Interest Rates
After completing this reading, you should be able to: Calculate and interpret the impact of different compounding frequencies on a bond’s value. Define spot rate and compute spot rates given discount factors. Interpret the forward rate and compute forward rates…
Bond Yields and Return Calculations
After completing this reading, you should be able to: Distinguish between gross, and net realized returns and calculate the realized return for a bond over a holding period, including reinvestments. Define and interpret the spread of a bond and explain…
Study Notes for CFA® Level III – Behavioral Finance – offered by AnalystPrep
Reading 1: The Behavioral Biases of Individuals -a. Compare and contrast cognitive errors and emotional biases; -b. Discuss commonly recognized behavioral biases and their implications for financial decision making; -c. Identify and evaluate an individual’s behavioral biases; Reading 2: Behavioral…
Study Notes for CFA® Level III – Capital Market Expectations – offered by AnalystPrep
Reading 1: Capital Market Expectations – Part 1 (Framework and Macro Considerations) Los 1 a: Discuss the role of, and a framework for, capital market expectations in the portfolio management process Los 1 b: Discuss challenges in developing capital market…
Study Notes for CFA® Level III – Asset Allocation – offered by AnalystPrep
Reading 5: Overview of Asset Allocation -a. Describe elements of effective investment governance and investment governance considerations in asset allocation; -b. Describe elements of effective investment governance and investment governance considerations in asset allocation; -c. Compare the investment objectives of…
The Impact of Competitive Position on Prices and Costs
Modeling Non-operating Costs and Other Items
Financing Expenses Financing costs comprise interest expense and interest income, which are typically netted. Interest income is less significant to non-financial companies but a key revenue component for financial institutions such as banks and insurance companies. Interest income depends on…
Behavioral Finance and Analyst Forecasts
Financial statement models are not immune to behavioral biases. Analysts must be aware of the impact of behavioral biases and solutions to improve investment decisions and forecasts. The five key behavioral biases are overconfidence, conservatism, confirmation bias, the illusion of…
Income Statement Modeling: Revenue
Analysts use three approaches to project future revenue. Top-down approach. Bottom-up approach. Hybrid approach. Top-down Approach The top-down approach begins at the level of the overall economy. Forecasts are then narrowed to such levels as sector, industry, and market for…
Investment Action Evaluation
We will use an example to illustrate investment action evaluation for joint ventures, acquisitions, and equity investments. De Monte De Monte is a company that makes and sells vintage brandy and cognac. For the past five years, the company has…
