Exam Study Tips for Postponed 2021 CFA ...
You may have rescheduled your CFA level II exams due to the postponement... Read More
For 2019, the major change is the addition of one reading – Fintech – in the Portfolio Management study session. This reading summarizes new technologies in the investment world such as big data, machine learning, distributed ledgers, and even Bitcoin.
There has also been the deletion of the Financial Reporting Mechanics reading, which should not have a material impact for candidates retaking the exam in 2019.
The area weights have also changed slightly. Most candidates will be happy to see that Financial Reporting and Analysis is now worth 5% less in the exam:
TOPIC AREA 
2019  2018 

Ethics & Professional Standards  15%  15% 
Quantitative Methods  10%  12% 
Economics  10%  10% 
Financial Reporting & Analysis  15%  20% 
Corporate Finance  10%  7% 
Equity Investments  11%  10% 
Fixed Income  11%  10% 
Derivative Investments  6%  5% 
Alternative Investments  6%  4% 
Portfolio Management & Wealth Management  6%  7% 
Apart from that, here are some LOS changes that the candidate should take into account while preparing for the exam. (Deletions are in red and additions are in green.)
2018 Curriculum 
2019 Curriculum 
Reading 10 – Common Probability Distributions 

LOS 10a: define a probability distribution and distinguish between discrete and continuous random variables and their probability functions  LOS 10a: define a probability distribution and distinguish between discrete and continuous random variables and their probability functions 
LOS 10b: describe the set of possible outcomes of a specified discrete random variable  LOS 10b: describe the set of possible outcomes of a specified discrete random variable 
LOS 10c: interpret a cumulative distribution function  LOS 10c: interpret a cumulative distribution function 
LOS 10d: calculate and interpret probabilities for a random variable, given its cumulative distribution function  LOS 10d: calculate and interpret probabilities for a random variable, given its cumulative distribution function 
LOS 10e: define a discrete uniform random variable, a Bernoulli random variable, and a binomial random variable  LOS 10e: define a discrete uniform random variable, a Bernoulli random variable, and a binomial random variable 
LOS 10f: calculate and interpret probabilities given the discrete uniform and the binomial distribution functions  LOS 10f: calculate and interpret probabilities given the discrete uniform and the binomial distribution functions 
LOS 10g: construct a binomial tree to describe stock price movement  LOS 10g: construct a binomial tree to describe stock price movement 
LOS 10h: calculate and interpret tracking error  LOS 10h: define the continuous uniform distribution and calculate and interpret probabilities, given a continuous uniform distribution 
LOS 10i: define the continuous uniform distribution and calculate and interpret probabilities, given a continuous uniform distribution  LOS 10i: explain the key properties of the normal distribution 
LOS 10j: explain the key properties of the normal distribution  LOS 10j: distinguish between a univariate and a multivariate distribution and explain the role of correlation in the multivariate normal distribution 
LOS 10k: distinguish between a univariate and a multivariate distribution and explain the role of correlation in the multivariate normal distribution  LOS 10k: determine the probability that a normally distributed random variable lies inside a given interval 
LOS 10l: determine the probability that a normally distributed random variable lies inside a given interval  LOS 10l: define the standard normal distribution, explain how to standardize a random variable, and calculate and interpret probabilities using the standard normal distribution 
LOS 10m: define the standard normal distribution, explain how to standardize a random variable, and calculate and interpret probabilities using the standard normal distribution  LOS 10m: define shortfall risk, calculate the safetyfirst ratio, and select an optimal portfolio using Roy’s safetyfirst criterion 
LOS 10n: define shortfall risk, calculate the safetyfirst ratio, and select an optimal portfolio using Roy’s safetyfirst criterion  LOS 10n: explain the relationship between normal and lognormal distributions and why the lognormal distribution is used to model asset prices 
LOS 10o: explain the relationship between normal and lognormal distributions and why the lognormal distribution is used to model asset prices  LOS 10o: 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 10p: 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 10p: explain Monte Carlo simulation and describe its applications and limitations 
LOS 10q: explain Monte Carlo simulation and describe its applications and limitations  LOS 10q: compare Monte Carlo simulation and historical simulation 
LOS 10r: compare Monte Carlo simulation and historical simulation  
Reading 20 – Currency Exchange Rates 

LOS20a: define an exchange rate and distinguish between nominal and real exchange rates and spot and forward exchange rates  LOS20a: define an exchange rate and distinguish between nominal and real exchange rates and spot and forward exchange rates 
LOS20b: describe functions of and participants in the foreign exchange market  LOS20b: describe functions of and participants in the foreign exchange market 
LOS20c: calculate and interpret the percentage change in a currency relative to another currency  LOS20c: calculate and interpret the percentage change in a currency relative to another currency 
LOS20d: calculate and interpret currency crossrates  LOS20d: calculate and interpret currency crossrates 
LOS20e: convert forward quotations expressed on a points basis or in percentage terms into an outright forward quotation  LOS20e: convert forward quotations expressed on a points basis or in percentage terms into an outright forward quotation 
LOS20f: explain the arbitrage relationship between spot rates, forward rates, and interest rates  LOS20f: explain the arbitrage relationship between spot rates, forward rates, and interest rates 
LOS20g: calculate and interpret a forward discount or premium  LOS20g: calculate and interpret a forward discount or premium 
LOS20h: calculate and interpret the forward rate consistent with the spot rate and the interest rate in each currency  LOS20h: calculate and interpret the forward rate consistent with the spot rate and the interest rate in each currency 
LOS20i: describe exchange rate regimes  LOS20i: describe exchange rate regimes 
LOS 20j: explain the effects of exchange rates on countries’ international trade and capital flows  
Reading 40 – Portfolio Risk and Return Part II 

LOS 40a: describe the implications of combining a riskfree asset with a portfolio of risky assets  LOS 41a: describe the implications of combining a riskfree asset with a portfolio of risky assets 
LOS 40b: explain the capital allocation line (CAL) and the capital market line (CML)  LOS 41b: explain the capital allocation line (CAL) and the capital market line (CML) 
LOS 40c: explain systematic and nonsystematic risk, including why an investor should not expect to receive additional return for bearing nonsystematic risk  LOS 41c: explain systematic and nonsystematic risk, including why an investor should not expect to receive additional return for bearing nonsystematic risk 
LOS 40d: explain return generating models (including the market model) and their uses  LOS 41d: explain return generating models (including the market model) and their uses 
LOS 40e: calculate and interpret beta  LOS 41e: calculate and interpret beta 
LOS 40f: explain the capital asset pricing model (CAPM), including its assumptions, and the security market line (SML)  LOS 41f: explain the capital asset pricing model (CAPM), including its assumptions, and the security market line (SML) 
LOS 40g: calculate and interpret the expected return of an asset using the CAPM  LOS 41g: calculate and interpret the expected return of an asset using the CAPM 
LOS 40h: describe and demonstrate applications of the CAPM and the SML  LOS 41h: describe and demonstrate applications of the CAPM and the SML 
LOS 41i: calculate and interpret the Sharpe ratio, Treynor ratio, M2, and Jensen’s alpha  
Reading 43 – Fintech in Investment Management 

LOS 43a: describe “fintech”  
LOS 43b: describe Big Data, artificial intelligence, and machine learning  
LOS 43c: describe fintech applications to investment management  
LOS 43d: describe financial applications of distributed ledger technology  
Reading 49 – Equity Valuation – Concepts and Basic Tools 

LOS 49a: evaluate whether a security, given its current market price and a value estimate, is overvalued, fairly valued, or undervalued by the market  LOS 49a: evaluate whether a security, given its current market price and a value estimate, is overvalued, fairly valued, or undervalued by the market 
LOS 49b: describe major categories of equity valuation models  LOS 49b: describe major categories of equity valuation models 
LOS 49c: explain the rationale for using present value models to value equity and describe the dividend discount and freecashflowtoequity models  LOS 49c: describe regular cash dividends, extra dividends, stock dividends, stock splits, reverse stock splits, and share repurchases 
LOS 49d: calculate the intrinsic value of a noncallable, nonconvertible preferred stock  LOS 49d: describe dividend payment chronology 
LOS 49e: calculate and interpret the intrinsic value of an equity security based on the Gordon (constant) growth dividend discount model or a twostage dividend discount model, as appropriate  LOS 49e: explain the rationale for using present value models to value equity and describe the dividend discount and freecashflowtoequity models 
LOS 49f: identify characteristics of companies for which the constant growth or a multistage dividend discount model is appropriate  LOS 49f: calculate the intrinsic value of a noncallable, nonconvertible preferred stock 
LOS 49g: 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  LOS 49g: calculate and interpret the intrinsic value of an equity security based on the Gordon (constant) growth dividend discount model or a twostage dividend discount model, as appropriate 
LOS 49h: 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  LOS 49h: identify characteristics of companies for which the constant growth or a multistage dividend discount model is appropriate 
LOS 49i: describe enterprise value multiples and their use in estimating equity value  LOS 49i: 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 
LOS 49j: describe assetbased valuation models and their use in estimating equity value  LOS 49j: 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 
LOS 49k: explain advantages and disadvantages of each category of valuation model  LOS 49k: describe enterprise value multiples and their use in estimating equity value 
LOS 49l: describe assetbased valuation models and their use in estimating equity value  
LOS 49m: explain advantages and disadvantages of each category of valuation model  
Reading 51 – Fixed Income Markets: Issuance, Trading, and Funding 

LOS 51a: describe classifications of global fixedincome markets  LOS 51a: describe classifications of global fixedincome markets 
LOS 51b: describe the use of interbank offered rates as reference rates in floatingrate debt  LOS 51b: describe the use of interbank offered rates as reference rates in floatingrate debt 
LOS 51c: describe mechanisms available for issuing bonds in primary markets  LOS 51c: describe mechanisms available for issuing bonds in primary markets 
LOS 51d: describe secondary markets for bonds  LOS 51d: describe secondary markets for bonds 
LOS 51e: describe securities issued by sovereign governments  LOS 51e: describe securities issued by sovereign governments 
LOS 51f: describe securities issued by nonsovereign governments, quasigovernment entities, and supranational agencies  LOS 51f: describe securities issued by nonsovereign governments, quasigovernment entities, and supranational agencies 
LOS 51g: describe types of debt issued by corporations  LOS 51g: describe types of debt issued by corporations 
LOS 51h: describe shortterm funding alternatives available to banks  LOS 51h: describe structured financial instruments 
LOS 51i: describe repurchase agreements and the risks associated with them  LOS 51i: describe shortterm funding alternatives available to banks 
LOS 51j: describe repurchase agreements and the risks associated with them  
Reading 52: Introduction to Fixed Income Valuation 

LOS 52a: calculate a bond’s price given a market discount rate  LOS 52a: calculate a bond’s price given a market discount rate 
LOS 52b: identify the relationships among a bond’s price, coupon rate, maturity, and market discount rate (yieldtomaturity)  LOS 52b: identify the relationships among a bond’s price, coupon rate, maturity, and market discount rate (yieldtomaturity) 
LOS 52c: define spot rates and calculate the price of a bond using spot rates  LOS 52c: define spot rates and calculate the price of a bond using spot rates 
LOS 52d: describe and calculate the flat price, accrued interest, and the full price of a bond  LOS 52d: describe and calculate the flat price, accrued interest, and the full price of a bond 
LOS 52e: describe matrix pricing  LOS 52e: describe matrix pricing 
LOS 52f: calculate and interpret yield measures for fixedrate bonds, floatingrate notes, and money market instruments  LOS 52f: calculate and interpret yield measures for fixedrate bonds, floatingrate notes, and money market instruments 
LOS 52g: define and compare the spot curve, yield curve on coupon bonds, par curve, and forward curve  LOS 52g: define and compare the spot curve, yield curve on coupon bonds, par curve, and forward curve 
LOS 52h: define forward rates and calculate spot rates from forward rates, forward rates from spot rates, and the price of a bond using forward rates  LOS 52h: define forward rates and calculate spot rates from forward rates, forward rates from spot rates, and the price of a bond using forward rates 
LOS 52i: compare, calculate, and interpret yield spread measures. 
You may have rescheduled your CFA level II exams due to the postponement... Read More
The CFA Institute has transitioned all level testing to be computerbased in 2021.... Read More