[NEW] CFA Program Level I

Quantitative Methods (10%): Time Value of Money, Probability Concepts, and learn statistical inference hypothesis testing for data science.

Economics (10%): Supply and Demand, Inflation and Deflation, Fiscal and Monetary Policy, and International Trade and Capital Flows.

Financial Statement Analysis (15%): Income Statement Analysis, Balance Sheet Ratios, Cash Flow Statement, and Financial Ratio Interpretation.

Corporate Issuers (10%): Corporate Governance, Capital Structure, Working Capital Management, and Leverage.

Equity Investments (10%): Equity Market Structure, Industry Analysis, Security Analysis, and Basic Valuation Techniques.

Fixed Income (10%): Bond Valuation, Yield Measures, Credit Analysis, and Term Structure of Interest Rates.

Derivatives (5%): Forward Contracts, Futures Contracts, Options Basics, and Swaps Overview.

Alternative Investments (5%): Real Estate, Private Equity, Hedge Funds, and Commodities.

Portfolio Management & Wealth Planning (5%): Asset Allocation, Risk Management, Performance Measurement, and Wealth Planning Fundamentals.

B: Using the mosaic theory to piece together public and non-material nonpublic information to reach an investment conclusion.

C: Acting on preliminary earnings data accidentally emailed to an analyst by a company's CFO before the public press release.

D: Refusing to execute a client's trade in a specific stock after reading a highly speculative, anonymous blog post.

E: Recommending a sector rotation based on an expert network interview that only covered general, well-known macroeconomic trends.

F: Waiting a full 24 hours after an official company press release to execute trades for discretionary client accounts.

Correct Answer: C

Overall Explanation: The Standard regarding Material Nonpublic Information strictly prohibits members from trading or causing others to trade on information that is both material (would impact the stock price) and nonpublic (not disseminated to the broader market).

Option Explanations:

B is incorrect because the mosaic theory is a legally and ethically permissible method of analysis under CFA Institute standards.

C is correct. The earnings data is highly material and, because it was accidentally emailed prior to the press release, it is definitively nonpublic. Trading on this violates the Standard.

D is incorrect. Speculative blog posts are not material nonpublic information.

E is incorrect. General industry trends do not constitute material nonpublic information.

F is incorrect. Waiting after a press release ensures the information has been fully absorbed by the public market, which is compliant.

B: US GAAP: Financing activity; IFRS: Operating or Financing activity

C: US GAAP: Financing activity; IFRS: Financing activity only

D: US GAAP: Investing activity; IFRS: Financing activity

E: US GAAP: Operating activity; IFRS: Investing activity

F: US GAAP: Investing activity; IFRS: Operating activity

Correct Answer: B

Overall Explanation: Different accounting standards have different flexibility regarding cash flow classifications. US GAAP is rigid on certain line items, whereas IFRS often allows classification based on the nature of the entity.

Option Explanations:

B is correct. Under US GAAP, dividends paid must be classified as a financing activity. Under IFRS, a company has the flexibility to classify dividends paid as either an operating activity or a financing activity.

C is incorrect. IFRS provides flexibility; it does not strictly require financing classification for dividends paid.

D is incorrect. US GAAP classifies dividends paid as financing, not investing.

E is incorrect. It misstates both the US GAAP and IFRS rules.

F is incorrect. Dividends paid are never classified as an investing activity under either standard.

B: A bond's price moves directly in tandem with changes in the market yield.

C: If the coupon rate equals the market yield, the bond will trade at its par value.

D: Longer-maturity bonds are generally less sensitive to market yield changes than shorter-maturity bonds.

E: A bond trading at a discount will always have a coupon rate higher than the prevailing market yield.

F: Floating rate bonds experience the highest price volatility when market interest rates fluctuate.

Correct Answer: C

Overall Explanation: Bond prices and market yields have an inverse relationship. The bond's price adjusts so that its fixed coupon payments offer a return competitive with the current market yield.

Option Explanations:

B is incorrect. Bond prices and yields have an inverse relationship, not a direct one.

C is correct. When a bond's coupon rate perfectly matches the current market yield, investors require no price adjustment (discount or premium), so it trades exactly at par.

D is incorrect. Longer-maturity bonds are typically more sensitive to yield changes (higher duration) than shorter-maturity bonds.

E is incorrect. A bond trading at a discount has a coupon rate lower than the market yield.

F is incorrect. Floating rate bonds regularly reset their coupons to match current rates, resulting in very low price volatility compared to fixed-rate bonds.

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