Cfa portfolio management

CFA Level I: Portfolio Performance Evaluation Measures

There are various ways to assess portfolio performance, especially when just knowing the return may not tell us much about the true performance of a manager. The measures below are four commonly used methods to evaluate portfolio performance. Sharpe Ratio = (Rp – Rf)/σp The Sharpe Ratio is a measure of risk premium gained per unit … Read more

CFA Financial Analysis & Reporting

CFA Level I: Cost of Inventories

With the IFRS, the costs of inventories include purchase costs, conversion costs and transport costs. Purchase costs include duties, insurance, handling, shipping and any other costs of acquisition of the inventory. Volume discounts like rebates reduce the price paid of purchase. Costs of conversion are related to management of the inventories, like labor and overhead … Read more

CFA Fixed Income

CFA Level I: Bond Duration

Bond duration is one of the measure of interest rate risk on a bond. It measures the sensitivity of a bond’s price to changes in interest rates. One assumption of duration analysis is that all other variables are fixed. Essentially, bond duration tells us how much longer or shorter we need to hold a bond … Read more

CFA Corporate Finance

CFA Level I: Short-Term Investments

Short Term Investment Yields Short-term investments are investment assets that are meant to be held for less than a year. We calculate the yields on money of these assets using a discount yield basis. The difference between face value and purchase price is the discount interest. Purchase price (discount purchase): Face Value – [(APR)(periods remaining/maturity)(FV)] … Read more

CFA Financial Analysis & Reporting

CFA Level I: Leases

An alternative to purchasing assets is to lease them. Leases have advantages over outright purchases, but are treated for differently than purchases in terms of accounting. Usually, leased equipment can be financed very cheaply due to the nature of lessors, whom may enjoy benefits such as economies of scale on equipment, which incentivize them to … Read more

CFA Financial Analysis & Reporting

CFA Level I: DuPont Analysis

The DuPont system is widely taught because by interpreting the ROE of a company through various other ratios, we can quickly gain insight into the various operations of a company and understand which aspects could be improved to generate a higher ROE. The DuPont analysis breaks the ROE of a company apart in three different … Read more

CFA Financial Analysis & Reporting

CFA Level I: Cash Flow Statements

The three major financial statements analysts look over to evaluate a company are the income statements, balance sheet and cash flow statements. The income statement shows how the company is using its assets and liabilities to generate revenue. The cash flow statement is an overview of the inflows and outflows of cash, and shows the … Read more

CFA Quantitative Methods

CFA Level I: Technical Analysis

Technical analysis focuses on making investment decisions purely based on supply and demand forces which are interpreted in charts and graphs. Technical analysts believe that human driven markets are susceptible to predictable reactions and patterns of behavior which enable analysts to estimate price direction. Using technical data, mainly based on price and volume trends, seek … Read more