rules, shareowner sponsored
proposals, common stock classes, and
takeover defenses
describe the portfolio approach to
investing
describe types of investors and
distinctive characteristics and needs of
each
describe defined contribution and
defined benefit pension plans
describe the steps in the portfolio
management process
describe mutual funds and compare
them with other pooled investment
products
define risk management
describe features of a risk management
framework
define risk governance and describe
elements of effective risk governance
explain how risk tolerance affects risk
management
LOS
Level I - 2017 (534 LOS)
Compared
Removed
Removed
Removed
Removed
Removed
12.40.a
12.40.b
12.40.c
12.40.d
12.40.e
12.41.a
12.41.b
12.41.c
12.41.d
describe the portfolio approach to
investing
describe types of investors and
distinctive characteristics and needs of
each
describe defined contribution and
defined benefit pension plans
describe the steps in the portfolio
management process
describe mutual funds and compare
them with other pooled investment
products
define risk management
describe features of a risk management
framework
define risk governance and describe
elements of effective risk governance
explain how risk tolerance affects risk
management
Finance or Accounting Questions? Go to passingscoreforum.com
32
Topic
LOS
Portfolio
Management
12.42.e
Portfolio
Management
12.42.f
Portfolio
Management
12.42.g
Portfolio
Management
12.43.a
Portfolio
Management
12.43.b
Portfolio
Management
12.43.c
Portfolio
Management
Portfolio
Management
12.43.d
12.43.e
Portfolio
Management
12.43.f
Portfolio
Management
12.43.g
Portfolio
Management
12.43.h
Portfolio
Management
12.44.a
Portfolio
Management
12.44.b
Level I - 2016 (549 LOS)
describe risk budgeting and its role in
risk governance
identify financial and non-financial
sources of risk and describe how they
may interact
describe methods for measuring and
modifying risk exposures and factors to
consider in choosing among the
methods
calculate and interpret major return
measures and describe their
appropriate uses
describe characteristics of the major
asset classes that investors consider in
forming portfolios
calculate and interpret the mean,
variance, and covariance (or
correlation) of asset returns based on
historical data
explain risk aversion and its
implications for portfolio selection
calculate and interpret portfolio
standard deviation
describe the effect on a portfolio’s risk
of investing in assets that are less than
perfectly correlated
describe and interpret the minimumvariance and efficient frontiers of risky
assets and the global minimumvariance portfolio
explain the selection of an optimal
portfolio, given an investor’s utility (or
risk aversion) and the capital allocation
line
describe the implications of combining
a risk-free asset with a portfolio of risky
assets
explain the capital allocation line (CAL)
and the capital market line (CML)
LOS
12.41.e
12.41.f
12.41.g
12.42.a
12.42.b
12.42.c
12.42.d
12.42.e
12.42.f
12.42.g
12.42.h
12.43.a
12.43.b
Level I - 2017 (534 LOS)
Compared
describe risk budgeting and its role in
risk governance
identify financial and non-financial
sources of risk and describe how they
may interact
describe methods for measuring and
modifying risk exposures and factors to
consider in choosing among the
methods
calculate and interpret major return
measures and describe their appropriate
uses
describe characteristics of the major
asset classes that investors consider in
forming portfolios
calculate and interpret the mean,
variance, and covariance (or
correlation) of asset returns based on
historical data
explain risk aversion and its implications
for portfolio selection
calculate and interpret portfolio
standard deviation
describe the effect on a portfolio’s risk
of investing in assets that are less than
perfectly correlated
describe and interpret the minimumvariance and efficient frontiers of risky
assets and the global minimum-variance
portfolio
explain the selection of an optimal
portfolio, given an investor’s utility (or
risk aversion) and the capital allocation
line
describe the implications of combining a
risk-free asset with a portfolio of risky
assets
explain the capital allocation line (CAL)
and the capital market line (CML)
Finance or Accounting Questions? Go to passingscoreforum.com
33
Topic
LOS
Portfolio
Management
12.44.c
Portfolio
Management
12.44.d
Portfolio
Management
12.44.e
Portfolio
Management
12.44.f
Portfolio
Management
Portfolio
Management
Portfolio
Management
Portfolio
Management
Portfolio
Management
Portfolio
Management
12.44.g
12.44.h
12.45.a
12.45.b
12.45.c
12.45.d
Portfolio
Management
12.45.e
Portfolio
Management
12.45.f
Portfolio
Management
12.45.g
Equity
13.46.a
Equity
13.46.b
Level I - 2016 (549 LOS)
explain systematic and nonsystematic
risk, including why an investor should
not expect to receive additional return
for bearing nonsystematic risk
explain return generating models
(including the market model) and their
uses
calculate and interpret beta
explain the capital asset pricing model
(CAPM), including its assumptions, and
the security market line (SML)
calculate and interpret the expected
return of an asset using the CAPM
describe and demonstrate applications
of the CAPM and the SML
describe the reasons for a written
investment policy statement (IPS)
describe the major components of an
IPS
describe risk and return objectives and
how they may be developed for a client
distinguish between the willingness and
the ability (capacity) to take risk in
analyzing an investor’s financial risk
tolerance
describe the investment constraints of
liquidity, time horizon, tax concerns,
legal and regulatory factors, and
unique circumstances and their
implications for the choice of portfolio
assets
explain the specification of asset
classes in relation to asset allocation
describe the principles of portfolio
construction and the role of asset
allocation in relation to the IPS
explain the main functions of the
financial system
describe classifications of assets and
markets
LOS
12.43.c
12.43.d
12.43.e
12.43.f
12.43.g
12.43.h
12.44.a
12.44.b
12.44.c
12.44.d
12.44.e
12.44.f
12.44.g
13.45.a
13.45.b
Level I - 2017 (534 LOS)
Compared
explain systematic and nonsystematic
risk, including why an investor should
not expect to receive additional return
for bearing nonsystematic risk
explain return generating models
(including the market model) and their
uses
calculate and interpret beta
explain the capital asset pricing model
(CAPM), including its assumptions, and
the security market line (SML)
calculate and interpret the expected
return of an asset using the CAPM
describe and demonstrate applications
of the CAPM and the SML
describe the reasons for a written
investment policy statement (IPS)
describe the major components of an
IPS
describe risk and return objectives and
how they may be developed for a client
distinguish between the willingness and
the ability (capacity) to take risk in
analyzing an investor’s financial risk
tolerance
describe the investment constraints of
liquidity, time horizon, tax concerns,
legal and regulatory factors, and unique
circumstances and their implications for
the choice of portfolio assets
explain the specification of asset classes
in relation to asset allocation
describe the principles of portfolio
construction and the role of asset
allocation in relation to the IPS
explain the main functions of the
financial system
describe classifications of assets and
markets
Finance or Accounting Questions? Go to passingscoreforum.com
34
Topic
LOS
Equity
13.46.c
Equity
13.46.d
Equity
13.46.e
Equity
13.46.f
Equity
13.46.g
Equity
13.46.h
Equity
13.46.i
Equity
13.46.j
Equity
13.46.k
Equity
13.46.l
Equity
13.47.a
Equity
13.47.b
Equity
13.47.c
Equity
13.47.d
Equity
13.47.e
Equity
13.47.f
Level I - 2016 (549 LOS)
describe the major types of securities,
currencies, contracts, commodities, and
real assets that trade in organized
markets, including their distinguishing
characteristics and major subtypes
describe types of financial
intermediaries and services that they
provide
compare positions an investor can take
in an asset
calculate and interpret the leverage
ratio, the rate of return on a margin
transaction, and the security price at
which the investor would receive a
margin call
compare execution, validity, and
clearing instructions
compare market orders with limit
orders
define primary and secondary markets
and explain how secondary markets
support primary markets
describe how securities, contracts, and
currencies are traded in quote-driven,
order-driven, and brokered markets
describe characteristics of a wellfunctioning financial system
describe objectives of market
regulation
describe a security market index
calculate and interpret the value, price
return, and total return of an index
describe the choices and issues in index
construction and management
compare the different weighting
methods used in index construction
calculate and analyze the value and
return of an index given its weighting
method
describe rebalancing and reconstitution
of an index
LOS
13.45.c
13.45.d
13.45.e
13.45.f
13.45.g
13.45.h
13.45.i
13.45.j
13.45.k
13.45.l
13.46.a
13.46.b
13.46.c
13.46.d
13.46.e
13.46.f
Level I - 2017 (534 LOS)
Compared
describe the major types of securities,
currencies, contracts, commodities, and
real assets that trade in organized
markets, including their distinguishing
characteristics and major subtypes
describe types of financial
intermediaries and services that they
provide
compare positions an investor can take
in an asset
calculate and interpret the leverage
ratio, the rate of return on a margin
transaction, and the security price at
which the investor would receive a
margin call
compare execution, validity, and
clearing instructions
compare market orders with limit orders
define primary and secondary markets
and explain how secondary markets
support primary markets
describe how securities, contracts, and
currencies are traded in quote-driven,
order-driven, and brokered markets
describe characteristics of a wellfunctioning financial system
describe objectives of market regulation
describe a security market index
calculate and interpret the value, price
return, and total return of an index
describe the choices and issues in index
construction and management
compare the different weighting
methods used in index construction
calculate and analyze the value and
return of an index given its weighting
method
describe rebalancing and reconstitution
of an index
Finance or Accounting Questions? Go to passingscoreforum.com
35
Topic
LOS
Equity
13.47.g
Equity
Equity
13.47.h
13.47.i
Equity
13.47.j
Equity
13.47.k
Equity
13.48.a
Equity
13.48.b
Equity
13.48.c
Equity
13.48.d
Equity
13.48.e
Equity
13.48.f
Equity
13.48.g
Equity
14.49.a
Equity
14.49.b
Equity
14.49.c
Equity
14.49.d
Equity
14.49.e
Equity
14.49.f
Equity
14.49.g
Level I - 2016 (549 LOS)
LOS
13.46.g
describe uses of security market indices
describe types of equity indices
13.46.h
describe types of fixed-income indices
13.46.i
describe indices representing
13.46.j
alternative investments
compare types of security market
13.46.k
indices
describe market efficiency and related
concepts, including their importance to
13.47.a
investment practitioners
distinguish between market value and
13.47.b
intrinsic value
explain factors that affect a market’s
13.47.c
efficiency
contrast weak-form, semi-strong-form,
13.47.d
and strong-form market efficiency
explain the implications of each form of
market efficiency for fundamental
analysis, technical analysis, and the
13.47.e
choice between active and passive
portfolio management
describe market anomalies
13.47.f
describe behavioral finance and its
potential relevance to understanding
13.47.g
market anomalies
describe characteristics of types of
14.48.a
equity securities
describe differences in voting rights and
other ownership characteristics among
14.48.b
different equity classes
distinguish between public and private
14.48.c
equity securities
describe methods for investing in non14.48.d
domestic equity securities
compare the risk and return
characteristics of different types of
14.48.e
equity securities
explain the role of equity securities in
14.48.f
the financing of a company’s assets
distinguish between the market value
14.48.g
and book value of equity securities
Finance or Accounting Questions? Go to
Level I - 2017 (534 LOS)
describe uses of security market indices
describe types of equity indices
describe types of fixed-income indices
describe indices representing alternative
investments
compare types of security market
indices
describe market efficiency and related
concepts, including their importance to
investment practitioners
distinguish between market value and
intrinsic value
explain factors that affect a market’s
efficiency
contrast weak-form, semi-strong-form,
and strong-form market efficiency
explain the implications of each form of
market efficiency for fundamental
analysis, technical analysis, and the
choice between active and passive
portfolio management
describe market anomalies
describe behavioral finance and its
potential relevance to understanding
market anomalies
describe characteristics of types of
equity securities
describe differences in voting rights and
other ownership characteristics among
different equity classes
distinguish between public and private
equity securities
describe methods for investing in nondomestic equity securities
compare the risk and return
characteristics of different types of
equity securities
explain the role of equity securities in
the financing of a company’s assets
distinguish between the market value
and book value of equity securities
passingscoreforum.com
Compared
36
Topic
LOS
Equity
14.49.h
Equity
14.50.a
Equity
14.50.b
Equity
14.50.c
Equity
14.50.d
Equity
14.50.e
Equity
14.50.f
Equity
14.50.g
Equity
14.50.h
Equity
14.50.i
Equity
14.50.j
Level I - 2016 (549 LOS)
compare a company’s cost of equity, its
(accounting) return on equity, and
investors’ required rates of return
explain uses of industry analysis and
the relation of industry analysis to
company analysis
compare methods by which companies
can be grouped, current industry
classification systems, and classify a
company, given a description of its
activities and the classification system
explain the factors that affect the
sensitivity of a company to the
business cycle and the uses and
limitations of industry and company
descriptors such as “growth,”
“defensive,” and “cyclical”
explain how a company’s industry
classification can be used to identify a
potential “peer group” for equity
valuation
describe the elements that need to be
covered in a thorough industry analysis
describe the principles of strategic
analysis of an industry
explain the effects of barriers to entry,
industry concentration, industry
capacity, and market share stability on
pricing power and price competition
describe industry life cycle models,
classify an industry as to life cycle
stage, and describe limitations of the
life-cycle concept in forecasting
industry performance
compare characteristics of
representative industries from the
various economic sectors
describe macroeconomic, technological,
demographic, governmental, and social
influences on industry growth,
profitability, and risk
LOS
14.48.h
14.49.a
14.49.b
14.49.c
14.49.d
14.49.e
14.49.f
14.49.g
14.49.h
14.49.i
14.49.j
Level I - 2017 (534 LOS)
Compared
compare a company’s cost of equity, its
(accounting) return on equity, and
investors’ required rates of return
explain uses of industry analysis and
the relation of industry analysis to
company analysis
compare methods by which companies
can be grouped, current industry
classification systems, and classify a
company, given a description of its
activities and the classification system
explain the factors that affect the
sensitivity of a company to the business
cycle and the uses and limitations of
industry and company descriptors such
as “growth,” “defensive,” and “cyclical”
explain how a company’s industry
classification can be used to identify a
potential “peer group” for equity
valuation
describe the elements that need to be
covered in a thorough industry analysis
describe the principles of strategic
analysis of an industry
explain the effects of barriers to entry,
industry concentration, industry
capacity, and market share stability on
pricing power and price competition
describe industry life cycle models,
classify an industry as to life cycle
stage, and describe limitations of the
life-cycle concept in forecasting industry
performance
compare characteristics of
representative industries from the
various economic sectors
describe macroeconomic, technological,
demographic, governmental, and social
influences on industry growth,
profitability, and risk
Finance or Accounting Questions? Go to passingscoreforum.com
37
Topic
LOS
Equity
14.50.k
Equity
14.51.a
Equity
14.51.b
Equity
14.51.c
Equity
14.51.d
Equity
14.51.e
Equity
14.51.f
Equity
14.51.g
Equity
14.51.h
Equity
14.51.i
Equity
14.51.j
Equity
14.51.k
Level I - 2016 (549 LOS)
describe the elements that should be
covered in a thorough company
analysis
evaluate whether a security, given its
current market price and a value
estimate, is overvalued, fairly valued,
or undervalued by the market
describe major categories of equity
valuation models
explain the rationale for using present
value models to value equity and
describe the dividend discount and freecash-flow-to-equity models
calculate the intrinsic value of a noncallable, non-convertible preferred
stock
calculate and interpret the intrinsic
value of an equity security based on
the Gordon (constant) growth dividend
discount model or a two-stage dividend
discount model, as appropriate
identify characteristics of companies for
which the constant growth or a
multistage dividend discount model is
appropriate
explain the rationale for using price
multiples to value equity, how the price
to earnings multiple relates to
fundamentals, and the use of multiples
based on comparables
calculate and interpret the following
multiples: price to earnings, price to an
estimate of operating cash flow, price
to sales, and price to book value
describe enterprise value multiples and
their use in estimating equity value
describe asset-based valuation models
and their use in estimating equity value
explain advantages and disadvantages
of each category of valuation model
LOS
14.49.k
14.50.a
14.50.b
14.50.c
14.50.d
14.50.e
14.50.f
14.50.g
14.50.h
14.50.i
14.50.j
14.50.k
Level I - 2017 (534 LOS)
Compared
describe the elements that should be
covered in a thorough company analysis
evaluate whether a security, given its
current market price and a value
estimate, is overvalued, fairly valued, or
undervalued by the market
describe major categories of equity
valuation models
explain the rationale for using present
value models to value equity and
describe the dividend discount and freecash-flow-to-equity models
calculate the intrinsic value of a noncallable, non-convertible preferred stock
calculate and interpret the intrinsic
value of an equity security based on the
Gordon (constant) growth dividend
discount model or a two-stage dividend
discount model, as appropriate
identify characteristics of companies for
which the constant growth or a
multistage dividend discount model is
appropriate
explain the rationale for using price
multiples to value equity, how the price
to earnings multiple relates to
fundamentals, and the use of multiples
based on comparables
calculate and interpret the following
multiples: price to earnings, price to an
estimate of operating cash flow, price to
sales, and price to book value
describe enterprise value multiples and
their use in estimating equity value
describe asset-based valuation models
and their use in estimating equity value
explain advantages and disadvantages
of each category of valuation model
Finance or Accounting Questions? Go to passingscoreforum.com
38
Topic
LOS
Fixed Income 15.52.a
Fixed Income 15.52.b
Fixed Income 15.52.c
Fixed Income 15.52.d
Fixed Income 15.52.e
Fixed Income 15.52.f
Fixed Income 15.53.a
Fixed Income 15.53.b
Fixed Income 15.53.c
Fixed Income 15.53.d
Fixed Income 15.53.e
Fixed Income 15.53.f
Fixed Income 15.53.g
Fixed Income 15.53.h
Fixed Income 15.53.i
Fixed Income 15.54.a
Level I - 2016 (549 LOS)
describe basic features of a fixedincome security
describe content of a bond indenture
compare affirmative and negative
covenants and identify examples of
each
describe how legal, regulatory, and tax
considerations affect the issuance and
trading of fixed-income securities
describe how cash flows of fixedincome securities are structured
describe contingency provisions
affecting the timing and/or nature of
cash flows of fixed-income securities
and identify whether such provisions
benefit the borrower or the lender
describe classifications of global fixedincome markets
describe the use of interbank offered
rates as reference rates in floating-rate
debt
describe mechanisms available for
issuing bonds in primary markets
describe secondary markets for bonds
describe securities issued by sovereign
governments
describe securities issued by nonsovereign governments, quasigovernment entities, and supranational
agencies
describe types of debt issued by
corporations
describe short-term funding
alternatives available to banks
describe repurchase agreements
(repos) and the risks associated with
them
calculate a bond’s price given a market
discount rate
LOS
15.51.a
15.51.b
15.51.c
15.51.d
15.51.e
15.51.f
15.52.a
15.52.b
15.52.c
15.52.d
15.52.e
15.52.f
15.52.g
15.52.h
15.52.i
15.53.a
Level I - 2017 (534 LOS)
Compared
describe basic features of a fixedincome security
describe content of a bond indenture
compare affirmative and negative
covenants and identify examples of
each
describe how legal, regulatory, and tax
considerations affect the issuance and
trading of fixed-income securities
describe how cash flows of fixed-income
securities are structured
describe contingency provisions
affecting the timing and/or nature of
cash flows of fixed-income securities
and identify whether such provisions
benefit the borrower or the lender
describe classifications of global fixedincome markets
describe the use of interbank offered
rates as reference rates in floating-rate
debt
describe mechanisms available for
issuing bonds in primary markets
describe secondary markets for bonds
describe securities issued by sovereign
governments
describe securities issued by nonsovereign governments, quasigovernment entities, and supranational
agencies
describe types of debt issued by
corporations
describe short-term funding alternatives
available to banks
describe repurchase agreements (repos)
and the risks associated with them
calculate a bond’s price given a market
discount rate
Finance or Accounting Questions? Go to passingscoreforum.com
39
Topic
LOS
Fixed Income 15.54.b
Fixed Income 15.54.c
Fixed Income 15.54.d
Fixed Income 15.54.e
Fixed Income 15.54.f
Fixed Income 15.54.g
Fixed Income 15.54.h
Fixed Income 15.54.i
Fixed Income 15.55.a
Fixed Income 15.55.b
Fixed Income 15.55.c
Fixed Income 15.55.d
Fixed Income 15.55.e
Fixed Income 15.55.f
Level I - 2016 (549 LOS)
LOS
identify the relationships among a
bond’s price, coupon rate, maturity,
15.53.b
and market discount rate (yield-tomaturity)
define spot rates and calculate the
15.53.c
price of a bond using spot rates
describe and calculate the flat price,
accrued interest, and the full price of a
15.53.d
bond
describe matrix pricing
15.53.e
calculate and interpret yield measures
for fixed-rate bonds, floating-rate
15.53.f
notes, and money market instruments
define and compare the spot curve,
yield curve on coupon bonds, par
15.53.g
curve, and forward curve
define forward rates and calculate spot
rates from forward rates, forward rates
15.53.h
from spot rates, and the price of a bond
using forward rates
compare, calculate, and interpret yield
15.53.i
spread measures
explain benefits of securitization for
15.54.a
economies and financial markets
describe securitization, including the
parties involved in the process and the
15.54.b
roles they play
describe typical structures of
securitizations, including credit
15.54.c
tranching and time tranching
describe types and characteristics of
residential mortgage loans that are
15.54.d
typically securitized
describe types and characteristics of
residential mortgage-backed securities,
including mortgage pass-through
15.54.e
securities and collateralized mortgage
obligations, and explain the cash flows
and risks for each type
define prepayment risk and describe
the prepayment risk of mortgage15.54.f
backed securities
Finance or Accounting Questions? Go to
Level I - 2017 (534 LOS)
identify the relationships among a
bond’s price, coupon rate, maturity, and
market discount rate (yield-to-maturity)
define spot rates and calculate the price
of a bond using spot rates
describe and calculate the flat price,
accrued interest, and the full price of a
bond
describe matrix pricing
calculate and interpret yield measures
for fixed-rate bonds, floating-rate notes,
and money market instruments
define and compare the spot curve,
yield curve on coupon bonds, par curve,
and forward curve
define forward rates and calculate spot
rates from forward rates, forward rates
from spot rates, and the price of a bond
using forward rates
compare, calculate, and interpret yield
spread measures
explain benefits of securitization for
economies and financial markets
describe securitization, including the
parties involved in the process and the
roles they play
describe typical structures of
securitizations, including credit
tranching and time tranching
describe types and characteristics of
residential mortgage loans that are
typically securitized
describe types and characteristics of
residential mortgage-backed securities,
including mortgage pass-through
securities and collateralized mortgage
obligations, and explain the cash flows
and risks for each type
define prepayment risk and describe the
prepayment risk of mortgage-backed
securities
passingscoreforum.com
Compared
40
Topic
LOS
Fixed Income 15.55.g
Fixed Income 15.55.h
Fixed Income 15.55.i
Fixed Income 16.56.a
Fixed Income 16.56.b
Fixed Income 16.56.c
Fixed Income 16.56.d
Fixed Income 16.56.e
Fixed Income 16.56.f
Fixed Income 16.56.g
Fixed Income 16.56.h
Fixed Income 16.56.i
Level I - 2016 (549 LOS)
describe characteristics and risks of
commercial mortgage-backed securities
describe types and characteristics of
non-mortgage asset-backed securities,
including the cash flows and risks of
each type
describe collateralized debt obligations,
including their cash flows and risks
calculate and interpret the sources of
return from investing in a fixed-rate
bond
define, calculate, and interpret
Macaulay, modified, and effective
durations
explain why effective duration is the
most appropriate measure of interest
rate risk for bonds with embedded
options
define key rate duration and describe
the use of key rate durations in
measuring the sensitivity of bonds to
changes in the shape of the benchmark
yield curve
explain how a bond’s maturity, coupon,
and yield level affect its interest rate
risk
calculate the duration of a portfolio and
explain the limitations of portfolio
duration
calculate and interpret the money
duration of a bond and price value of a
basis point (PVBP)
calculate and interpret approximate
convexity and distinguish between
approximate and effective convexity
estimate the percentage price change
of a bond for a specified change in
yield, given the bond’s approximate
duration and convexity
LOS
15.54.g
15.54.h
15.54.i
16.55.a
16.55.b
16.55.c
16.55.d
16.55.e
16.55.f
16.55.g
16.55.h
16.55.i
Level I - 2017 (534 LOS)
Compared
describe characteristics and risks of
commercial mortgage-backed securities
describe types and characteristics of
non-mortgage asset-backed securities,
including the cash flows and risks of
each type
describe collateralized debt obligations,
including their cash flows and risks
calculate and interpret the sources of
return from investing in a fixed-rate
bond
define, calculate, and interpret
Macaulay, modified, and effective
durations
explain why effective duration is the
most appropriate measure of interest
rate risk for bonds with embedded
options
define key rate duration and describe
the use of key rate durations in
measuring the sensitivity of bonds to
changes in the shape of the benchmark
yield curve
explain how a bond’s maturity, coupon,
and yield level affect its interest rate
risk
calculate the duration of a portfolio and
explain the limitations of portfolio
duration
calculate and interpret the money
duration of a bond and price value of a
basis point (PVBP)
calculate and interpret approximate
convexity and distinguish between
approximate and effective convexity
estimate the percentage price change of
a bond for a specified change in yield,
given the bond’s approximate duration
and convexity
Finance or Accounting Questions? Go to passingscoreforum.com
41
Topic
LOS
Fixed Income 16.56.j
Fixed Income 16.56.k
Fixed Income 16.56.l
Fixed Income 16.57.a
Fixed Income 16.57.b
Fixed Income 16.57.c
Fixed Income 16.57.d
Fixed Income 16.57.e
Fixed Income 16.57.f
Fixed Income 16.57.g
Fixed Income 16.57.h
Fixed Income 16.57.i
Fixed Income 16.57.j
Level I - 2016 (549 LOS)
describe how the term structure of
yield volatility affects the interest rate
risk of a bond
describe the relationships among a
bond’s holding period return, its
duration, and the investment horizon
explain how changes in credit spread
and liquidity affect yield-to-maturity of
a bond and how duration and convexity
can be used to estimate the price effect
of the changes
describe credit risk and credit-related
risks affecting corporate bonds
describe default probability and loss
severity as components of credit risk
describe seniority rankings of corporate
debt and explain the potential violation
of the priority of claims in a bankruptcy
proceeding
distinguish between corporate issuer
credit ratings and issue credit ratings
and describe the rating agency practice
of “notching”
explain risks in relying on ratings from
credit rating agencies
explain the four Cs (Capacity,
Collateral, Covenants, and Character)
of traditional credit analysis
calculate and interpret financial ratios
used in credit analysis
evaluate the credit quality of a
corporate bond issuer and a bond of
that issuer, given key financial ratios of
the issuer and the industry
describe factors that influence the level
and volatility of yield spreads
explain special considerations when
evaluating the credit of high yield,
sovereign, and non-sovereign
government debt issuers and issues
LOS
16.55.j
16.55.k
16.55.l
16.56.a
16.56.b
16.56.c
16.56.d
16.56.e
16.56.f
16.56.g
16.56.h
16.56.i
16.56.j
Level I - 2017 (534 LOS)
Compared
describe how the term structure of yield
volatility affects the interest rate risk of
a bond
describe the relationships among a
bond’s holding period return, its
duration, and the investment horizon
explain how changes in credit spread
and liquidity affect yield-to-maturity of
a bond and how duration and convexity
can be used to estimate the price effect
of the changes
describe credit risk and credit-related
risks affecting corporate bonds
describe default probability and loss
severity as components of credit risk
describe seniority rankings of corporate
debt and explain the potential violation
of the priority of claims in a bankruptcy
proceeding
distinguish between corporate issuer
credit ratings and issue credit ratings
and describe the rating agency practice
of “notching”
explain risks in relying on ratings from
credit rating agencies
explain the four Cs (Capacity, Collateral,
Covenants, and Character) of traditional
credit analysis
calculate and interpret financial ratios
used in credit analysis
evaluate the credit quality of a
corporate bond issuer and a bond of
that issuer, given key financial ratios of
the issuer and the industry
describe factors that influence the level
and volatility of yield spreads
explain special considerations when
evaluating the credit of high yield,
sovereign, and non-sovereign
government debt issuers and issues
Finance or Accounting Questions? Go to passingscoreforum.com
42
Topic
LOS
Derivatives
17.58.a
Derivatives
17.58.b
Derivatives
17.58.c
Derivatives
17.58.d
Derivatives
17.58.e
Derivatives
17.59.a
Derivatives
17.59.b
Derivatives
17.59.c
Derivatives
17.59.d
Derivatives
17.59.e
Derivatives
17.59.f
Derivatives
17.59.g
Derivatives
17.59.h
Derivatives
17.59.i
Derivatives
17.59.j
Level I - 2016 (549 LOS)
define a derivative, and distinguish
between exchange-traded and over-thecounter derivatives
contrast forward commitments with
contingent claims
define forward contracts, futures
contracts, options (calls and puts),
swaps, and credit derivatives, and
compare their basic characteristics
LOS
17.57.a
17.57.b
17.57.c
describe purposes of, and controversies
17.57.d
related to, derivative markets
explain arbitrage and the role it plays in
determining prices and promoting
17.57.e
market efficiency
explain how the concepts of arbitrage,
replication, and risk neutrality are used
17.58.a
in pricing derivatives
distinguish between value and price of
17.58.b
forward and futures contracts
explain how the value and price of a
forward contract are determined at
17.58.c
expiration, during the life of the
contract, and at initiation
describe monetary and nonmonetary
benefits and costs associated with
holding the underlying asset, and
17.58.d
explain how they affect the value and
price of a forward contract
define a forward rate agreement and
17.58.e
describe its uses
explain why forward and futures prices
17.58.f
differ
explain how swap contracts are similar
to but different from a series of forward
17.58.g
contracts
distinguish between the value and price
17.58.h
of swaps
explain how the value of a European
17.58.i
option is determined at expiration
explain the exercise value, time value,
17.58.j
and moneyness of an option
Finance or Accounting Questions? Go to
Level I - 2017 (534 LOS)
Compared
define a derivative and distinguish
between exchange-traded and over-thecounter derivatives
contrast forward commitments with
contingent claims
define forward contracts, futures
contracts, options (calls and puts),
swaps, and credit derivatives and
compare their basic characteristics
describe purposes of, and controversies
related to, derivative markets
explain arbitrage and the role it plays in
determining prices and promoting
market efficiency
explain how the concepts of arbitrage,
replication, and risk neutrality are used
in pricing derivatives
distinguish between value and price of
forward and futures contracts
explain how the value and price of a
forward contract are determined at
expiration, during the life of the
contract, and at initiation
describe monetary and nonmonetary
benefits and costs associated with
holding the underlying asset and explain
how they affect the value and price of a
forward contract
define a forward rate agreement and
describe its uses
explain why forward and futures prices
differ
explain how swap contracts are similar
to but different from a series of forward
contracts
distinguish between the value and price
of swaps
explain how the value of a European
option is determined at expiration
explain the exercise value, time value,
and moneyness of an option
passingscoreforum.com
43
Topic
Derivatives
Derivatives
Derivatives
Derivatives
Derivatives
Derivatives
Derivatives
Alternative
Investments
Alternative
Investments
Alternative
Investments
LOS
Level I - 2016 (549 LOS)
identify the factors that determine the
value of an option, and explain how
17.59.k
each factor affects the value of an
option
explain put–call parity for European
17.59.l
options
explain put–call–forward parity for
17.59.m
European options
explain how the value of an option is
17.59.n determined using a one-period binomial
model
explain under which circumstances the
17.59.o values of European and American
options differ
determine the value at expiration, the
profit, maximum profit, maximum loss,
breakeven underlying price at
expiration, and payoff graph of the
17.60.a
strategies of buying and selling calls
and puts and determine the potential
outcomes for investors using these
strategies
determine the value at expiration,
profit, maximum profit, maximum loss,
breakeven underlying price at
expiration, and payoff graph of a
17.60.b
covered call strategy and a protective
put strategy, and explain the risk
management application of each
strategy
compare alternative investments with
18.61.a
traditional investments
describe categories of alternative
18.61.b
investments
describe potential benefits of
18.61.c alternative investments in the context
of portfolio management
LOS
Level I - 2017 (534 LOS)
Compared
identify the factors that determine the
value of an option and explain how each
factor affects the value of an option
explain put–call parity for European
17.58.l
options
explain put–call–forward parity for
17.58.m
European options
explain how the value of an option is
17.58.n determined using a one-period binomial
model
explain under which circumstances the
17.58.o values of European and American
options differ
determine the value at expiration, the
profit, maximum profit, maximum loss,
breakeven underlying price at
expiration, and payoff graph of the
17.59.a
strategies of buying and selling calls
and puts and determine the potential
outcomes for investors using these
strategies
determine the value at expiration,
profit, maximum profit, maximum loss,
breakeven underlying price at
expiration, and payoff graph of a
17.59.b
covered call strategy and a protective
put strategy, and explain the risk
management application of each
strategy
compare alternative investments with
18.60.a
traditional investments
describe categories of alternative
18.60.b
investments
describe potential benefits of alternative
18.60.c investments in the context of portfolio
management
17.58.k
Finance or Accounting Questions? Go to passingscoreforum.com
44
Topic
LOS
Alternative
Investments
18.61.d
Alternative
Investments
18.61.e
Alternative
Investments
18.61.f
Alternative
Investments
18.61.g
Level I - 2016 (549 LOS)
describe hedge funds, private equity,
real estate, commodities,
infrastructure, and other alternative
investments, including, as applicable,
strategies, sub-categories, potential
benefits and risks, fee structures, and
due diligence
describe, calculate, and interpret
management and incentive fees and
net-of-fees returns to hedge funds
describe issues in valuing, and
calculating returns on, hedge funds,
private equity, real estate,
commodities, and infrastructure
describe risk management of
alternative investments
LOS
18.60.d
18.60.e
18.60.f
18.60.g
Level I - 2017 (534 LOS)
Compared
describe hedge funds, private equity,
real estate, commodities, infrastructure,
and other alternative investments,
including, as applicable, strategies, subcategories, potential benefits and risks,
fee structures, and due diligence
describe, calculate, and interpret
management and incentive fees and netof-fees returns to hedge funds
describe issues in valuing and
calculating returns on hedge funds,
private equity, real estate, commodities,
and infrastructure
describe risk management of alternative
investments
Finance or Accounting Questions? Go to passingscoreforum.com
45