{"id":63634,"date":"2026-08-31T10:25:01","date_gmt":"2026-08-31T10:25:01","guid":{"rendered":"https:\/\/analystprep.com\/cfa-level-1-exam\/?p=63634"},"modified":"2026-08-31T10:25:04","modified_gmt":"2026-08-31T10:25:04","slug":"63634","status":"publish","type":"post","link":"https:\/\/analystprep.com\/cfa-level-1-exam\/uncategorized\/63634\/","title":{"rendered":""},"content":{"rendered":"

Reading 36 – Market Organization and Structure<\/strong><\/h3>\n

– LOS 36a: explain the main functions of the financial system<\/a>
\n– LOS 36b: describe classifications of assets and markets<\/a>
\n– 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<\/a>
\n– LOS 36d: describe types of financial intermediaries and services that they provide<\/a>
\n– LOS 36e: compare positions an investor can take in an asset<\/a>
\n– 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<\/a>
\n– LOS 36g: compare execution, validity, and clearing instructions<\/a>
\n– LOS 36h: compare market orders with limit orders<\/a>
\n– LOS 36i: define primary and secondary markets and explain how secondary markets support primary markets<\/a>
\n– LOS 36j: describe how securities, contracts, and currencies are traded in quote-driven, order-driven, and brokered markets<\/a>
\n– LOS 36k: describe characteristics of a well-functioning financial system<\/a>
\n– LOS 36l: describe objectives of market regulation<\/a><\/p>\n

Reading 37 – Security Market Indices<\/strong><\/h3>\n

– LOS 37a: describe a security market index<\/a>
\n– LOS 37b: calculate and interpret the value, price return, and total return of an index<\/a>
\n– LOS 37c: describe the choices and issues in index construction and management<\/a>
\n– LOS 37d: compare the different weighting methods used in index construction<\/a>
\n– LOS 37e: calculate and analyze the value and return of an index given its weighting method<\/a>
\n– LOS 37f: describe rebalancing and reconstitution of an index<\/a>
\n– LOS 37g: describe uses of security market indices<\/a>
\n– LOS 37h: describe types of equity indices<\/a>
\n– LOS 37i: describe types of fixed-income indices<\/a>
\n– LOS 37j: describe indices representing alternative investments<\/a>
\n– LOS 37k: compare types of security market indices<\/a><\/p>\n

Reading 38 – Market Efficiency<\/strong><\/h3>\n

– LOS 38a: describe market efficiency and related concepts, including their importance to investment practitioners<\/a>
\n– LOS 38b: distinguish between market value and intrinsic value<\/a>
\n– LOS 38c: explain factors that affect a market\u2019s efficiency<\/a>
\n– LOS 38d: contrast weak-form, semi-strong-form, and strong-form market efficiency<\/a>
\n– 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<\/a>
\n– LOS 38f: describe market anomalies<\/a>
\n– LOS 38g: describe behavioral finance and its potential relevance to understanding market anomalies<\/a><\/p>\n

Reading 39 – Overview of Equity Securities<\/strong><\/h3>\n

– LOS 39a: describe characteristics of types of equity securities<\/a>
\n– LOS 39b: describe differences in voting rights and other ownership characteristics among different equity classes<\/a>
\n– LOS 39c: distinguish between public and private equity securities<\/a>
\n– LOS 39d: describe methods for investing in non-domestic equity securities<\/a>
\n– LOS 39e: compare the risk and return characteristics of different types of equity securities<\/a>
\n– LOS 39f: explain the role of equity securities in the financing of a company\u2019s assets<\/a>
\n– LOS 39g: distinguish between the market value and book value of equity securities<\/a>
\n– LOS 39h: compare a company\u2019s cost of equity, its (accounting) return on equity, and investors\u2019 required rates of return<\/a><\/p>\n

Reading 40 – Introduction to Industry and Company Analysis<\/strong><\/h3>\n

– LOS 40a: explain uses of industry analysis and the relation of industry analysis to company analysis<\/a>
\n– LOS 40b: compare methods by which companies can be grouped<\/a>
\n– 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 \u201cgrowth,\u201d \u201cdefensive,\u201d and \u201ccyclical\u201d<\/a>
\n– 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<\/a>
\n– LOS 40e: explain how a company\u2019s industry classification can be used to identify a potential \u201cpeer group\u201d for equity valuation<\/a>
\n– LOS 40f: describe the elements that need to be covered in a thorough industry analysis<\/a>
\n– LOS 40g: describe the principles of strategic analysis of an industry<\/a>
\n– LOS 40h: explain the effects of barriers to entry, industry concentration, industry capacity, and market share stability on pricing power and price competition<\/a>
\n– 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<\/a>
\n– LOS 40j: compare characteristics of representative industries from the various economic sectors<\/a>
\n– LOS 40k: describe macroeconomic, technological, demographic, governmental, and social influences on industry growth, profitability, and risk<\/a>
\n– LOS 40l: describe the elements that should be covered in a thorough company analysis<\/a><\/p>\n

Reading 41 – Equity Valuation: Concepts and Basic Tools<\/strong><\/h3>\n

– LOS 41a: evaluate whether security, given its current market price and a value estimate, is overvalued, fairly valued, or undervalued by the market<\/a>
\n– LOS 41b: describe major categories of equity valuation models<\/a>
\n– LOS 41c: describe regular cash dividends, extra dividends, stock dividends, stock splits, reverse stock splits, and share repurchases<\/a>
\n– LOS 41d: describe dividend payment chronology<\/a>
\n– 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<\/a>
\n– LOS 41f: calculate the intrinsic value of a non-callable, non-convertible preferred stock<\/a>
\n– 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<\/a>
\n– LOS 41h: identify characteristics of companies for which the constant growth or a multistage dividend discount model is appropriate<\/a>
\n– 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<\/a>
\n– 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<\/a>
\n– LOS 41k: describe enterprise value multiples and their use in estimating equity value<\/a>
\n– LOS 41l: describe asset-based valuation models and their use in estimating equity value<\/a>
\n– LOS 41m: explain the advantages and disadvantages of each category of the valuation model<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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…<\/p>\n","protected":false},"author":25,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-63634","post","type-post","status-publish","format-standard","hentry","category-uncategorized","blog-post","no-post-thumbnail","animate"],"acf":[],"yoast_head":"\n- AnalystPrep | CFA\u00ae Exam Study Notes<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/analystprep.com\/cfa-level-1-exam\/uncategorized\/63634\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" 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