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Understanding the Chartered Financial Analyst (CFA) Designation

publication date: Oct 13, 2016
author/source: Valuentum Editorial Staff

“Among the countless finance degrees around the world, the Chartered Financial Analyst qualification has become the gold standard.” – Financial Times, 13 August 2010

“[The] qualification is roughly equivalent to a specialized postgraduate finance degree, including a mixture of economics, ethics, law, and accountancy… Whereas there are tens of thousands of finance degrees available around the world, ranging from the excellent to the worthless, there is only one CFA, managed and examined by an American association of financial professionals, the CFA Institute.” – the Economist

From the CFA Institute: “The Chartered Financial Analyst (CFA) charter is an investment credential that, for more than 60 years, has been the global standard for embodying the integrity, dedication, and advanced skills needed to build a stronger, more accountable financial industry. No credential is as widely respected for its focus on current investment expertise and performing in the client’s best interest. None is harder to obtain…Earning the charter requires demonstrating four years of professional investment experience, committing to uphold a comprehensive code of ethics, and passing three levels of rigorous exams that test an advanced curriculum of investment management and analysis skills. This achievement takes multiple years of persistent effort and hundreds of hours of study per exam level. Having accomplished all this, charterholders are tested and trusted professionals with the skill and insight to uphold high standards across the global investment industry and serve the best interests of investors and society.”

Pasted below is a list of topics that CFA charterholders must master before receiving the designation.


Professional Standards of Practice

Ethical Practices


Time Value of Money


Probability Distributions and Descriptive Statistics

Sampling and Estimation

Hypothesis Testing

Correlation Analysis and Regression

Time Series Analysis

Simulation Analysis

Technical Analysis


Market Forces of Supply and Demand

The Firm and Industry Organization

Measuring National Income and Growth

Business Cycles

The Monetary System


International Trade and Capital Flows

Currency Exchange Rates

Monetary and Fiscal Policy

Economic Growth and Development

Effects of Government Regulation

Impact of Economic Factors on

Investment Markets


Financial Reporting System (IFRS and GAAP)

Principal Financial Statements

Financial Reporting Quality

Analysis of Inventories

Analysis of Long-Lived Assets

Analysis of Taxes

Analysis of Debt

Analysis of Off-Balance-Sheet Assets and Liabilities

Analysis of Pensions, Stock Compensation, and Other Employee Benefits

Analysis of Inter-Corporate Investments

Analysis of Business Combinations

Analysis of Global Operations

Ratio and Financial Analysis


Corporate Governance

Dividend Policy

Capital Investment Decisions

Business and Financial Risk

Long-Term Financial Policy

Short-Term Financial Policy

Mergers and Acquisitions and Corporate Restructuring


Types of Equity Securities and Their Characteristics

Equity Markets: Characteristics, Institutions, and Benchmarks

Fundamental Analysis (Sector, Industry, Company) and the Valuation of Individual Equity Securities

Equity Market Valuation and Return Analysis

Special Applications of Fundamental Analysis (Residual Earnings)

Equity of Hybrid Investment Vehicles


Types of Fixed-Income Securities and Their Characteristics

Fixed-Income Markets: Characteristics, Institutions, and Benchmarks

Fixed-Income Valuation (Sector, Industry, Company) and Return Analysis

Term Structure Determination and Yield Spreads

Analysis of Interest Rate Risk

Analysis of Credit Risk

Valuing Bonds with Embedded Options

Structured Products


Types of Derivative Instruments and Their Characteristics

Forward Markets and Instruments

Futures Markets and Instruments

Options Markets and Instruments

Swaps Markets and Instruments

Credit Derivatives Markets and Instruments


Types of Alternative Investments and Their Characteristics

Real Estate

Private Equity/Venture Capital

Hedge Funds

Closely-Held Companies and Inactively Traded Securities

Distressed Securities/Bankruptcies


Tangible Assets with Low Liquidity


Portfolio Concepts

Management of Individual/Family Investor Portfolios

Management of Institutional Investor Portfolios

Pension Plans and Employee Benefit Funds

Investment Manager Selection

Other Institutional Investors

Mutual Funds, Pooled Funds, and ETFs

Economic Analysis and Setting Capital

Market Expectations

Tax Efficiency

Asset Allocation (including Currency Overlay)

Portfolio Construction and Revision

Equity Portfolio Management Strategies

Fixed-Income Portfolio Management Strategies

Alternative Investment Management Strategies

Risk Management

Execution of Portfolio Decisions (Trading)

Performance Evaluation

Presentation of Performance Results

"If I were looking for someone who was going to manage a portfolio of individual common stocks and do the selection and analysis, I'd look for the CFA designation," says John Markese, president of the American Association of Individual Investors. "The CFA has the ability to look at the financial statements and arrive at an informed opinion," he adds. -- source

<< CFA charter brochure

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