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Study Session 12
Reading 36 – Market Organization and Structure
– LOS 36a: explain the main functions of the financial system
– LOS 36b: describe classifications of assets and markets
– LOS 36c: describe the major types of securities, currencies, contracts, commodities, and real assets that trade in organized markets, including their distinguishing characteristics and major subtypes
– LOS 36d: describe types of financial intermediaries and services that they provide
– LOS 36e: compare positions an investor can take in an asset
– LOS 36f: 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
– LOS 36g: compare execution, validity, and clearing instructions
– LOS 36h: compare market orders with limit orders
– LOS 36i: define primary and secondary markets and explain how secondary markets support primary markets
– LOS 36j: describe how securities, contracts, and currencies are traded in quote-driven, order-driven, and brokered markets
– LOS 36k: describe characteristics of a well-functioning financial system
– LOS 36l: describe objectives of market regulation
Reading 37 – Security Market Indices
– LOS 37a: describe a security market index
– LOS 37b: calculate and interpret the value, price return, and total return of an index
– LOS 37c: describe the choices and issues in index construction and management
– LOS 37d: compare the different weighting methods used in index construction
– LOS 37e: calculate and analyze the value and return of an index given its weighting method
– LOS 37f: describe rebalancing and reconstitution of an index
– LOS 37g: describe uses of security market indices
– LOS 37h: describe types of equity indices
– LOS 37i: describe types of fixed-income indices
– LOS 37j: describe indices representing alternative investments
– LOS 37k: compare types of security market indices
Reading 38 – Market Efficiency
– LOS 38a: describe market efficiency and related concepts, including their importance to investment practitioners
– LOS 38b: distinguish between market value and intrinsic value
– LOS 38c: explain factors that affect a market’s efficiency
– LOS 38d: contrast weak-form, semi-strong-form, and strong-form market efficiency
– LOS 38e: explain the implications of each form of market efficiency for fundamental analysis, technical analysis, and the choice between active and passive portfolio management
– LOS 38f: describe market anomalies
– LOS 38g: describe behavioral finance and its potential relevance to understanding market anomalies
Reading 39 – Overview of Equity Securities
– LOS 39a: describe characteristics of types of equity securities
– LOS 39b: describe differences in voting rights and other ownership characteristics among different equity classes
– LOS 39c: distinguish between public and private equity securities
– LOS 39d: describe methods for investing in non-domestic equity securities
– LOS 39e: compare the risk and return characteristics of different types of equity securities
– LOS 39f: explain the role of equity securities in the financing of a company’s assets
– LOS 39g: distinguish between the market value and book value of equity securities
– LOS 39h: compare a company’s cost of equity, its (accounting) return on equity, and investors’ required rates of return
Reading 40 – Introduction to Industry and Company Analysis
– LOS 40a: explain uses of industry analysis and the relation of industry analysis to company analysis
– LOS 40b: compare methods by which companies can be grouped
– LOS 40c: 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”
– LOS 40d: 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
– LOS 40e: explain how a company’s industry classification can be used to identify a potential “peer group” for equity valuation
– LOS 40f: describe the elements that need to be covered in a thorough industry analysis
– LOS 40g: describe the principles of strategic analysis of an industry
– LOS 40h: explain the effects of barriers to entry, industry concentration, industry capacity, and market share stability on pricing power and price competition
– LOS 40i: 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
– LOS 40j: compare characteristics of representative industries from the various economic sectors
– LOS 40k: describe macroeconomic, technological, demographic, governmental, and social influences on industry growth, profitability, and risk
– LOS 40l: describe the elements that should be covered in a thorough company analysis
Reading 41 – Equity Valuation: Concepts and Basic Tools
– LOS 41a: evaluate whether security, given its current market price and a value estimate, is overvalued, fairly valued, or undervalued by the market
– LOS 41b: describe major categories of equity valuation models
– LOS 41c: describe regular cash dividends, extra dividends, stock dividends, stock splits, reverse stock splits, and share repurchases
– LOS 41d: describe dividend payment chronology
– LOS 41e: explain the rationale for using present value models to value equity and describe the dividend discount and free-cash-flow-to-equity models
– LOS 41f: calculate the intrinsic value of a non-callable, non-convertible preferred stock
– LOS 41g: 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
– LOS 41h: identify characteristics of companies for which the constant growth or a multistage dividend discount model is appropriate
– LOS 41i: 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 41j: 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 41k: describe enterprise value multiples and their use in estimating equity value
– LOS 41l: describe asset-based valuation models and their use in estimating equity value
– LOS 41m: explain the advantages and disadvantages of each category of the valuation model
2024 Curriculum
Learning Module 1 – Market Organization and Structure
LOS a: explain the main functions of the financial system
LOS b: describe classifications of assets and markets
LOS d: describe types of financial intermediaries and services that they provide
LOS e: compare positions an investor can take in an asset
LOS g: compare execution, validity, and clearing instructions
LOS h: compare market orders with limit orders
LOS k: describe characteristics of a well-functioning financial system
LOS l: describe objectives of market regulation
Learning Module 2 – Security Market Indices
LOS a: describe a security market index
LOS b: calculate and interpret the value, price return, and total return of an index
LOS c: describe the choices and issues in index construction and management
LOS d: compare the different weighting methods used in index construction
LOS e: calculate and analyze the value and return of an index given its weighting method
LOS f: describe rebalancing and reconstitution of an index
LOS g: describe uses of security market indices
LOS h: describe types of equity indices
LOS i: describe types of fixed-income indices
LOS j: describe indices representing alternative investments
LOS k: compare types of security market indices
Learning Module 3 – Market Efficiency
LOS b: distinguish between market value and intrinsic value
LOS c: explain factors that affect a market’s efficiency
LOS d: contrast weak-form, semi-strong-form, and strong-form market efficiency
LOS f: describe market anomalies
LOS g: describe behavioral finance and its potential relevance to understanding market anomalies
Learning Module 4 – Overview of Equity Securities
LOS a: describe characteristics of types of equity securities
LOS c: distinguish between public and private equity securities
LOS d: describe methods for investing in non-domestic equity securities
LOS e: compare the risk and return characteristics of different types of equity securities
LOS f: explain the role of equity securities in the financing of a company’s assets
LOS g: distinguish between the market value and book value of equity securities
Learning Module 5 – Company Analysis: Past and Present
LOS a: describe the elements that should be covered in a thorough company research report
LOS b: determine a company’s business model
LOS c: evaluate a company’s revenue and revenue drivers, including pricing power
LOS d: evaluate a company’s operating profitability and working capital using key measures
LOS e: evaluate a company’s capital investments and capital structure
Learning Module 6 – Industry and Competitive Analysis
LOS a: describe the purposes of, and steps involved in, industry and competitive analysis
LOS c: determine an industry’s size, growth characteristics, profitability, and market share trends
LOS e: evaluate the competitive strategy and position of a company
Learning Module 7 – Company Analysis: Forecasting
LOS a: explain principles and approaches to forecasting a company’s financial results and position
LOS b: explain approaches to forecasting a company’s revenues
LOS c: explain approaches to forecasting a company’s operating expenses and working capital
LOS d: explain approaches to forecasting a company’s capital investments and capital structure
LOS e: describe the use of scenario analysis in forecasting
Learning Module 8 – Equity Valuation: Concepts and Basic Tools
LOS b: describe major categories of equity valuation models
LOS d: describe dividend payment chronology
LOS f: calculate the intrinsic value of a non-callable, non-convertible preferred stock
LOS k: describe enterprise value multiples and their use in estimating equity value
LOS l: describe asset-based valuation models and their use in estimating equity value
LOS m: explain the advantages and disadvantages of each category of the valuation model
Sergio Torrico
2021-07-23
Excelente para el FRM 2
Escribo esta revisión en español para los hispanohablantes, soy de Bolivia, y utilicé
AnalystPrep para dudas y consultas sobre mi preparación para el FRM nivel 2 (lo tomé una sola vez y aprobé muy bien), siempre tuve un soporte claro, directo y rápido, el material sale rápido cuando hay cambios en el temario de GARP, y los ejercicios y exámenes son muy útiles para practicar.
diana
2021-07-17
So helpful. I have been using the videos to prepare for the CFA Level II exam. The videos signpost the reading contents, explain the concepts and provide additional context for specific concepts.
The fun light-hearted analogies are also a welcome break to some very dry content.
I usually watch the videos before going into more in-depth reading and they are a good way to avoid being overwhelmed by the sheer volume of content when you look at the readings.
Kriti Dhawan
2021-07-16
A great curriculum provider. James sir explains the concept so well that rather than memorising it, you tend to intuitively understand and absorb them.
Thank you ! Grateful I saw this at the right time for my CFA prep.
nikhil kumar
2021-06-28
Very well explained and gives a great insight about topics in a very short time. Glad to have found Professor Forjan's lectures.
Marwan
2021-06-22
Great support throughout the course by the team, did not feel neglected
Benjamin anonymous
2021-05-10
I loved using AnalystPrep for FRM.
QBank is huge, videos are great.
Would recommend to a friend
Daniel Glyn
2021-03-24
I have finished my FRM1 thanks to AnalystPrep. And now using AnalystPrep for my FRM2 preparation. Professor Forjan is brilliant. He gives such good explanations and analogies. And more than anything makes learning fun. A big thank you to Analystprep and Professor Forjan. 5 stars all the way!
michael walshe
2021-03-18
Professor James' videos are excellent for understanding the underlying theories behind financial engineering / financial analysis. The AnalystPrep videos were better than any of the others that I searched through on YouTube for providing a clear explanation of some concepts, such as Portfolio theory, CAPM, and Arbitrage Pricing theory. Watching these cleared up many of the unclarities I had in my head. Highly recommended.