Ethical and Professional Standards

STUDY SESSION 1 Etl n Prossonl Stnrs T rns n ts stuy ssson prsnt rmwork or tl onut n t nvstmnt prosson y ousn on t CFA Insttut Co o Ets n Stnrs o Prossonl Conut (t Co n Stnrs) s wll s t CFA Insttut Rsr Ojtvty Stnrs. T prnpls n un prsnt n t CFA Insttut Stnrs o Prt Hnook (Hnook) orm t ss or t CFA Insttut sl- rultory prorm to mntn t st prossonl stnrs mon nvstmnt prttonrs. A lr unrstnn o t CFA Insttut Co o Ets n Stnrs o Prossonl Conut (ot oun n t Hnook) soul llow t prttonr to nty n pproprtly rsolv tl onlts. T rsultn ronton or ntrty soul nt ot t nvul n t prosson. Gun n t Hnook rsss t prtl pplton o t Co o Ets n Stnrs o Prossonl Conut. T un rvws t purpos n sop o Stnr, prsnts rommn prours or ompln, n provs xmpls o t Stnr n prt. T CFA Insttut Rsr Ojtvty Stnrs rss ontmporry ssus or w CFA Insttut s lv urtr, mor sp un s wrrnt. It s onsstnt wt n omplmnt to t CFA Insttut Co o Ets n Stnrs o Prossonl Conut. Invstmnt rsr ojtvty soul t lol onsqun o tl onut, onsstnt wt t CFA Insttut Co o Ets n Stnrs o Prossonl Conut, n w lnt ntrsts r pl rst n onlts o ntrst r ully slos. Wn tmptton or prssur ls to s or msln rsr rports, t ntrty o ll nnl prossonls s tnt. T CFA Insttut Rsr Ojtvty Stnrs prsnt sp pols n prours sn to rt rsr nvronmnt n w onlts o ntrsts n opportunts or tl lpss r mnmz n slos. 2016 Lvl II CFA Prorm Currulum CFA Insttut.

Stuy Ssson 1 2 READING ASSIGNMENTS Rn 1 Rn 2 Rn 3 Co o Ets n Stnrs o Prossonl Conut Stnrs o Prt Hnook, Elvnt Eton Gun or Stnrs I VII Stnrs o Prt Hnook, Elvnt Eton CFA Insttut Rsr Ojtvty Stnrs LEARNING OUTCOMES READING 1. CODE OF ETHICS AND STANDARDS OF PROFESSIONAL CONDUCT T nt soul l to: sr t sx omponnts o t Co o Ets n t svn Stnrs o Prossonl Conut; xpln t tl rsponslts rqur o CFA Insttut mmrs n nts n t CFA Prorm y t Co n Stnrs. READING 2. GUIDANCE FOR STANDARDS I VII T nt soul l to: monstrt torou knowl o t Co o Ets n Stnrs o Prossonl Conut y pplyn t Co n Stnrs to sp stutons; rommn prts n prours sn to prvnt voltons o t Co o Ets n Stnrs o Prossonl Conut. READING 3. CFA INSTITUTE RESEARCH OBJECTIVITY STANDARDS T nt soul l to: xpln t ojtvs o t Rsr Ojtvty Stnrs; vlut ompny pols n prts rlt to rsr ojtvty, n stnus twn ns rqur n ns rommn or ompln wt t Rsr Ojtvty Stnrs. 2016 Lvl II CFA Prorm Currulum CFA Insttut.

STUDY SESSION 2 Etl n Prossonl Stnrs Applton Ts stuy ssson uss s stus s n to unrstnn n ntrnlzn t vlus n stnrs prsnt n t CFA Insttut Co o Ets n Stnrs o Prossonl Conut. T ss prsnt rlst ut tonl stutons tt losly pproxmt ow nvuls prtn n t nvstmnt nustry nountr tl ssus n tr y- to- y tvts. T sussons ollown s nty ky voltons o t Stnrs o Prossonl Conut, rommn orrtv tons, n, wn pproprt, prsnt poly sttmnts rm oul us n skn to prvnt t voltons. T Stnrs Rportr rns prsnt rultory tons tkn n rspons to tul ss o voltons n xpln ow t voltons woul vw rom t prsptv o t Co o Ets n Stnrs o Prossonl Conut. Wspr ronton xsts tt rtn stutons rt rltonsp n w n lvt lvl o lty, u ln, n prun s rqur o t nvstmnt mnr. Hstorlly, t trm ury s n n n ountry- sp lws n rultons, mkn nr ntons ult. READING ASSIGNMENTS Rn 4 Rn 5 Rn 6 Rn 7 Rn 8 T Glnrm Compny y Gln A. Holn, Jr., CFA Prston Prtnrs y Juls A. Huot, CFA Supr Slton y Zo L. Vn Synl, CFA Tr Alloton: Fr Dln n Dslosur Stnrs Rportr Cnn Invstmnt Ojtvs Stnrs Rportr 2016 Lvl II CFA Prorm Currulum CFA Insttut.

Stuy Ssson 2 2 LEARNING OUTCOMES READING 4. THE GLENARM COMPANY T nt soul l to: vlut t prts n pols prsnt; xpln t pproprt ton to tk n rspons to onut tt volts t CFA Insttut Co o Ets n Stnrs o Prossonl Conut. READING 5. PRESTON PARTNERS T nt soul l to: vlut t prts n pols prsnt; xpln t pproprt ton to tk n rspons to onut tt volts t CFA Insttut Co o Ets n Stnrs o Prossonl Conut. READING 6. SUPER SELECTION T nt soul l to: vlut t prts n pols prsnt; xpln t pproprt ton to tk n rspons to onut tt volts t CFA Insttut Co o Ets n Stnrs o Prossonl Conut. READING 7. TRADE ALLOCATION: FAIR DEALING AND DISCLOSURE T nt soul l to: vlut tr lloton prts n trmn wtr ty omply wt t CFA Insttut Stnrs o Prossonl Conut rssn r ln n lnt loylty; sr pproprt tons to tk n rspons to tr lloton prts tt o not qutly rspt lnt ntrsts. READING 8. CHANGING INVESTMENT OBJECTIVES T nt soul l to: vlut t slosur o nvstmnt ojtvs n s pols n trmn wtr ty omply wt t CFA Insttut Stnrs o Prossonl Conut; sr pproprt tons n to nsur qut slosur o t nvstmnt pross. 2016 Lvl II CFA Prorm Currulum CFA Insttut.

STUDY SESSION 3 Quntttv Mtos or Vluton Ts stuy ssson ns wt susson o lnr orrlton n tn ouss on lnr rrsson, on o t most wly us sttstl tnqus n nnl moln. In ton to susson o uln n ntrprtn multpl rrsson mols, t rns prsnt normton out tstn t snn o t stmt prmtrs n trmnn t vlty o t ssum rrsson mol. It s mportnt to unrstn t ssumptons n t strutur o rrsson mols, to mk orrtons t osrv vrls o not xt t ssum proprts, n to vo msspton o t mols. Tm- srs nlyss s us to sr t ynm vor o n onom or nnl vrl, to orst ts utur vlus, n to tt rltons twn t tm srs o rnt vrls. In, rrsson mols must trt wtn tm- srs ontxt t vrls r msur ovr tm. Rrsson rports or su mols soul nlu stnr tm- srs tsts to nsur tt t rsults o t rrsson r ntrprt orrtly. In ny pplton, t stston o mol ssumptons n t onsquns o mol msspton must onsr. In ton to ovrn t ov tops, t rn rsss tm- srs proprts, nlun sttonrty n mn rvrson, tt r mportnt n mny nvstmnt ontxts. T stuy ssson onlus wt n ntrouton to t us o smulton mols n son mkn n rsk ssssmnt. 2016 Lvl II CFA Prorm Currulum CFA Insttut.

Stuy Ssson 3 2 READING ASSIGNMENTS Rn 9 Rn 10 Rn 11 Rn 12 Corrlton n Rrsson y Rr A. DFuso, CFA, Dnns W. MLvy, CFA, Jrl E. Pnto, PD, CFA, n Dv E. Runkl, PD, CFA Multpl Rrsson n Issus n Rrsson Anlyss y Rr A. DFuso, CFA, Dnns W. MLvy, CFA, Jrl E. Pnto, PD, CFA, n Dv E. Runkl, PD, CFA Tm- Srs Anlyss y Rr A. DFuso, CFA, Dnns W. MLvy, CFA, Jrl E. Pnto, PD, CFA, n Dv E. Runkl, PD, CFA Exrpt rom Prolst Appros: Snro Anlyss, Dson Trs, n Smultons y Aswt Dmorn LEARNING OUTCOMES READING 9. CORRELATION AND REGRESSION T nt soul l to: j k lult n ntrprt smpl ovrn n smpl orrlton ont n ntrprt sttr plot; sr lmttons to orrlton nlyss; ormult tst o t ypotss tt t populton orrlton ont quls zro n trmn wtr t ypotss s rjt t vn lvl o snn; stnus twn t pnnt n npnnt vrls n lnr rrsson; sr t ssumptons unrlyn lnr rrsson n ntrprt rrsson onts; lult n ntrprt t stnr rror o stmt, t ont o trmnton, n onn ntrvl or rrsson ont; ormult null n ltrntv ypotss out populton vlu o rrsson ont n trmn t pproprt tst sttst n wtr t null ypotss s rjt t vn lvl o snn; lult t prt vlu or t pnnt vrl, vn n stmt rrsson mol n vlu or t npnnt vrl; lult n ntrprt onn ntrvl or t prt vlu o t pnnt vrl; sr t us o nlyss o vrn (ANOVA) n rrsson nlyss, ntrprt ANOVA rsults, n lult n ntrprt t F-sttst; sr lmttons o rrsson nlyss. 2016 Lvl II CFA Prorm Currulum CFA Insttut.

Stuy Ssson 3 3 READING 10. MULTIPLE REGRESSION AND ISSUES IN REGRESSION ANALYSIS T nt soul l to: j k l ormult multpl rrsson quton to sr t rlton twn pnnt vrl n svrl npnnt vrls n trmn t sttstl snn o npnnt vrl; ntrprt stmt rrsson onts n tr p-vlus; ormult null n n ltrntv ypotss out t populton vlu o rrsson ont, lult t vlu o t tst sttst, n trmn wtr to rjt t null ypotss t vn lvl o snn; ntrprt t rsults o ypotss tsts o rrsson onts; lult n ntrprt 1) onn ntrvl or t populton vlu o rrsson ont n 2) prt vlu or t pnnt vrl, vn n stmt rrsson mol n ssum vlus or t npnnt vrls; xpln t ssumptons o multpl rrsson mol; lult n ntrprt t F-sttst, n sr ow t s us n rrsson nlyss; stnus twn n ntrprt t R 2 n just R 2 n multpl rrsson; vlut ow wll rrsson mol xplns t pnnt vrl y nlyzn t output o t rrsson quton n n ANOVA tl; ormult multpl rrsson quton y usn ummy vrls to rprsnt qulttv tors n ntrprt t onts n rrsson rsults; xpln t typs o troskstty n ow troskstty n srl orrlton t sttstl nrn; sr multollnrty n xpln ts uss n ts n rrsson nlyss; m sr ow mol msspton ts t rsults o rrsson nlyss n sr ow to vo ommon orms o msspton; n o sr mols wt qulttv pnnt vrls; vlut n ntrprt multpl rrsson mol n ts rsults. READING 11. TIME- SERIES ANALYSIS T nt soul l to: lult n vlut t prt trn vlu or tm srs, mol s tr lnr trn or lo- lnr trn, vn t stmt trn onts; sr tors tt trmn wtr lnr or lo- lnr trn soul us wt prtulr tm srs n vlut lmttons o trn mols; xpln t rqurmnt or tm srs to ovrn sttonry n sr t snn o srs tt s not sttonry; sr t strutur o n utorrssv (AR) mol o orr p n lult on- n two- pro- orsts vn t stmt onts; xpln ow utoorrltons o t rsuls n us to tst wtr t utorrssv mol ts t tm srs; xpln mn rvrson n lult mn- rvrtn lvl; 2016 Lvl II CFA Prorm Currulum CFA Insttut.

Stuy Ssson 3 4 j k l ontrst n- smpl n out- o- smpl orsts n ompr t orstn ury o rnt tm- srs mols s on t root mn squr rror rtron; xpln t nstlty o onts o tm- srs mols; sr rtrsts o rnom wlk prosss n ontrst tm to ovrn sttonry prosss; sr mpltons o unt roots or tm- srs nlyss, xpln wn unt roots r lkly to our n ow to tst or tm, n monstrt ow tm srs wt unt root n trnsorm so t n nlyz wt n AR mol; sr t stps o t unt root tst or nonsttonrty n xpln t rlton o t tst to utorrssv tm- srs mols; xpln ow to tst n orrt or ssonlty n tm- srs mol n lult n ntrprt orst vlu usn n AR mol wt ssonl l; m xpln utorrssv ontonl troskstty (ARCH) n sr ow ARCH mols n ppl to prt t vrn o tm srs; n o xpln ow tm- srs vrls soul nlyz or nonsttonrty n/or ontrton or us n lnr rrsson; trmn n pproprt tm- srs mol to nlyz vn nvstmnt prolm n justy tt o. READING 12. EXCERPT FROM PROBABILISTIC APPROACHES: SCENARIO ANALYSIS, DECISION TREES, AND SIMULATIONS T nt soul l to: sr stps n runnn smulton; xpln tr wys to n t prolty strutons or smulton s vrls; sr ow to trt orrlton ross vrls n smulton; sr vnts o usn smultons n son mkn; sr som ommon onstrnts ntrou nto smultons; sr ssus n usn smultons n rsk ssssmnt; ompr snro nlyss, son trs, n smultons. 2016 Lvl II CFA Prorm Currulum CFA Insttut.

STUDY SESSION 4 Eonoms or Vluton Ts stuy ssson uls on t prnpls o onoms rom Lvl I n lnks tm to t vluton pross. T rns xpln ow t onom nvronmnt ts rm s prormn. T rst rn srs tors o xn rt trmnton n ow ts n us to orst xn rts. Tr r t lst two rsons wy ts tops r mportnt to nvstmnt nlysts. Frst, nlysts n to vlut t urrny rsks y t ompns ty nlyz. Most lr ompns o usnss ntrntonlly, so xn rt lututons my t tr protlty n vlu. Son, most portolos r rtly xpos to t rsk o xn rt lututons. Ts rn lys ounton or unrstnn mnmnt o portolo s urrny rsk. T son rn srs tors tn onom rowt n ow onom rowt ts nvstmnt sons n stok mrkt pprton. T nl rn n t stuy ssson srs rulton, ts purposs, n ts potntl ts on ompny s oprtn nvronmnt. Unrstnn rulton s mportnt or nustry n ompny nlyss. READING ASSIGNMENTS Rn 13 Rn 14 Rn 15 Currny Exn Rts: Dtrmnton n Forstn y Ml R. Rosnr n Wllm A. Brkr, CFA Eonom Growt n t Invstmnt Dson y Pul Kutsov, PD, CFA Eonoms o Rulton y Cstr S. Sptt, PD 2016 Lvl II CFA Prorm Currulum CFA Insttut.

Stuy Ssson 4 2 LEARNING OUTCOMES READING 13. CURRENCY EXCHANGE RATES: DETERMINATION AND FORECASTING T nt soul l to: j k l lult n ntrprt t sk spr on spot or orwr orn urrny quotton n sr t tors tt t t or spr; nty trnulr rtr opportunty n lult ts prot, vn t or quottons or tr urrns; stnus twn spot n orwr rts n lult t orwr prmum/ sount or vn urrny; lult t mrk- to- mrkt vlu o orwr ontrt; xpln ntrntonl prty rltons (ovr n unovr ntrst rt prty, pursn powr prty, n t ntrntonl Fsr t); sr rltons mon t ntrntonl prty ontons; vlut t us o t urrnt spot rt, t orwr rt, pursn powr prty, n unovr ntrst prty to orst utur spot xn rts; xpln ppros to ssssn t lon- run r vlu o n xn rt; sr t rry tr n ts rlton to unovr ntrst rt prty n lult t prot rom rry tr; xpln ow lows n t ln o pymnt ounts t urrny xn rts; sr t Munll Flmn mol, t montry ppro, n t sst mrkt (portolo ln) ppro to xn rt trmnton; orst t rton o t xpt n n n xn rt s on ln o pymnt, Munll Flmn, montry, n sst mrkt ppros to xn rt trmnton; m xpln t potntl ts o montry n sl poly on xn rts; n o p sr ojtvs o ntrl nk ntrvnton n ptl ontrols n sr t tvnss o ntrvnton n ptl ontrols; sr wrnn sns o urrny rss; sr uss o tnl nlyss n orstn xn rts. READING 14. ECONOMIC GROWTH AND THE INVESTMENT DECISION T nt soul l to: ompr tors vorn n lmtn onom rowt n vlop n vlopn onoms; sr t rlton twn t lon- run rt o stok mrkt pprton n t sustnl rowt rt o t onomy; xpln wy potntl GDP n ts rowt rt mttr or quty n x nom nvstors; stnus twn ptl pnn nvstmnt n tnolol prorss n xpln ow ts onom rowt n lor proutvty; orst potntl GDP s on rowt ountn rltons; 2016 Lvl II CFA Prorm Currulum CFA Insttut.

Stuy Ssson 4 3 j k l xpln ow nturl rsours t onom rowt n vlut t rumnt tt lmt vllty o nturl rsours onstrns onom rowt; xpln ow morps, mmrton, n lor or prtpton t t rt n sustnlty o onom rowt; xpln ow nvstmnt n pysl ptl, umn ptl, n tnolol vlopmnt ts onom rowt; ompr lssl rowt tory, nolssl rowt tory, n nonous rowt tory; xpln n vlut onvrn ypotss; sr t onom rtonl or ovrnmnts to prov nntvs to prvt nvstmnt n tnoloy n knowl; sr t xpt mpt o rmovn tr rrrs on ptl nvstmnt n prots, mploymnt n ws, n rowt n t onoms nvolv. READING 15. ECONOMICS OF REGULATION T nt soul l to: sr lsstons o rultons n rultors; sr uss o sl- rulton n nnl mrkts; sr t onom rtonl or rultory ntrvnton; sr rultory ntrpnns n tr ts; sr tools o rultory ntrvnton n mrkts; xpln purposs n rultn ommr n nnl mrkts; sr ntompttv vors trt y nttrust lws lolly n vlut t nttrust rsk ssot wt vn usnss strty; sr nts n osts o rulton; vlut ow sp rulton ts n nustry, ompny, or surty. 2016 Lvl II CFA Prorm Currulum CFA Insttut.

STUDY SESSION 5 Fnnl Rportn n Anlyss Invntors n Lon- lv Assts T rns n ts stuy ssson ous on t ts tt rnt ountn mtos n v on nnl sttmnts n rtos. Comprn t prormn o ompns s llnn u to t vrty o llowl ountn os. Anlysts must nty n unrstn ny ountn rns n mk pproprt justmnts to rport nnl sttmnts to v omprlty. I nvntory pr lvls n ovr tm, t o o nvntory vluton mto ts ompny s nnl sttmnts n rtos. Anlysts must know t ts o rnt nvntory vluton mtos n l to ompr nnl sttmnts prpr usn t sm or rnt mtos. Anlysts lso must unrstn ow t ollown t nnl sttmnts n rtos: 1 ptlzn vrsus xpnsn osts, 2 t o o prton mto, 3 sst mprmnt n rvluton, 4 lsn vrsus pursn n sst, n 5 rorn ls s nn ls vrsus n oprtn ls. READING ASSIGNMENTS Rn 16 Rn 17 Invntors: Impltons or Fnnl Sttmnts n Rtos y Ml A. Bron, CPA, CIA, CFA Lon- lv Assts: Impltons or Fnnl Sttmnts n Rtos y Eln Hnry, PD, CFA, n Elzt A. Goron Not: Nw rulns n/or pronounmnts ssu tr t pulton o t rns n nnl rportn n nlyss my us som o t normton n ts rns to om t. Cnts r xpt to mlr wt t ovrll nlytl rmwork ontn n t stuy ssson rns, s wll s t mpltons o ltrntv ountn mtos or nnl nlyss n vluton, s prov n t ssn rns. Cnts r not rsponsl or ns tt our tr t mtrl ws wrttn. 2016 Lvl II CFA Prorm Currulum CFA Insttut.

Stuy Ssson 5 2 LEARNING OUTCOMES READING 16. INVENTORIES: IMPLICATIONS FOR FINANCIAL STATEMENTS AND RATIOS T nt soul l to: lult n xpln ow nlton n lton o nvntory osts t t nnl sttmnts n rtos o ompns tt us rnt nvntory vluton mtos; xpln LIFO rsrv n LIFO lquton n tr ts on nnl sttmnts n rtos; onvrt ompny s rport nnl sttmnts rom LIFO to FIFO or purposs o omprson; sr t mpltons o vlun nvntory t nt rlsl vlu or nnl sttmnts n rtos; nlyz n ompr t nnl sttmnts n rtos o ompns, nlun tos tt us rnt nvntory vluton mtos; xpln ssus tt nlysts soul onsr wn xmnn ompny s nvntory slosurs n otr sours o normton. READING 17. LONG- LIVED ASSETS: IMPLICATIONS FOR FINANCIAL STATEMENTS AND RATIOS T nt soul l to: xpln n vlut ow ptlsn vrsus xpnsn osts n t pro n w ty r nurr ts nnl sttmnts n rtos; xpln n vlut ow t rnt prton mtos or proprty, plnt, n qupmnt t nnl sttmnts n rtos; xpln n vlut ow mprmnt n rvluton o proprty, plnt, n qupmnt n ntnl ssts t nnl sttmnts n rtos; nlyz n ntrprt nnl sttmnt slosurs rrn lon- lv ssts; xpln n vlut ow lsn rtr tn pursn ssts ts nnl sttmnts n rtos; xpln n vlut ow nn lss n oprtn lss t nnl sttmnts n rtos rom t prsptvs o ot t lssor n t lss. 2016 Lvl II CFA Prorm Currulum CFA Insttut.

STUDY SESSION 6 Fnnl Rportn n Anlyss Introrport Invstmnts, Post- Employmnt n Sr- Bs Compnston, n Multntonl Oprtons Introrport nvstmnts rv rnt ountn trtmnts pnn on t prnt ownrsp, mount o ontrol, n otr vrls tt n t rlton twn t ompny mkn t nvstmnt (t nvstor) n t nvst. An nlyss o ntrorport nvstmnts s nssry to sprt oprtn prormn rom nvstn prormn n to unrstn t potntl ountn stortons tt rs s rsult o ountn stnrs n/or rnns mnmnt. Mrrs n qustons n n mportnt strt onsrton tt ts nnl sttmnts n rtos. T ountn stnrs tt ovrn usnss omntons r t rsult o jont projt twn t IASB n t FASB. IFRS n US GAAP rqur t us o t quston mto. T strutur n sop o usnss omntons rt omprlty llns us t nnl sttmnts o t qurn ompny my rlly n. An nlyst must unrstn ow usnss omntons, nlun ull onsolton n proportont onsolton, t t omprlty o nnl sttmnts n rtos. IFRS n US GAAP rqur t rportn o nt oltons (or nt ssts) or pnsons n otr post- mploymnt nts on t ln st. IFRS n US GAAP my r n tr trtmnt o pro pnson osts n rportn o pnson xpnss. Anlysts must lso unrstn ow t ountn trtmnt o mploy stok optons ts nnl sttmnts. Multntonl ompns otn v susrs n rnt ountrs tt mntn tr ooks n rors n urrns rnt rom tt o t prnt ompny. Flotn xn rts prsnt n tonl lln. Forn urrny trnstons n trnsltons n prnt ompny s nnl sttmnts must nlyz to vlut ompny s prormn n nnl poston. Not: Nw rulns n/or pronounmnts ssu tr t pulton o t rns n nnl rportn n nlyss my us som o t normton n ts rns to om t. Cnts r xpt to mlr wt t ovrll nlytl rmwork ontn n t stuy ssson rns, s wll s t mpltons o ltrntv ountn mtos or nnl nlyss n vluton, s prov n t ssn rns. Cnts r not rsponsl or ns tt our tr t mtrl ws wrttn. 2016 Lvl II CFA Prorm Currulum CFA Insttut.

Stuy Ssson 6 2 READING ASSIGNMENTS Rn 18 Rn 19 Rn 20 Introrport Invstmnts y Susn Prry Wllms, CPA, CMA, PD Employ Compnston: Post- Employmnt n Sr- Bs y Eln Hnry, PD, CFA, n Elzt A. Goron Multntonl Oprtons y Tmoty S. Doupnk, PD, n Eln Hnry, PD, CFA LEARNING OUTCOMES READING 18. INTERCORPORATE INVESTMENTS T nt soul l to: sr t lsston, msurmnt, n slosur unr Intrntonl Fnnl Rportn Stnrs (IFRS) or 1) nvstmnts n nnl ssts, 2) nvstmnts n ssots, 3) jont vnturs, 4) usnss omntons, n 5) spl purpos n vrl ntrst ntts; stnus twn IFRS n US GAAP n t lsston, msurmnt, n slosur o nvstmnts n nnl ssts, nvstmnts n ssots, jont vnturs, usnss omntons, n spl purpos n vrl ntrst ntts; nlyz ow rnt mtos us to ount or ntrorport nvstmnts t nnl sttmnts n rtos. READING 19. EMPLOYEE COMPENSATION: POST- EMPLOYMENT AND SHARE-BASED T nt soul l to: sr t typs o post- mploymnt nt plns n mpltons or nnl rports; xpln n lult msurs o n nt pnson olton (.., prsnt vlu o t n nt olton n projt nt olton) n nt pnson llty (or sst); sr t omponnts o ompny s n nt pnson osts; xpln n lult t t o n nt pln s ssumptons on t n nt olton n pro pnson ost; xpln n lult ow justn or tms o pnson n otr postmploymnt nts tt r rport n t nots to t nnl sttmnts ts nnl sttmnts n rtos; ntrprt pnson pln not slosurs nlun s low rlt normton; xpln ssus ssot wt ountn or sr- s ompnston; xpln ow ountn or stok rnts n stok optons ts nnl sttmnts, n t mportn o ompns ssumptons n vlun ts rnts n optons. 2016 Lvl II CFA Prorm Currulum CFA Insttut.

Stuy Ssson 6 3 READING 20. MULTINATIONAL OPERATIONS T nt soul l to: j stnus mon prsntton (rportn) urrny, untonl urrny, n lol urrny; sr orn urrny trnston xposur, nlun ountn or n slosurs out orn urrny trnston ns n losss; nlyz ow ns n xn rts t t trnslt sls o t susry n prnt ompny; ompr t urrnt rt mto n t tmporl mto, vlut ow ts t prnt ompny s ln st n nom sttmnt, n trmn w mto s pproprt n vrous snros; lult t trnslton ts n vlut t trnslton o susry s ln st n nom sttmnt nto t prnt ompny s prsntton urrny; nlyz ow t urrnt rt mto n t tmporl mto t nnl sttmnts n rtos; nlyz ow ltrntv trnslton mtos or susrs oprtn n yprnltonry onoms t nnl sttmnts n rtos; sr ow multntonl oprtons t ompny s tv tx rt; xpln ow ns n t omponnts o sls t t sustnlty o sls rowt; nlyz ow urrny lututons potntlly t nnl rsults, vn ompny s ountrs o oprton. 2016 Lvl II CFA Prorm Currulum CFA Insttut.

STUDY SESSION 7 Fnnl Rportn n Anlyss Qulty o Fnnl Rports n Fnnl Sttmnt Anlyss Ts stuy ssson ouss on vlutn t qulty o nnl rports n pplyn nnl sttmnt nlyss tnqus. T rst rn sows t pplton o onptul rmwork to ssssn t qulty o ompny s nnl rports. T ssssmnt nlus ntyn n vlutn potntl prolms. T son rn uss mn- ss to monstrt t pplton o rmwork or nlyzn nnl sttmnts. READING ASSIGNMENTS Rn 21 Rn 22 LEARNING OUTCOMES Evlutn Qulty o Fnnl Rports y Jk T. Cslsk, Jr., CFA, Eln Hnry, PD, CFA, n Toms I. Slln, PD, CPA Intrton o Fnnl Sttmnt Anlyss Tnqus y Jk T. Cslsk, Jr., CFA READING 21. EVALUATING QUALITY OF FINANCIAL REPORTS T nt soul l to: monstrt t us o onptul rmwork or ssssn t qulty o ompny s nnl rports; xpln potntl prolms tt t t qulty o nnl rports; sr ow to vlut t qulty o ompny s nnl rports; vlut t qulty o ompny s nnl rports; sr t onpt o sustnl (prsstnt) rnns; Not: Nw rulns n/or pronounmnts ssu tr t pulton o t rns n nnl rportn n nlyss my us som o t normton n ts rns to om t. Cnts r xpt to mlr wt t ovrll nlytl rmwork ontn n t stuy ssson rns, s wll s t mpltons o ltrntv ountn mtos or nnl nlyss n vluton, s prov n t ssn rns. Cnts r not rsponsl or ns tt our tr t mtrl ws wrttn. 2016 Lvl II CFA Prorm Currulum CFA Insttut.

Stuy Ssson 7 2 j k l sr ntors o rnns qulty; xpln mn rvrson n rnns n ow t ruls omponnt o rnns ts t sp o mn rvrson; vlut t rnns qulty o ompny; sr ntors o s low qulty; vlut t s low qulty o ompny; sr ntors o ln st qulty; vlut t ln st qulty o ompny; m sr sours o normton out rsk. READING 22. INTEGRATION OF FINANCIAL STATEMENT ANALYSIS TECHNIQUES T nt soul l to: monstrt t us o rmwork or t nlyss o nnl sttmnts, vn prtulr prolm, quston, or purpos (.., vlun quty s on omprls, rtqun rt rtn, otnn omprnsv ptur o nnl lvr, vlutn t prsptvs vn n mnmnt s susson o nnl rsults); nty nnl rportn os n ss tt t t qulty n omprlty o ompns nnl sttmnts, n xpln ow su ss my t nnl sons; vlut t qulty o ompny s nnl t, n rommn pproprt justmnts to mprov qulty n omprlty wt smlr ompns, nlun justmnts or rns n ountn stnrs, mtos, n ssumptons; vlut ow vn n n ountn stnrs, mtos, or ssumptons ts nnl sttmnts n rtos; nlyz n ntrprt ow ln st motons, rnns normlzton, n s low sttmnt rlt motons t ompny s nnl sttmnts, nnl rtos, n ovrll nnl onton. 2016 Lvl II CFA Prorm Currulum CFA Insttut.

STUDY SESSION 8 Corport Fnn Ts stuy ssson rst prsnts ptl utn nlyss, ousn on t pplton o onpts n t orport nn son- mkn pross. Ts ptl utn prnpls r rtl or n nlyst ns ompny prprn ptl utn rommntons s wll s or n xtrnl nlyst stmtn t vlu o t ompny. T rmnr o t stuy ssson ovrs ptl strutur n vn poly. T prsntton o ptl strutur strts wt t lss Moln Mllr rrlvn proposton. Ts proposton stts tt ompny s vlu s not t y ptl strutur os. T rn tn onsrs ow t optml ptl strutur s t y txs, ny osts, n t posslty o nnl strss. T rn on vn poly susss t ompny s o twn rnvstn or strutn rnns n t o twn pyn s vns n rpursn srs. Anlysts r ntrst n ptl strutur n vn pols us o tr t on t rsk n rturn rtrsts o orport quts n ons. READING ASSIGNMENTS Rn 23 Rn 24 Rn 25 Cptl Butn y Jon D. Stow, PD, CFA, n Jqus R. Gné, CFA, CIPM Cptl Strutur y Rj Arwl, CFA, Pml Ptrson Drk, PD, CFA, Am Koor, CFA, n Grory Noron, PD, CFA Dvns n Sr Rpurss: Anlyss y Grory Noron, PD, CFA, n Gor H. Trouton, PD, CFA 2016 Lvl II CFA Prorm Currulum CFA Insttut.

Stuy Ssson 8 2 LEARNING OUTCOMES READING 23. CAPITAL BUDGETING T nt soul l to: lult t yrly s lows o xpnson n rplmnt ptl projts n vlut ow t o o prton mto ts tos s lows; xpln ow nlton ts ptl utn nlyss; vlut ptl projts n trmn t optml ptl projt n stutons o 1) mutully xlusv projts wt unqul lvs, usn tr t lst ommon multpl o lvs ppro or t quvlnt nnul nnuty ppro, n 2) ptl rtonn; xpln ow snstvty nlyss, snro nlyss, n Mont Crlo smulton n us to ssss t stn- lon rsk o ptl projt; xpln n lult t sount rt, s on mrkt rsk mtos, to us n vlun ptl projt; sr typs o rl optons n vlut ptl projt usn rl optons; sr ommon ptl utn ptlls; lult n ntrprt ountn nom n onom nom n t ontxt o ptl utn; stnus mon t onom prot, rsul nom, n lms vluton mols or ptl utn n vlut ptl projt usn. READING 24. CAPITAL STRUCTURE T nt soul l to: xpln t Moln Mllr propostons rrn ptl strutur, nlun t ts o lvr, txs, nnl strss, ny osts, n symmtr normton on ompny s ost o quty, ost o ptl, n optml ptl strutur; sr trt ptl strutur n xpln wy ompny s tul ptl strutur my lutut roun ts trt; sr t rol o t rtns n ptl strutur poly; xpln tors n nlyst soul onsr n vlutn t t o ptl strutur poly on vluton; sr ntrntonl rns n t us o nnl lvr, tors tt xpln ts rns, n mpltons o ts rns or nvstmnt nlyss. READING 25. DIVIDENDS AND SHARE REPURCHASES: ANALYSIS T nt soul l to: ompr tors o vn poly n xpln mpltons o or sr vlu vn srpton o orport vn ton; sr typs o normton (snls) tt vn nttons, nrss, rss, n omssons my onvy; xpln ow lntl ts n ny ssus my t ompny s pyout poly; 2016 Lvl II CFA Prorm Currulum CFA Insttut.

Stuy Ssson 8 3 xpln tors tt t vn poly; lult n ntrprt t tv tx rt on vn urrny unt o orport rnns unr oul txton, vn mputton, n splt- rt tx systms; ompr stl vn, onstnt vn pyout rto, n rsul vn pyout pols, n lult t vn unr poly; xpln t o twn pyn s vns n rpursn srs; sr ro trns n orport vn pols; lult n ntrprt vn ovr rtos s on 1) nt nom n 2) r s low; j nty rtrsts o ompns tt my not l to sustn tr s vn. 2016 Lvl II CFA Prorm Currulum CFA Insttut.

STUDY SESSION 9 Corport Fnn Fnnn n Control Issus Ts stuy ssson prsnts two mjor ornztonl tops o orport nn. Frst, orport ovrnn ovrs t systm o prnpls n pols us to mn onlts o ntrst mon vrous roups o stkolrs o orporton. Son, mrrs n qustons n orport rstruturns, w rstrut ownrsp n ontrol, r nlyz. READING ASSIGNMENTS Rn 26 Rn 27 Rn 28 Corport Prormn, Govrnn, n Busnss Ets y Crls W.L. Hll n Grt R. Jons Corport Govrnn y R To MEnlly, PD, CFA, n Knnt Km Mrrs n Aqustons y Rost P. Cn, PD, CFA, n Kt M. Moor, CFA LEARNING OUTCOMES READING 26. CORPORATE PERFORMANCE, GOVERNANCE, AND BUSINESS ETHICS T nt soul l to: ompr ntrsts o ky stkolr roups n xpln t purpos o stkolr mpt nlyss; suss prolms tt n rs n prnpl nt rltonsps n mnsms tt my mtt su prolms; 2016 Lvl II CFA Prorm Currulum CFA Insttut.

Stuy Ssson 9 2 suss roots o untl vor n ow mnrs mt nsur tt tl ssus r onsr n usnss son mkn; ompr t Frmn otrn, Utltrnsm, Kntn Ets, n Rts n Just Tors s ppros to tl son mkn. READING 27. CORPORATE GOVERNANCE T nt soul l to: sr ojtvs n or ttruts o n tv orport ovrnn systm n vlut wtr ompny s orport ovrnn s tos ttruts; ompr mjor usnss orms n sr t onlts o ntrst ssot wt ; xpln onlts tt rs n ny rltonsps, nlun mnr srolr onlts n rtor srolr onlts; sr rsponslts o t or o rtors n xpln qultons n or omptns tt n nvstmnt nlyst soul look or n t or o rtors; xpln tv orport ovrnn prt s t rlts to t or o rtors n vlut strnts n wknsss o ompny s orport ovrnn prt; sr lmnts o ompny s sttmnt o orport ovrnn pols tt nvstmnt nlysts soul ssss; sr nvronmntl, sol, n ovrnn rsk xposurs; xpln t vluton mpltons o orport ovrnn. READING 28. MERGERS AND ACQUISITIONS T nt soul l to: j lssy mrr n quston (M&A) tvts s on orms o ntrton n rltnss o usnss tvts; xpln ommon motvtons n M&A tvty; xpln ootstrppn o rnns pr sr (EPS) n lult ompny s post- mrr EPS; xpln, s on nustry l yls, t rlton twn mrr motvtons n typs o mrrs; ontrst mrr trnston rtrsts y orm o quston, mto o pymnt, n tttu o trt mnmnt; stnus mon pr- or n post- or tkovr ns mnsms; lult n ntrprt t Hrnl Hrsmn Inx n vlut t lkloo o n nttrust lln or vn usnss omnton; ompr t sount s low, omprl ompny, n omprl trnston nlyss or vlun trt ompny, nlun t vnts n svnts o ; lult r s lows or trt ompny n stmt t ompny s ntrns vlu s on sount s low nlyss; stmt t vlu o trt ompny usn omprl ompny n omprl trnston nlyss; 2016 Lvl II CFA Prorm Currulum CFA Insttut.

Stuy Ssson 9 3 k l vlut tkovr n lult t stmt post- quston vlu o n qurr n t ns ru to t trt srolrs vrsus t qurr srolrs; xpln ow pr n pymnt mto t t struton o rsks n nts n M&A trnstons; m sr rtrsts o M&A trnstons tt rt vlu; n o stnus mon quty rv- outs, spn- os, splt- os, n lquton; xpln ommon rsons or rstruturn. 2016 Lvl II CFA Prorm Currulum CFA Insttut.

STUDY SESSION 10 Equty Vluton Vluton Conpts Ts stuy ssson lys ounton or t stuy o quty vluton. T rst rn provs n ovrvw o mjor tms n mportnt mols n quty vluton. T ssson ns wt prsntton o tops rltn to rturns n sount rts, w r ssntl to quty vluton. READING ASSIGNMENTS Rn 29 Rn 30 Equty Vluton: Appltons n Prosss y Jrl E. Pnto, PD, CFA, Eln Hnry, PD, CFA, Toms R. Ronson, PD, CFA, n Jon D. Stow, PD, CFA Rturn Conpts y Jrl E. Pnto, PD, CFA, Eln Hnry, PD, CFA, Toms R. Ronson, PD, CFA, n Jon D. Stow, PD, CFA LEARNING OUTCOMES READING 29. EQUITY VALUATION: APPLICATIONS AND PROCESSES T nt soul l to: n vluton n ntrns vlu n xpln sours o prv msprn; xpln t on onrn ssumpton n ontrst on onrn vlu to lquton vlu; sr ntons o vlu n justy w nton o vlu s most rlvnt to pul ompny vluton; 2016 Lvl II CFA Prorm Currulum CFA Insttut.

Stuy Ssson 10 2 sr ppltons o quty vluton; sr qustons tt soul rss n onutn n nustry n ompttv nlyss; ontrst solut n rltv vluton mols n sr xmpls o typ o mol; sr sum- o- t- prts vluton n onlomrt sounts; xpln ro rtr or oosn n pproprt ppro or vlun vn ompny. READING 30. RETURN CONCEPTS T nt soul l to: stnus mon rlz oln pro rturn, xpt oln pro rturn, rqur rturn, rturn rom onvrn o pr to ntrns vlu, sount rt, n ntrnl rt o rturn; lult n ntrprt n quty rsk prmum usn storl n orwrlookn stmton ppros; stmt t rqur rturn on n quty nvstmnt usn t ptl sst prn mol, t Fm Frn mol, t Pstor Stmu mol, mroonom multtor mols, n t ul- up mto (.., on yl plus rsk prmum); xpln t stmton or pul ompns, tnly tr pul ompns, n nonpul ompns; sr strnts n wknsss o mtos us to stmt t rqur rturn on n quty nvstmnt; xpln ntrntonl onsrtons n rqur rturn stmton; xpln n lult t wt vr ost o ptl or ompny; vlut t pproprtnss o usn prtulr rt o rturn s sount rt, vn srpton o t s low to sount n otr rlvnt ts. 2016 Lvl II CFA Prorm Currulum CFA Insttut.

STUDY SESSION 11 Equty Vluton Inustry n Compny Anlyss n Glol Contxt Ts stuy ssson provs nsts on ssus tt t surty vluton ntrntonlly. Anlyzn nustrs n lol ontxt n vlutn ompttv ors tt wll t rturns prov ounton or surty vluton sons. Dsount vn mols r xmn n tl. READING ASSIGNMENTS Rn 31 Rn 32 Rn 33 Rn 34 T Fv Compttv Fors Tt Sp Strty y Ml E. Portr Your Strty Ns Strty y Mrtn Rvs, Clr Lov, n Plpp Tllmnns Inustry n Compny Anlyss y Mttw L. Con, CFA, Antony M. For, CFA, n Antonus J. vn Oojn, CFA Dsount Dvn Vluton y Jrl E. Pnto, PD, CFA, Eln Hnry, PD, CFA, Toms R. Ronson, PD, CFA, n Jon D. Stow, PD, CFA LEARNING OUTCOMES READING 31. THE FIVE COMPETITIVE FORCES THAT SHAPE STRATEGY T nt soul l to: stnus mon t v ompttv ors n xpln ow ty rv nustry protlty n t mum n lon run; 2016 Lvl II CFA Prorm Currulum CFA Insttut.

Stuy Ssson 11 2 sr wy nustry rowt rt, tnoloy n nnovton, ovrnmnt, n omplmntry prouts n srvs r ltn tors rtr tn ors spn nustry strutur; nty ns n nustry strutur n orst tr ts on t nustry s prot potntl; xpln ow postonn ompny, xplotn nustry n, n spn nustry strutur my us to v ompttv vnt. READING 32. YOUR STRATEGY NEEDS A STRATEGY T nt soul l to: sr prtlty n mlllty s tors n ssssn n nustry; sr ow n nustry s prtlty n mlllty r xpt to t t o o n pproprt orport strty (lssl, ptv, vsonry, or spn); vlut t prtlty n mlllty o n nustry n slt n pproprt strty. READING 33. INDUSTRY AND COMPANY ANALYSIS T nt soul l to: j k l ompr top- own, ottom- up, n yr ppros or vlopn nputs to quty vluton mols; ompr rowt rltv to GDP rowt n mrkt rowt n mrkt sr ppros to orstn rvnu; vlut wtr onoms o sl r prsnt n n nustry y nlyzn oprtn mrns n sls lvls; orst t ollown osts: ost o oos sol, slln nrl n mnstrtv osts, nnn osts, n nom txs; sr ppros to ln st moln; sr t rltonsp twn rturn on nvst ptl n ompttv vnt; xpln ow ompttv tors t prs n osts; ju t ompttv poston o ompny s on Portr s v ors nlyss; xpln ow to orst nustry n ompny sls n osts wn ty r sujt to pr nlton or lton; vlut t ts o tnolol vlopmnts on mn, slln prs, osts, n mrns; xpln onsrtons n t o o n xplt orst orzon; xpln n nlyst s os n vlopn projtons yon t sort- trm orst orzon; m monstrt t vlopmnt o sls- s pro orm ompny mol. 2016 Lvl II CFA Prorm Currulum CFA Insttut.

Stuy Ssson 11 3 READING 34. DISCOUNTED DIVIDEND VALUATION T nt soul l to: j k l ompr vns, r s low, n rsul nom s nputs to sount s low mols n nty nvstmnt stutons or w msur s sutl; lult n ntrprt t vlu o ommon stok usn t vn sount mol (DDM) or snl n multpl oln pros; lult t vlu o ommon stok usn t Goron rowt mol n xpln t mol s unrlyn ssumptons; lult n ntrprt t mpl rowt rt o vns usn t Goron rowt mol n urrnt stok pr; lult n ntrprt t prsnt vlu o rowt opportunts (PVGO) n t omponnt o t ln pr- to- rnns rto (P/E) rlt to PVGO; lult n ntrprt t just ln n trln P/Es usn t Goron rowt mol; lult t vlu o nonlll x- rt prptul prrr stok; sr strnts n lmttons o t Goron rowt mol n justy ts slton to vlu ompny s ommon srs; xpln t ssumptons n justy t slton o t two- st DDM, t H- mol, t tr- st DDM, or sprst moln to vlu ompny s ommon srs; xpln t rowt ps, trnstonl ps, n mturty ps o usnss; sr trmnl vlu n xpln ltrntv ppros to trmnn t trmnl vlu n DDM; lult n ntrprt t vlu o ommon srs usn t two- st DDM, t H- mol, n t tr- st DDM; m stmt rqur rturn s on ny DDM, nlun t Goron rowt mol n t H- mol; n o p xpln t us o sprst moln to orst vns n to vlu ommon srs; lult n ntrprt t sustnl rowt rt o ompny n monstrt t us o DuPont nlyss to stmt ompny s sustnl rowt rt; vlut wtr stok s ovrvlu, rly vlu, or unrvlu y t mrkt s on DDM stmt o vlu. 2016 Lvl II CFA Prorm Currulum CFA Insttut.

STUDY SESSION 12 Equty Invstmnts Vluton Mols Ts stuy ssson prsnts tonl vluton mtos or stmtn ompny s ntrns vlu. T vn sount mol suss n Stuy Ssson 11 rmns sln mol. T r s low ppro to vluton s n mportnt ltrntv to t vn sount mol wn vns r not t st rprsntton o ompny s vlu. Pr n ntrprs multpls r mon t most mlr n wly us vluton msurs us o t rltv s wt w ty n us n ommunt. Rsul nom mols rprsnt n ppro to vluton n w ountn nom s just to rlt uton or t opportunty ost o ptl. T nl rn s n ntrouton to ow ompns wtout rly mrktl srs r vlu. READING ASSIGNMENTS Rn 35 Rn 36 Rn 37 Rn 38 Fr Cs Flow Vluton y Jrl E. Pnto, PD, CFA, Eln Hnry, PD, CFA, Toms R. Ronson, PD, CFA, n Jon D. Stow, PD, CFA Mrkt- Bs Vluton: Pr n Entrprs Vlu Multpls y Jrl E. Pnto, PD, CFA, Eln Hnry, PD, CFA, Toms R. Ronson, PD, CFA, n Jon D. Stow, PD, CFA Rsul Inom Vluton y Jrl E. Pnto, PD, CFA, Eln Hnry, PD, CFA, Toms R. Ronson, PD, CFA, n Jon D. Stow, PD, CFA Prvt Compny Vluton y Rymon D. Rt, ASA, CFA 2016 Lvl II CFA Prorm Currulum CFA Insttut.

Stuy Ssson 12 2 LEARNING OUTCOMES READING 35. FREE CASH FLOW VALUATION T nt soul l to: j k l ompr t r s low to t rm (FCFF) n r s low to quty (FCFE) ppros to vluton; xpln t ownrsp prsptv mplt n t FCFE ppro; xpln t pproprt justmnts to nt nom, rnns or ntrst n txs (EBIT), rnns or ntrst, txs, prton, n mortzton (EBITDA), n s low rom oprtons (CFO) to lult FCFF n FCFE; lult FCFF n FCFE; sr ppros or orstn FCFF n FCFE; ompr t FCFE mol n vn sount mols; xpln ow vns, sr rpurss, sr ssus, n ns n lvr my t utur FCFF n FCFE; vlut t us o nt nom n EBITDA s proxs or s low n vluton; xpln t snl- st (stl- rowt), two- st, n tr- st FCFF n FCFE mols n slt n justy t pproprt mol vn ompny s rtrsts; stmt ompny s vlu usn t pproprt r s low mol(s); xpln t us o snstvty nlyss n FCFF n FCFE vlutons; sr ppros or lultn t trmnl vlu n multst vluton mol; m vlut wtr stok s ovrvlu, rly vlu, or unrvlu s on r s low vluton mol. READING 36. MARKET- BASED VALUATION: PRICE AND ENTERPRISE VALUE MULTIPLES T nt soul l to: stnus twn t mto o omprls n t mto s on orst unmntls s ppros to usn pr multpls n vluton, n xpln onom rtonls or ppro; lult n ntrprt just pr multpl; sr rtonls or n possl rwks to usn ltrntv pr multpls n vn yl n vluton; lult n ntrprt ltrntv pr multpls n vn yl; lult n ntrprt unrlyn rnns, xpln mtos o normlzn rnns pr sr (EPS), n lult normlz EPS; xpln n justy t us o rnns yl (E/P); sr unmntl tors tt nlun ltrntv pr multpls n vn yl; lult n ntrprt t just pr- to- rnns rto (P/E), pr- toook rto (P/B), n pr- to- sls rto (P/S) or stok, s on orst unmntls; 2016 Lvl II CFA Prorm Currulum CFA Insttut.

Stuy Ssson 12 3 j k l lult n ntrprt prt P/E, vn ross- stonl rrsson on unmntls, n xpln lmttons to t ross- stonl rrsson mtooloy; vlut stok y t mto o omprls n xpln t mportn o unmntls n usn t mto o omprls; lult n ntrprt t P/E- to- rowt rto (PEG) n xpln ts us n rltv vluton; lult n xpln t us o pr multpls n trmnn trmnl vlu n multst sount s low (DCF) mol; m xpln ltrntv ntons o s low us n pr n ntrprs vlu (EV) multpls n sr lmttons o nton; n o p q r lult n ntrprt EV multpls n vlut t us o EV/EBITDA; xpln sours o rns n ross- orr vluton omprsons; sr momntum ntors n tr us n vluton; xpln t us o t rtmt mn, t rmon mn, t wt rmon mn, n t mn to sr t ntrl tnny o roup o multpls; vlut wtr stok s ovrvlu, rly vlu, or unrvlu s on omprsons o multpls. READING 37. RESIDUAL INCOME VALUATION T nt soul l to: j k l lult n ntrprt rsul nom, onom vlu, n mrkt vlu ; sr t uss o rsul nom mols; lult t ntrns vlu o ommon stok usn t rsul nom mol n ompr vlu ronton n rsul nom n otr prsnt vlu mols; xpln unmntl trmnnts o rsul nom; xpln t rlton twn rsul nom vluton n t just prto- ook rto s on orst unmntls; lult n ntrprt t ntrns vlu o ommon stok usn snl- st (onstnt- rowt) n multst rsul nom mols; lult t mpl rowt rt n rsul nom, vn t mrkt pr- toook rto n n stmt o t rqur rt o rturn on quty; xpln ontnun rsul nom n justy n stmt o ontnun rsul nom t t orst orzon, vn ompny n nustry prospts; ompr rsul nom mols to vn sount n r s low mols; xpln strnts n wknsss o rsul nom mols n justy t slton o rsul nom mol to vlu ompny s ommon stok; sr ountn ssus n pplyn rsul nom mols; vlut wtr stok s ovrvlu, rly vlu, or unrvlu s on rsul nom mol. 2016 Lvl II CFA Prorm Currulum CFA Insttut.

Stuy Ssson 12 4 READING 38. PRIVATE COMPANY VALUATION T nt soul l to: j k l ompr pul n prvt ompny vluton; sr uss o prvt usnss vluton n xpln ppltons o rtst onrn to nnl nlysts; xpln vrous ntons o vlu n monstrt ow rnt ntons n l to rnt stmts o vlu; xpln t nom, mrkt, n sst- s ppros to prvt ompny vluton n tors rlvnt to t slton o ppro; xpln s low stmton ssus rlt to prvt ompns n justmnts rqur to stmt normlz rnns; lult t vlu o prvt ompny usn r s low, ptlz s low, n/or xss rnns mtos; xpln tors tt rqur justmnt wn stmtn t sount rt or prvt ompns; ompr mols us to stmt t rqur rt o rturn to prvt ompny quty (or xmpl, t CAPM, t xpn CAPM, n t ul- up ppro); lult t vlu o prvt ompny s on mrkt ppro mtos n sr vnts n svnts o mto; sr t sst- s ppro to prvt ompny vluton; xpln n vlut t ts on prvt ompny vlutons o sounts n prmums s on ontrol n mrktlty; sr t rol o vluton stnrs n vlun prvt ompns. 2016 Lvl II CFA Prorm Currulum CFA Insttut.

STUDY SESSION 13 Altrntv Invstmnts Ts stuy ssson susss t ollown tors o ltrntv nvstmnts: rl stt, prvt quty, n ommots. Rl stt nvstmnts, ot prvt nvstmnt n nvstmnt trou pully tr surts, r sr, n mtos or nlyss n vluton r prsnt. Prvt quty, nlun vntur ptl n lvr uyouts, s xmn rom t prsptvs o prvt quty rm vlutn quty nvstmnts or ts portolo n n nvstor vlutn prtpton n prvt quty un. T stuy ssson onlus wt n ovrvw o nvstn n ommots. READING ASSIGNMENTS Rn 39 Rn 40 Rn 41 Rn 42 Prvt Rl Estt Invstmnts y Jry D. Fsr n Bryn D. MGror, PD, MRICS, MRTPI Pully Tr Rl Estt Surts y Antony Polon, CFA, In Ross O Rlly, CFA, n Dv Krut, CFA Prvt Equty Vluton y Yvs Courtos, CMT, CFA, n Tm Jnknson, PD A Prmr on Commoty Invstn y Frnk J. Fozz, PD, CPA, CFA, Roln Füss, PD, n Dtr G. Ksr, PD 2016 Lvl II CFA Prorm Currulum CFA Insttut.

Stuy Ssson 13 2 LEARNING OUTCOMES READING 39. PRIVATE REAL ESTATE INVESTMENTS T nt soul l to: j k l lssy n sr s orms o rl stt nvstmnts; sr t rtrsts, t lsston, n s smnts o rl stt; xpln t rol n portolo, onom vlu trmnnts, nvstmnt rtrsts, n prnpl rsks o prvt rl stt; sr ommrl proprty typs, nlun tr stntv nvstmnt rtrsts; ompr t nom, ost, n sls omprson ppros to vlun rl stt proprts; stmt n ntrprt t nputs (or xmpl, nt oprtn nom, ptlzton rt, n sount rt) to t rt ptlzton n sount s low vluton mtos; lult t vlu o proprty usn t rt ptlzton n sount s low vluton mtos; ompr t rt ptlzton n sount s low vluton mtos; lult t vlu o proprty usn t ost n sls omprson ppros; sr u ln n prvt quty rl stt nvstmnt; suss prvt quty rl stt nvstmnt ns, nlun tr onstruton n potntl ss; xpln t rol n portolo, t mjor onom vlu trmnnts, nvstmnt rtrsts, prnpl rsks, n u ln o prvt rl stt t nvstmnt; m lult n ntrprt nnl rtos us to nlyz n vlut prvt rl stt nvstmnts. READING 40. PUBLICLY TRADED REAL ESTATE SECURITIES T nt soul l to: sr typs o pully tr rl stt surts; xpln vnts n svnts o nvstn n rl stt trou pully tr surts; xpln onom vlu trmnnts, nvstmnt rtrsts, prnpl rsks, n u ln onsrtons or rl stt nvstmnt trust (REIT) srs; sr typs o REITs; justy t us o nt sst vlu pr sr (NAVPS) n REIT vluton n stmt NAVPS s on orst s nt oprtn nom; sr t us o uns rom oprtons (FFO) n just uns rom oprtons (AFFO) n REIT vluton; ompr t nt sst vlu, rltv vlu (pr- to- FFO n pr- to- AFFO), n sount s low ppros to REIT vluton; lult t vlu o REIT sr usn nt sst vlu, pr- to- FFO n pr- to- AFFO, n sount s low ppros. 2016 Lvl II CFA Prorm Currulum CFA Insttut.

Stuy Ssson 13 3 READING 41. PRIVATE EQUITY VALUATION T nt soul l to: xpln sours o vlu rton n prvt quty; xpln ow prvt quty rms ln tr ntrsts wt tos o t mnrs o portolo ompns; stnus twn t rtrsts o uyout n vntur ptl nvstmnts; sr vluton ssus n uyout n vntur ptl trnstons; xpln ltrntv xt routs n prvt quty n tr mpt on vlu; xpln prvt quty un struturs, trms, vluton, n u ln n t ontxt o n nlyss o prvt quty un rturns; xpln rsks n osts o nvstn n prvt quty; ntrprt n ompr nnl prormn o prvt quty uns rom t prsptv o n nvstor; lult mnmnt s, rr ntrst, nt sst vlu, strut to p n (DPI), rsul vlu to p n (RVPI), n totl vlu to p n (TVPI) o prvt quty un; A Not on Vluton o Vntur Cptl Dls: (Appnx 41) j k lult pr- mony vluton, post- mony vluton, ownrsp rton, n pr pr sr pplyn t vntur ptl mto 1) wt snl n multpl nnn rouns n 2) n trms o IRR; monstrt ltrntv mtos to ount or rsk n vntur ptl. READING 42. A PRIMER ON COMMODITY INVESTING T nt soul l to: sr typs o mrkt prtpnts n ommoty uturs mrkts; xpln storlty n rnwlty n t ontxt o ommots n trmn wtr ommoty s storl n/or rnwl; xpln t onvnn yl n ow t rlts to t stok (nvntory lvl) o ommoty; stnus mon ptl ssts, stor- o- vlu ssts, n onsuml or trnsrl ssts n xpln mpltons or vluton; ompr wys o prtptn n ommoty mrkts, nlun vnts n svnts o ; xpln kwrton n ontno n trms o spot n uturs prs; sr t omponnts o rturn to ommoty uturs n portolo o ommoty uturs; xpln ow t sn o t roll rturn pns on t trm strutur o uturs prs; ompr t nsurn prsptv, t n prssur ypotss, n t tory o stor n tr mpltons or uturs prs n xpt utur spot prs. 2016 Lvl II CFA Prorm Currulum CFA Insttut.

STUDY SESSION 14 Fx Inom Vluton Conpts Ts stuy ssson ovrs ssntl knowl n sklls n or t vluton o x nom nvstmnts. It ns wt susson o t trm strutur o ntrst rts n ntrst rt ynms. T nxt rn rsss rtr- r vluton o x- nom surts. T stuy ssson onlus wt n ntrouton to t vluton n nlyss o ons wt m optons. READING ASSIGNMENTS Rn 43 Rn 44 Rn 45 T Trm Strutur n Intrst Rt Dynms y Toms S.Y. Ho, PD, Sn Bn L, PD, n Stpn E. Wlox, PD, CFA T Artr- Fr Vluton Frmwork y Stvn V. Mnn, PD Vluton n Anlyss: Bons wt Em Optons y Lsl Aro, MFE, Ionns Gorou, CFA, n Anrw Kloty, PD LEARNING OUTCOMES READING 43. THE TERM STRUCTURE AND INTEREST RATE DYNAMICS T nt soul l to: sr rltonsps mon spot rts, orwr rts, yl to mturty, xpt n rlz rturns on ons, n t sp o t yl urv; sr t orwr prn n orwr rt mols n lult orwr n spot prs n rts usn tos mols; 2016 Lvl II CFA Prorm Currulum CFA Insttut.

Stuy Ssson 14 2 j k l sr ow zro- oupon rts (spot rts) my otn rom t pr urv y ootstrppn; sr t ssumptons onrnn t voluton o spot rts n rlton to orwr rts mplt n tv on portolo mnmnt; sr t strty o rn t yl urv; xpln t swp rt urv n wy n ow mrkt prtpnts us t n vluton; lult n ntrprt t swp spr or vn mturty; sr t Z- spr; sr t TED n Lor OIS sprs; xpln trtonl tors o t trm strutur o ntrst rts n sr t mpltons o tory or orwr rts n t sp o t yl urv; sr morn trm strutur mols n ow ty r us; xpln ow on s xposur to o t tors rvn t yl urv n msur n ow ts xposurs n us to mn yl urv rsks; m xpln t mturty strutur o yl voltlts n tr t on pr voltlty. READING 44. THE ARBITRAGE- FREE VALUATION FRAMEWORK T nt soul l to: xpln wt s mnt y rtr- r vluton o x- nom nstrumnt; lult t rtr- r vlu o n opton- r, x- rt oupon on; sr noml ntrst rt tr rmwork; sr t kwr nuton vluton mtooloy n lult t vlu o x- nom nstrumnt vn ts s low t no; sr t pross o lrtn noml ntrst rt tr to mt sp trm strutur; ompr prn usn t zro- oupon yl urv wt prn usn n rtr- r noml ltt; sr ptws vluton n noml ntrst rt rmwork n lult t vlu o x- nom nstrumnt vn ts s lows lon pt; sr Mont Crlo orwr- rt smulton n ts pplton. READING 45. VALUATION AND ANALYSIS: BONDS WITH EMBEDDED OPTIONS T nt soul l to: sr x- nom surts wt m optons; xpln t rltonsps twn t vlus o lll or putl on, t unrlyn opton- r (strt) on, n t m opton; sr ow t rtr- r rmwork n us to vlu on wt m optons; xpln ow ntrst rt voltlty ts t vlu o lll or putl on; 2016 Lvl II CFA Prorm Currulum CFA Insttut.

Stuy Ssson 14 3 j k l xpln ow ns n t lvl n sp o t yl urv t t vlu o lll or putl on; lult t vlu o lll or putl on rom n ntrst rt tr; xpln t lulton n us o opton- just sprs; xpln ow ntrst rt voltlty ts opton- just sprs; lult n ntrprt tv urton o lll or putl on; ompr tv urtons o lll, putl, n strt ons; sr t us o on- s urtons n ky rt urtons to vlut t ntrst rt snstvty o ons wt m optons; ompr tv onvxts o lll, putl, n strt ons; m sr nn turs o onvrtl on; n o p lult n ntrprt t omponnts o onvrtl on s vlu; sr ow onvrtl on s vlu n n rtr- r rmwork; ompr t rsk rturn rtrsts o onvrtl on wt t rsk rturn rtrsts o strt on n o t unrlyn ommon stok. 2016 Lvl II CFA Prorm Currulum CFA Insttut.

STUDY SESSION 15 Fx Inom Tops n Fx Inom Anlyss Ts stuy ssson onssts o susson o rt nlyss n ow rt stnrs t lquty. READING ASSIGNMENTS Rn 46 Crt Anlyss Mols y Rort A. Jrrow, PD, n Donl R. vn Dvntr, PD LEARNING OUTCOMES READING 46. CREDIT ANALYSIS MODELS T nt soul l to: xpln prolty o ult, loss vn ult, xpt loss, n prsnt vlu o t xpt loss n sr t rltv mportn o ross t rt sptrum; xpln rt sorn n rt rtns, nlun wy ty r ll ornl rnkns; xpln strnts n wknsss o rt rtns; xpln struturl mols o orport rt rsk, nlun wy quty n vw s ll opton on t ompny s ssts; xpln ru orm mols o orport rt rsk, nlun wy t n vlu s t sum o xpt sount s lows tr justn or rsk; xpln ssumptons, strnts, n wknsss o ot struturl n ru orm mols o orport rt rsk; xpln t trmnnts o t trm strutur o rt sprs; 2016 Lvl II CFA Prorm Currulum CFA Insttut.

Stuy Ssson 15 2 lult n ntrprt t prsnt vlu o t xpt loss on on ovr vn tm orzon; ompr t rt nlyss rqur or sst- k surts to nlyss o orport t. 2016 Lvl II CFA Prorm Currulum CFA Insttut.

STUDY SESSION 16 Drvtv Invstmnts Forwrs n Futurs Ts stuy ssson xmns rvtv nvstmnts n mrkts n ouss on rvtv prn, vluton, n rt rsk vluton. Assssn t rltv ost/ nt o usn rvtv nstrumnts or nvstmnts wt m rvtvs rqurs n unrstnn o t tors tt t vluton. Ts stuy ssson lso rsss ntrst rt, quty, n urrny orwrs n uturs. READING ASSIGNMENTS Rn 47 Rn 48 Forwr Mrkts n Contrts y Don M. Cn, PD, CFA Futurs Mrkts n Contrts y Don M. Cn, PD, CFA LEARNING OUTCOMES READING 47. FORWARD MARKETS AND CONTRACTS T nt soul l to: xpln ow t vlu o orwr ontrt s trmn t ntton, urn t l o t ontrt, n t xprton; lult n ntrprt t pr n vlu o n quty orwr ontrt, ssumn vns r p tr srtly or ontnuously; 2016 Lvl II CFA Prorm Currulum CFA Insttut.

Stuy Ssson 16 2 lult n ntrprt t pr n vlu o 1) orwr ontrt on xnom surty, 2) orwr rt rmnt (FRA), n 3) orwr ontrt on urrny; vlut rt rsk n orwr ontrt, n xpln ow mrkt vlu s msur o xposur to prty n orwr ontrt. READING 48. FUTURES MARKETS AND CONTRACTS T nt soul l to: xpln wy t uturs pr must onvr to t spot pr t xprton; trmn t vlu o uturs ontrt; xpln wy orwr n uturs prs r; sr montry n nonmontry nts n osts ssot wt oln t unrlyn sst, n xpln ow ty t t uturs pr; sr kwrton n ontno; xpln t rlton twn uturs prs n xpt spot prs; sr t ults n prn Euroollr uturs n rtn pur rtr opportunty; lult n ntrprt t prs o Trsury on uturs, stok nx uturs, n urrny uturs. 2016 Lvl II CFA Prorm Currulum CFA Insttut.

STUDY SESSION 17 Drvtv Invstmnts Optons, Swps, n Intrst Rt n Crt Drvtvs Ts stuy ssson susss optons, swps, ntrst rt rvtvs, n m rvtvs n tr vluton. Bus rvtvs r otn us to ru rsk or nrt tonl nom, t s mportnt to unrstn t rltv ost/nt o rvtv strts. READING ASSIGNMENTS Rn 49 Rn 50 Rn 51 Rn 52 Opton Mrkts n Contrts y Don M. Cn, PD, CFA Swp Mrkts n Contrts y Don M. Cn, PD, CFA Intrst Rt Drvtv Instrumnts y Frnk J. Fozz, PD, CPA, CFA Crt Dult Swps y Brn Ros n Don M. Cn, PD, CFA LEARNING OUTCOMES READING 49. OPTION MARKETS AND CONTRACTS T nt soul l to: lult n ntrprt t prs o syntt ll opton, syntt put opton, syntt on, n syntt unrlyn stok n xpln wy n nvstor woul wnt to rt su nstrumnts; lult n ntrprt prs o ntrst rt optons n optons on ssts usn on- n two- pro noml mols; 2016 Lvl II CFA Prorm Currulum CFA Insttut.

Stuy Ssson 17 2 j xpln n vlut t ssumptons unrlyn t Blk Sols Mrton mol; xpln ow n opton pr, s rprsnt y t Blk Sols Mrton mol, s t y n n t vlu o o t nputs; xpln t lt o n opton n monstrt ow t s us n ynm n; xpln t mm t on n opton s lt n ow mm n t lt ; xpln t t o t unrlyn sst s s lows on t pr o n opton; trmn t storl n mpl voltlts o n unrlyn sst; monstrt ow put ll prty or optons on orwrs (or uturs) s stls; ompr Amrn n Europn optons on orwrs n uturs, n nty t pproprt prn mol or Europn optons. READING 50. SWAP MARKETS AND CONTRACTS T nt soul l to: j stnus twn t prn n vluton o swps; xpln t quvln o 1) ntrst rt swps to srs o o- mrkt orwr rt rmnts (FRAs) n 2) pln vnll swp to omnton o n ntrst rt ll n n ntrst rt put; lult n ntrprt t x rt on pln vnll ntrst rt swp n t mrkt vlu o t swp urn ts l; lult n ntrprt t x rt, ppll, n t orn notonl prnpl or vn omst notonl prnpl on urrny swp n stmt t mrkt vlus o o t rnt typs o urrny swps urn tr lvs; lult n ntrprt t x rt, ppll, on n quty swp n t mrkt vlus o t rnt typs o quty swps urn tr lvs; xpln n ntrprt t rtrsts n uss o swptons, nlun t rn twn pyr n rvr swptons; lult t pyos n s lows o n ntrst rt swpton; lult n ntrprt t vlu o n ntrst rt swpton t xprton; vlut swp rt rsk or prty n urn t l o t swp, stnus twn urrnt rt rsk n potntl rt rsk, n xpln ow swp rt rsk s ru y ot nttn n mrkn to mrkt; n swp spr n xpln ts rlton to rt rsk. READING 51. INTEREST RATE DERIVATIVE INSTRUMENTS T nt soul l to: monstrt ow ot p n loor r pks o 1) optons on ntrst rts n 2) optons on x- nom nstrumnts; lult t pyo or p n loor n xpln ow ollr s rt. 2016 Lvl II CFA Prorm Currulum CFA Insttut.

Stuy Ssson 17 3 READING 52. CREDIT DEFAULT SWAPS T nt soul l to: sr rt ult swps (CDS), snl- nm n nx CDS, n t prmtrs tt n vn CDS prout; sr rt vnts n sttlmnt protools wt rspt to CDS; xpln t prnpls unrlyn, n tors tt nlun, t mrkt s prn o CDS; sr t us o CDS to mn rt xposurs n to xprss vws rrn ns n sp n/or lvl o t rt urv; sr t us o CDS to tk vnt o vluton sprts mon sprt mrkts, su s ons, lons, quts, n quty- lnk nstrumnts. 2016 Lvl II CFA Prorm Currulum CFA Insttut.

STUDY SESSION 18 Portolo Mnmnt Cptl Mrkt Tory n t Portolo Mnmnt Pross T rst rn n ts stuy ssson srs multtor mols o sst rturns n slt ppltons o su mols. T son rn s n ntrouton to quntttv tools or onstrutn n nlyzn tvly mn portolos. T tr rn susss unmntl rltons twn onoms n nvstmnt mrkts n monstrts ow t onomy ts sst vlus; t rn provs nsts tt r rul or portolo onstruton n tv portolo mnmnt. T nl rn summrzs t portolo mnmnt pross, ntroun tops tt wll ovr n mor tl t Lvl III. READING ASSIGNMENTS Rn 53 Rn 54 Rn 55 Rn 56 An Introuton to Multtor Mols y Jrl E. Pnto, PD, CFA, n Eun L. Pokmnr, CFA Anlyss o Atv Portolo Mnmnt y Ror G. Clrk, PD, Hrnr Slv, PD, CFA, n Stvn Torly, PD, CFA Eonoms n Invstmnt Mrkts y Anrw Clr, PD, n Toms F. Cosmno, PD T Portolo Mnmnt Pross n t Invstmnt Poly Sttmnt y Jon L. Mnn, CFA, Donl L. Tuttl, PD, CFA, Dnns W. MLvy, CFA, n Jrl E. Pnto, PD, CFA 2016 Lvl II CFA Prorm Currulum CFA Insttut.

Stuy Ssson 18 2 LEARNING OUTCOMES READING 53. AN INTRODUCTION TO MULTIFACTOR MODELS T nt soul l to: sr rtr prn tory (APT), nlun ts unrlyn ssumptons n ts rlton to multtor mols; n rtr opportunty n trmn wtr n rtr opportunty xsts; lult t xpt rturn on n sst vn n sst s tor snstvts n t tor rsk prmums; sr n ompr mroonom tor mols, unmntl tor mols, n sttstl tor mols; xpln sours o tv rsk n ntrprt trkn rsk n t normton rto; sr uss o multtor mols n ntrprt t output o nlyss s on multtor mols; sr t potntl nts or nvstors n onsrn multpl rsk mnsons wn moln sst rturns. READING 54. ANALYSIS OF ACTIVE PORTFOLIO MANAGEMENT T nt soul l to: sr ow vlu y tv mnmnt s msur; lult n ntrprt t normton rto (x post n x nt) n ontrst t to t Srp rto; stt n ntrprt t unmntl lw o tv portolo mnmnt nlun ts omponnt trms trnsr ont, normton ont, rt, n tv rsk (rssvnss); xpln ow t normton rto my usul n nvstmnt mnr slton n oosn t lvl o tv portolo rsk; ompr tv mnmnt strts (nlun mrkt tmn n surty slton) n vlut strty ns n trms o t unmntl lw o tv mnmnt; sr t prtl strnts n lmttons o t unmntl lw o tv mnmnt. READING 55. ECONOMICS AND INVESTMENT MARKETS T nt soul l to: xpln t noton tt to t mrkt vlus, onom tors must t on or mor o t ollown: (1) ult- r ntrst rts ross mturts, (2) t tmn n/or mntu o xpt s lows, n (3) rsk prmums; xpln t rol o xpttons n ns n xpttons n mrkt vluton; xpln t rltonsp twn t lon- trm rowt rt o t onomy, t voltlty o t rowt rt, n t vr lvl o rl sort- trm ntrst rts; 2016 Lvl II CFA Prorm Currulum CFA Insttut.

Stuy Ssson 18 3 j k l xpln ow t ps o t usnss yl ts poly n sort- trm ntrst rts, t slop o t trm strutur o ntrst rts, n t rltv prormn o ons o rn mturts; sr t tors tt t yl sprs twn non- nlton- just n nlton- nx ons; xpln ow t ps o t usnss yl ts rt sprs n t prormn o rt- snstv x- nom nstrumnts; xpln ow t rtrsts o t mrkts or ompny s prouts t t ompny s rt qulty; xpln ow t ps o t usnss yl ts sort- trm n lon- trm rnns rowt xpttons; xpln t rltonsp twn t onsumpton- n proprts o quty n t quty rsk prmum; sr yll ts on vluton multpls; sr t mpltons o t usnss yl or vn styl strty (vlu, rowt, smll ptlzton, lr ptlzton); sr ow onom nlyss s us n stor rotton strts; m sr t onom tors tn nvstmnt n ommrl rl stt. READING 56. THE PORTFOLIO MANAGEMENT PROCESS AND THE INVESTMENT POLICY STATEMENT T nt soul l to: xpln t mportn o t portolo prsptv; sr t stps o t portolo mnmnt pross n t omponnts o tos stps; xpln t rol o t nvstmnt poly sttmnt n t portolo mnmnt pross n sr t lmnts o n nvstmnt poly sttmnt; xpln ow ptl mrkt xpttons n t nvstmnt poly sttmnt lp nlun t strt sst lloton son n ow n nvstor s nvstmnt tm orzon my nlun t nvstor s strt sst lloton; n nvstmnt ojtvs n onstrnts n xpln n stnus mon t typs o nvstmnt ojtvs n onstrnts; ontrst t typs o nvstmnt tm orzons, trmn t tm orzon or prtulr nvstor, n vlut t ts o ts tm orzon on portolo o; justy tl onut s rqurmnt or mnn nvstmnt portolos. 2016 Lvl II CFA Prorm Currulum CFA Insttut.