CFA Level 3 - LOS Changes 2014 - 2015
Topic LOS Level III - 2014 (336 LOS)
describe the structure of the CFA
Institute Professional Conduct Program
Ethics 1.1.a and the disciplinary review process for
the enforcement of the Code of Ethics
and Standards of Professional Conduct
explain the ethical responsibilities
required by the Code of Ethics and the
Ethics 1.1.b Standards of Professional Conduct,
including the multiple sub-sections of
each standard
demonstrate a thorough knowledge of
the Code of Ethics and Standards of
Professional Conduct by interpreting
Ethics 1.2.a
the Code and Standards in various
situations involving issues of
professional integrity
recommend practices and procedures
designed to prevent violations of the
Ethics 1.2.b
Code of Ethics and Standards of
Professional Conduct
explain the ethical and professional
responsibilities of CFA Institute
members and CFA candidates required
Ethics 2.3.a
by each of the six provisions of the
Code of Ethics and the seven
Standards of Professional Conduct
interpret the Code of Ethics and
Standards of Professional Conduct in
Ethics 2.3.b situations involving issues of
professional integrity and formulate
corrective actions where appropriate.
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LOS Level III - 2015 (333 LOS) Compared
describe the structure of the CFA
Institute Professional Conduct Program
1.1.a and the disciplinary review process for
the enforcement of the Code of Ethics
and Standards of Professional Conduct
explain the ethical responsibilities
required by the Code of Ethics and the
1.1.b Standards of Professional Conduct,
including the multiple sub-sections of
each standard
demonstrate a thorough knowledge of
the Code of Ethics and Standards of
Professional Conduct by interpreting
1.2.a
the Code and Standards in various
situations involving issues of
professional integrity
recommend practices and procedures
designed to prevent violations of the
1.2.b
Code of Ethics and Standards of
Professional Conduct
Removed
Removed
1
 evaluate professional conduct and
formulate an appropriate response to
Ethics 2.4.a
actions that violate the Code of Ethics
and Standards of Professional Conduct
formulate appropriate policy and
procedural changes needed to assure
Ethics 2.4.b
compliance with the Code of Ethics and
Standards of Professional Conduct
evaluate professional conduct and
formulate an appropriate response to
Ethics 2.5.a
actions that violate the Code of Ethics
and Standards of Professional Conduct
formulate appropriate policy and
procedural changes needed to assure
Ethics 2.5.b
compliance with the Code of Ethics and
Standards of Professional Conduct
explain the ethical and professional
Ethics 2.6.a
responsibilities required by the six
components of the Asset Manager Code
determine whether an asset manager’s
Ethics 2.6.b
practices and procedures are consistent
with the Asset Manager Code
recommend practices and procedures
Ethics 2.6.c designed to prevent violations of the
Asset Manager Code
contrast traditional and behavioral
Behavioral
3.7.a finance perspectives on investor
Finance
decision making
Behavioral contrast expected utility and prospect
3.7.b
Finance theories of investment decision making
Behavioral discuss the effect that cognitive
3.7.c
Finance limitations and bounded rationality may
have on investment decision making
compare traditional and behavioral
Behavioral finance perspectives on portfolio
3.7.d
Finance construction and the behavior of capital
markets
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evaluate professional conduct and
formulate an appropriate response to
2.2.a
actions that violate the Code of Ethics
and Standards of Professional Conduct
formulate appropriate policy and
procedural changes needed to assure
2.2.b
compliance with the Code of Ethics and
Standards of Professional Conduct
evaluate professional conduct and
formulate an appropriate response to
2.4.a
actions that violate the Code of Ethics
and Standards of Professional Conduct
formulate appropriate policy and
procedural changes needed to assure
2.4.b
compliance with the Code of Ethics and
Standards of Professional Conduct
explain the ethical and professional
2.5.a
responsibilities required by the six
components of the Asset Manager Code
determine whether an asset manager’s
2.5.b
practices and procedures are consistent
with the Asset Manager Code
recommend practices and procedures
2.5.c designed to prevent violations of the
Asset Manager Code
contrast traditional and behavioral
3.6.a finance perspectives on investor
decision making
contrast expected utility and prospect
3.6.b
theories of investment decision making
discuss the effect that cognitive
3.6.c
limitations and bounded rationality may
have on investment decision making
compare traditional and behavioral
finance perspectives on portfolio
3.6.d
construction and the behavior of capital
markets
2
Behavioral distinguish between cognitive errors distinguish between cognitive errors
3.8.a 3.7.a
Finance and emotional biases and emotional biases

Behavioral discuss commonly recognized discuss commonly recognized

3.8.b 3.7.b
Finance behavioral biases and their implications behavioral biases and their implications
for financial decision making for financial decision making
Behavioral identify and evaluate an individual’s identify and evaluate an individual’s
3.8.c 3.7.c
Finance behavioral biases behavioral biases
evaluate how behavioral biases affect evaluate how behavioral biases affect
Behavioral investment policy and asset allocation investment policy and asset allocation
3.8.d 3.7.d
Finance decisions and recommend approaches decisions and recommend approaches
to mitigate their effects to mitigate their effects
explain the uses and limitations of
Behavioral Wording
3.9.a explain the uses and limitations of 3.8.a classifying investors into personality
Finance Change
classifying investors into various types types
Behavioral discuss how behavioral factors affect discuss how behavioral factors affect
3.9.b 3.8.b
Finance adviser–client interactions adviser–client interactions
Behavioral discuss how behavioral factors discuss how behavioral factors
3.9.c 3.8.c
Finance influence portfolio construction influence portfolio construction
explain how behavioral finance can be explain how behavioral finance can be
Behavioral
3.9.d applied to the process of portfolio 3.8.d applied to the process of portfolio
Finance
construction construction
discuss how behavioral factors affect discuss how behavioral factors affect
Behavioral
3.9.e analyst forecasts and recommend 3.8.e analyst forecasts and recommend
Finance
remedial actions for analyst biases remedial actions for analyst biases
discuss how behavioral factors affect discuss how behavioral factors affect
Behavioral investment committee decision making investment committee decision making
3.9.f 3.8.f
Finance and recommend techniques for and recommend techniques for
mitigating their effects mitigating their effects
describe how behavioral biases of
Behavioral describe how behavioral biases of investors can lead to market Wording
3.9.g 3.8.g
Finance investors can lead to market anomalies characteristics that may not be Change
and observed market characteristics explained by traditional finance
discuss how source of wealth, measure discuss how source of wealth, measure
Private
4.10.a of wealth, and stage of life affect an 4.9.a of wealth, and stage of life affect an
Wealth
individual investors’ risk tolerance individual investors’ risk tolerance
explain the role of situational and
Private explain the role of situational and psychological profiling in understanding Wording
4.10.b 4.9.b
Wealth psychological profiling in understanding an individual investor’s attitude toward Change
an individual investor risk

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 compare the traditional finance and
Private
4.10.c behavioral finance models of investor Removed
Wealth
decision making
explain the influence of investor explain the influence of investor
Private
4.10.d psychology on risk tolerance and 4.9.c psychology on risk tolerance and
Wealth
investment choices investment choices
explain the use of a personality typing
Private
4.10.e questionnaire for identifying an Removed
Wealth
investor’s personality type
compare risk attitudes and decision-
making styles among distinct investor
Private
4.10.f personality types, including cautious, Removed
Wealth
methodical, spontaneous, and
individualistic investors
explain potential benefits, for both explain potential benefits, for both
Private clients and investment advisers, of clients and investment advisers, of
4.10.g 4.9.d
Wealth having a formal investment policy having a formal investment policy
statement statement
Private
4.10.h explain the process involved in creating 4.9.e explain the process involved in creating
Wealth
an investment policy statement an investment policy statement
distinguish between required return distinguish between required return
Private and desired return and explain how and desired return and explain how
4.10.i 4.9.f
Wealth these affect the individual investor’s these affect the individual investor’s
investment policy investment policy
explain how to set risk and return explain how to set risk and return
objectives for individual investor objectives for individual investor
Private
4.10.j portfolios and discuss the impact that 4.9.g portfolios and discuss the impact that
Wealth
ability and willingness to take risk have ability and willingness to take risk have
on risk tolerance on risk tolerance
discuss each of the major constraint discuss the major constraint categories
Private Wording
4.10.k categories included in an individual 4.9.h included in an individual investor’s
Wealth Change
investor’s investment policy statement investment policy statement
prepare and justify an investment prepare and justify an investment
Private
4.10.l policy statement for an individual 4.9.i policy statement for an individual
Wealth
investor investor
determine the strategic asset allocation determine the strategic asset allocation
Private that is most appropriate for an that is most appropriate for an
4.10.m 4.9.j
Wealth individual investor’s specific investment individual investor’s specific investment
objectives and constraints objectives and constraints

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 compare Monte Carlo and traditional compare Monte Carlo and traditional
Private deterministic approaches to retirement deterministic approaches to retirement
4.10.n 4.9.k
Wealth planning and explain the advantages of planning and explain the advantages of
a Monte Carlo approach a Monte Carlo approach
compare basic global taxation regimes compare basic global taxation regimes
as they relate to the taxation of as they relate to the taxation of
Private
4.11.a dividend income, interest income, 4.10.a dividend income, interest income,
Wealth
realized capital gains, and unrealized realized capital gains, and unrealized
capital gains capital gains
determine the effects of different types determine the effects of different types
Private
4.11.b of taxes and tax regimes on future 4.10.b of taxes and tax regimes on future
Wealth
wealth accumulation wealth accumulation
Private calculate accrual equivalent tax rates calculate accrual equivalent tax rates
4.11.c 4.10.c
Wealth and after-tax returns and after-tax returns
explain how investment return and explain how investment return and
Private
4.11.d investment horizon affect the tax 4.10.d investment horizon affect the tax
Wealth
impact associated with an investment impact associated with an investment
discuss the tax profiles of different discuss the tax profiles of different
Private types of investment accounts and types of investment accounts and
4.11.e 4.10.e
Wealth explain their impact on after-tax explain their impact on after-tax
returns and future accumulations returns and future accumulations
Private explain how taxes affect investment explain how taxes affect investment
4.11.f 4.10.f
Wealth risk risk
discuss the relation between after-tax discuss the relation between after-tax
Private
4.11.g returns and different types of investor 4.10.g returns and different types of investor
Wealth
trading behavior trading behavior
explain the benefits of tax loss explain the benefits of tax loss
Private
4.11.h harvesting and highest-in/first-out 4.10.h harvesting and highest-in/first-out
Wealth
(HIFO) tax lot accounting (HIFO) tax lot accounting
demonstrate how taxes and asset demonstrate how taxes and asset
Private
4.11.i location relate to mean–variance 4.10.i location relate to mean–variance
Wealth
optimization optimization
discuss the purpose of estate planning discuss the purpose of estate planning
Private and explain the basic concepts of and explain the basic concepts of
4.12.a 4.11.a
Wealth domestic estate planning, including domestic estate planning, including
estates, wills, and probate estates, wills, and probate

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 explain the two principal forms of explain the two principal forms of
wealth transfer taxes and discuss the wealth transfer taxes and discuss
Private Wording
4.12.b effects of important non-tax issues, 4.11.b effects of important non-tax issues,
Wealth Change
such as legal system, forced heirship, such as legal system, forced heirship,
and marital property regime and marital property regime
determine a family’s core capital and determine a family’s core capital and
Private
4.12.c excess capital, based on mortality 4.11.c excess capital, based on mortality
Wealth
probabilities and Monte Carlo analysis probabilities and Monte Carlo analysis
evaluate the relative after-tax value of evaluate the relative after-tax value of
Private
4.12.d lifetime gifts and testamentary 4.11.d lifetime gifts and testamentary
Wealth
bequests bequests
explain the estate planning benefit of explain the estate planning benefit of
Private making lifetime gifts when gift taxes making lifetime gifts when gift taxes
4.12.e 4.11.e
Wealth are paid by the donor, rather than the are paid by the donor, rather than the
recipient recipient
evaluate the after-tax benefits of basic evaluate the after-tax benefits of basic
estate planning strategies, including estate planning strategies, including
Private
4.12.f generation skipping, spousal 4.11.f generation skipping, spousal
Wealth
exemptions, valuation discounts, and exemptions, valuation discounts, and
charitable gifts charitable gifts
explain the basic structure of a trust explain the basic structure of a trust
Private
4.12.g and discuss the differences between 4.11.g and discuss the differences between
Wealth
revocable and irrevocable trusts revocable and irrevocable trusts
Private explain how life insurance can be a tax- explain how life insurance can be a tax-
4.12.h 4.11.h
Wealth efficient means of wealth transfer efficient means of wealth transfer
discuss the two principal systems discuss the two principal systems
Private (source jurisdiction and residence (source jurisdiction and residence
4.12.i 4.11.i
Wealth jurisdiction) for establishing a country’s jurisdiction) for establishing a country’s
tax jurisdiction tax jurisdiction
discuss the possible income and estate discuss the possible income and estate
Private
4.12.j tax consequences of foreign situated 4.11.j tax consequences of foreign situated
Wealth
assets and foreign-sourced income assets and foreign-sourced income
evaluate a client’s tax liability under evaluate a client’s tax liability under
each of three basic methods (credit, each of three basic methods (credit,
Private
4.12.k exemption, and deduction) that a 4.11.k exemption, and deduction) that a
Wealth
country may use to provide relief from country may use to provide relief from
double taxation double taxation

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 discuss how increasing international discuss how increasing international
Private transparency and information exchange transparency and information exchange
4.12.l 4.11.l
Wealth among tax authorities affect among tax authorities affect
international estate planning international estate planning
explain investment risks associated explain investment risks associated
Private with a concentrated position in a single with a concentrated position in a single
4.13.a 5.12.a
Wealth asset and discuss the appropriateness asset and discuss the appropriateness
of reducing such risks of reducing such risks
Private describe typical objectives in managing describe typical objectives in managing
4.13.b 5.12.b
Wealth concentrated positions concentrated positions
discuss tax consequences and illiquidity discuss tax consequences and illiquidity
as considerations affecting the as considerations affecting the
Private management of concentrated positions management of concentrated positions
4.13.c 5.12.c
Wealth in publicly traded common shares, in publicly traded common shares,
privately held businesses, and real privately held businesses, and real
estate estate
discuss capital market and institutional discuss capital market and institutional
Private
4.13.d constraints on an investor’s ability to 5.12.d constraints on an investor’s ability to
Wealth
reduce a concentrated position reduce a concentrated position
discuss psychological considerations discuss psychological considerations
Private that may make an investor reluctant to that may make an investor reluctant to
4.13.e 5.12.e
Wealth reduce his or her exposure to a reduce his or her exposure to a
concentrated position concentrated position
describe advisers’ use of goal-based describe advisers’ use of goal-based
Private
4.13.f planning in managing concentrated 5.12.f planning in managing concentrated
Wealth
positions positions
explain uses of asset location and explain uses of asset location and
Private
4.13.g wealth transfers in managing 5.12.g wealth transfers in managing
Wealth
concentrated positions concentrated positions
describe strategies for managing describe strategies for managing
Private
4.13.h concentrated positions in publicly 5.12.h concentrated positions in publicly
Wealth
traded common shares traded common shares
Private discuss tax considerations in the choice discuss tax considerations in the choice
4.13.i 5.12.i
Wealth of hedging strategy of hedging strategy
describe strategies for managing describe strategies for managing
Private
4.13.j concentrated positions in privately held 5.12.j concentrated positions in privately held
Wealth
businesses businesses
Private describe strategies for managing describe strategies for managing
4.13.k 5.12.k
Wealth concentrated positions in real estate concentrated positions in real estate

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 evaluate and recommend techniques
for tax efficiently managing the risks of
Private
4.13.l concentrated positions in publicly
Wealth
traded common stock, privately held
businesses, and real estate
Private explain the concept and discuss the
4.14.a
Wealth characteristics of “human capital” as a
component of an investor’s total wealth
discuss the earnings risk, mortality
risk, and longevity risk associated with
Private human capital and explain how these
4.14.b
Wealth risks can be reduced by appropriate
portfolio diversification, life insurance,
and annuity products
explain how asset allocation policy is
influenced by the risk characteristics of
Private
4.14.c human capital and the relative
Wealth
relationships of human capital, financial
capital, and total wealth
discuss how asset allocation and the
appropriate level of life insurance are
Private influenced by the joint consideration of
4.14.d
Wealth human capital, financial capital,
bequest preferences, risk tolerance,
and financial wealth
discuss the financial market risk,
longevity risk, and savings risk faced
by investors in retirement and explain
Private
4.14.e how these risks can be reduced by
Wealth
appropriate portfolio diversification,
insurance products, and savings
discipline
discuss the relative advantages of fixed
Private
4.14.f and variable annuities as hedges
Wealth
against longevity risk
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evaluate and recommend techniques
for tax efficiently managing the risks of
5.12.l concentrated positions in publicly
traded common stock, privately held
businesses, and real estate
explain the concept and discuss the
5.13.a
characteristics of “human capital” as a
component of an investor’s total wealth
discuss the earnings risk, mortality
risk, and longevity risk associated with
human capital and explain how these
5.13.b
risks can be reduced by appropriate
portfolio diversification, life insurance,
and annuity products
explain how asset allocation policy is
influenced by the risk characteristics of
5.13.c human capital and the relative
relationships of human capital, financial
capital, and total wealth
discuss how asset allocation and the
appropriate level of life insurance are
influenced by the joint consideration of
5.13.d
human capital, financial capital,
bequest preferences, risk tolerance,
and financial wealth
discuss the financial market risk,
longevity risk, and savings risk faced
by investors in retirement and explain
5.13.e how these risks can be reduced by
appropriate portfolio diversification,
insurance products, and savings
discipline
discuss the relative advantages of fixed
5.13.f and variable annuities as hedges
against longevity risk
8
 recommend basic strategies for asset recommend basic strategies for asset
allocation and risk reduction when allocation and risk reduction when
given an investor profile of key inputs, given an investor profile of key inputs,
Private
4.14.g including human capital, financial 5.13.g including human capital, financial
Wealth
capital, stage of life cycle, bequest capital, stage of life cycle, bequest
preferences, risk tolerance, and preferences, risk tolerance, and
financial wealth financial wealth
contrast a defined-benefit plan to a contrast a defined-benefit plan to a
defined-contribution plan and discuss defined-contribution plan and discuss
Institutional
5.15.a the advantages and disadvantages of 6.14.a the advantages and disadvantages of
Management
each from the perspectives of the each from the perspectives of the
employee and the employer employee and the employer
Institutional discuss investment objectives and discuss investment objectives and
5.15.b 6.14.b
Management constraints for defined-benefit plans constraints for defined-benefit plans
evaluate pension fund risk tolerance evaluate pension fund risk tolerance
when risk is considered from the when risk is considered from the
perspective of the 1) plan surplus, 2) perspective of the 1) plan surplus, 2)
Institutional sponsor financial status and sponsor financial status and
5.15.c 6.14.c
Management profitability, 3) sponsor and pension profitability, 3) sponsor and pension
fund common risk exposures, 4) plan fund common risk exposures, 4) plan
features, and 5) workforce features, and 5) workforce
characteristics characteristics
Institutional prepare an investment policy prepare an investment policy
5.15.d 6.14.d
Management statement for a defined-benefit plan statement for a defined-benefit plan
evaluate the risk management evaluate the risk management
Institutional
5.15.e considerations in investing pension plan 6.14.e considerations in investing pension plan
Management
assets assets
prepare an investment policy prepare an investment policy
Institutional Wording
5.15.f statement for a defined-contribution 6.14.f statement for a participant directed
Management Change
plan defined-contribution plan
discuss hybrid pension plans (e.g., cash discuss hybrid pension plans (e.g., cash
Institutional
5.15.g balance plans) and employee stock 6.14.g balance plans) and employee stock
Management
ownership plans ownership plans
distinguish among various types of distinguish among various types of
Institutional foundations, with respect to their foundations, with respect to their Wording
5.15.h 6.14.h
Management description, purpose, source of funds, description, purpose, and source of Change
and annual spending requirements funds

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 compare the investment objectives and compare the investment objectives and
Institutional constraints of foundations, constraints of foundations,
5.15.i 6.14.i
Management endowments, insurance companies, endowments, insurance companies,
and banks and banks
discuss the factors that determine
investment policy for pension funds, discuss the factors that determine
Institutional Wording
5.15.l foundations, endowments, life and 6.14.j investment policy for pension funds,
Management Change
nonlife insurance companies, and foundation endowments, life and non-
banks life insurance companies, and banks
prepare an investment policy prepare an investment policy
Institutional statement for a foundation, an statement for a foundation, an
5.15.j 6.14.k
Management endowment, an insurance company, endowment, an insurance company,
and a bank and a bank
contrast investment companies, contrast investment companies,
Institutional
5.15.k commodity pools, and hedge funds to 6.14.l commodity pools, and hedge funds to
Management
other types of institutional investors other types of institutional investors
compare the asset/liability compare the asset/liability
Institutional management needs of pension funds, management needs of pension funds,
5.15.m 6.14.m
Management foundations, endowments, insurance foundations, endowments, insurance
companies, and banks companies, and banks
compare the investment objectives and compare the investment objectives and
constraints of institutional investors constraints of institutional investors
Institutional given relevant data, such as given relevant data, such as
5.15.n 6.14.n
Management descriptions of their financial descriptions of their financial
circumstances and attitudes toward circumstances and attitudes toward
risk risk
contrast the assumptions concerning contrast the assumptions concerning
Institutional pension liability risk in asset-only and pension liability risk in asset-only and
5.16.a 6.15.a
Management liability-relative approaches to asset liability-relative approaches to asset
allocation allocation
discuss the fundamental and economic discuss the fundamental and economic
Institutional exposures of pension liabilities and exposures of pension liabilities and
5.16.b 6.15.b
Management identify asset types that mimic these identify asset types that mimic these
liability exposures liability exposures
compare pension portfolios built from a compare pension portfolios built from a
traditional asset-only perspective to traditional asset-only perspective to
Institutional portfolios designed relative to liabilities portfolios designed relative to liabilities
5.16.c 6.15.c
Management and discuss why corporations may and discuss why corporations may
choose not to implement fully the choose not to implement fully the
liability mimicking portfolio liability mimicking portfolio

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 discuss the role of, and a framework discuss the role of, and a framework
Capital
6.17.a for, capital market expectations in the 7.16.a for, capital market expectations in the
Markets
portfolio management process portfolio management process
Capital discuss challenges in developing capital discuss challenges in developing capital
6.17.b 7.16.b
Markets market forecasts market forecasts
demonstrate the application of formal demonstrate the application of formal
tools for setting capital market tools for setting capital market
Capital expectations, including statistical tools, expectations, including statistical tools,
6.17.c 7.16.c
Markets discounted cash flow models, the risk discounted cash flow models, the risk
premium approach, and financial premium approach, and financial
equilibrium models equilibrium models
explain the use of survey and panel explain the use of survey and panel
Capital
6.17.d methods and judgment in setting 7.16.d methods and judgment in setting
Markets
capital market expectations capital market expectations
discuss the inventory and business discuss the inventory and business
Capital cycles, the impact of consumer and cycles, the impact of consumer and
6.17.e 7.16.e
Markets business spending, and monetary and business spending, and monetary and
fiscal policy on the business cycle fiscal policy on the business cycle
discuss the impact that the phases of discuss the impact that the phases of
Capital
6.17.f the business cycle have on short- 7.16.f the business cycle have on short-
Markets
term/long-term capital market returns term/long-term capital market returns
explain the relationship of inflation to explain the relationship of inflation to
Capital the business cycle and the implications the business cycle and the implications
6.17.g 7.16.g
Markets of inflation for cash, bonds, equity, and of inflation for cash, bonds, equity, and
real estate returns real estate returns
Capital demonstrate the use of the Taylor rule demonstrate the use of the Taylor rule
6.17.h 7.16.h
Markets to predict central bank behavior to predict central bank behavior
evaluate 1) the shape of the yield evaluate 1) the shape of the yield
Capital curve as an economic predictor and 2) curve as an economic predictor and 2)
6.17.i 7.16.i
Markets the relationship between the yield the relationship between the yield
curve and fiscal and monetary policy curve and fiscal and monetary policy
identify and interpret the components identify and interpret the components
of economic growth trends and of economic growth trends and
Capital demonstrate the application of demonstrate the application of
6.17.j 7.16.j
Markets economic growth trend analysis to the economic growth trend analysis to the
formulation of capital market formulation of capital market
expectations expectations
Capital explain how exogenous shocks may explain how exogenous shocks may
6.17.k 7.16.k
Markets affect economic growth trends affect economic growth trends

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 identify and interpret macroeconomic, identify and interpret macroeconomic,
Capital
6.17.l interest rate, and exchange rate 7.16.l interest rate, and exchange rate
Markets
linkages between economies linkages between economies
discuss the risks faced by investors in discuss the risks faced by investors in
emerging-market securities and the emerging-market securities and the
Capital
6.17.m country risk analysis techniques used 7.16.m country risk analysis techniques used
Markets
to evaluate emerging market to evaluate emerging market
economies economies
Capital compare the major approaches to compare the major approaches to
6.17.n 7.16.n
Markets economic forecasting economic forecasting
demonstrate the use of economic demonstrate the use of economic
Capital
6.17.o information in forecasting asset class 7.16.o information in forecasting asset class
Markets
returns returns
evaluate how economic and
Capital competitive factors affect investment explain how economic and competitive Wording
6.17.p 7.16.p
Markets markets, sectors, and specific factors can affect investment markets, Change
securities sectors, and specific securities
discuss the relative advantages and discuss the relative advantages and
Capital
6.17.q limitations of the major approaches to 7.16.q limitations of the major approaches to
Markets
forecasting exchange rates forecasting exchange rates
recommend and justify changes in the recommend and justify changes in the
component weights of a global component weights of a global
Capital
6.17.r investment portfolio based on trends 7.16.r investment portfolio based on trends
Markets
and expected changes in and expected changes in
macroeconomic factors macroeconomic factors

explain the terms of the Cobb-Douglas
Capital production function and demonstrate
7.18.a
Markets how the function can be used to model
growth in real output under the
assumption of constant returns to scale
evaluate the relative importance of
Capital growth in total factor productivity, in
7.18.b
Markets capital stock, and in labor input given
relevant historical data
demonstrate the use of the Cobb-
Douglas production function in
Capital
7.18.c obtaining a discounted dividend model
Markets
estimate of the intrinsic value of an
equity market
explain the terms of the Cobb-Douglas
production function and demonstrate
7.17.a
how the function can be used to model
growth in real output under the
assumption of constant returns to scale
evaluate the relative importance of
growth in total factor productivity, in
7.17.b
capital stock, and in labor input given
relevant historical data
demonstrate the use of the Cobb-
Douglas production function in
7.17.c obtaining a discounted dividend model
estimate of the intrinsic value of an
equity market

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 critique the use of discounted dividend critique the use of discounted dividend
Capital models and macroeconomic forecasts models and macroeconomic forecasts
7.18.d 7.17.d
Markets to estimate the intrinsic value of an to estimate the intrinsic value of an
equity market equity market
contrast top-down and bottom-up contrast top-down and bottom-up
Capital
7.18.e approaches to forecasting the earnings 7.17.e approaches to forecasting the earnings
Markets
per share of an equity market index per share of an equity market index
Capital discuss the strengths and limitations of discuss the strengths and limitations of
7.18.f 7.17.f
Markets relative valuation models relative valuation models
judge whether an equity market is judge whether an equity market is
Capital
7.18.g under-, fairly, or over-valued using a 7.17.g under-, fairly, or over-valued using a
Markets
relative equity valuation model relative equity valuation model
explain the function of strategic asset explain the function of strategic asset
allocation in portfolio management and allocation in portfolio management and
Asset
8.19.a discuss its role in relation to specifying 8.18.a discuss its role in relation to specifying
Allocation
and controlling the investor’s exposures and controlling the investor’s exposures
to systematic risk to systematic risk
Asset compare strategic and tactical asset
8.19.b 8.18.b
Allocation allocation compare strategic and tactical asset allocation
Asset discuss the importance of asset discuss the importance of asset
8.19.c 8.18.c
Allocation allocation for portfolio performance allocation for portfolio performance
contrast the asset-only and contrast the asset-only and
asset/liability management (ALM) asset/liability management (ALM)
Asset
8.19.d approaches to asset allocation and 8.18.d approaches to asset allocation and
Allocation
discuss the investor circumstances in discuss the investor circumstances in
which they are commonly used which they are commonly used
explain the advantage of dynamic over explain the advantage of dynamic over
Asset
8.19.e static asset allocation and discuss the 8.18.e static asset allocation and discuss the
Allocation
trade-offs of complexity and cost trade-offs of complexity and cost
explain how loss aversion, mental explain how loss aversion, mental
Asset
8.19.f accounting, and fear of regret may 8.18.f accounting, and fear of regret may
Allocation
influence asset allocation policy influence asset allocation policy
Asset evaluate return and risk objectives in evaluate return and risk objectives in
8.19.g 8.18.g
Allocation relation to strategic asset allocation relation to strategic asset allocation
evaluate whether an asset class or set evaluate whether an asset class or set
Asset
8.19.h of asset classes has been appropriately 8.18.h of asset classes has been appropriately
Allocation
specified specified
Asset select and justify an appropriate set of select and justify an appropriate set of
8.19.i 8.18.i
Allocation asset classes for an investor asset classes for an investor

www.passingscore.net 13
 evaluate the theoretical and practical evaluate the theoretical and practical
Asset
8.19.j effects of including additional asset 8.18.j effects of including additional asset
Allocation
classes in an asset allocation classes in an asset allocation
demonstrate the application of demonstrate the application of
Asset mean–variance analysis to decide mean–variance analysis to decide
8.19.k 8.18.k
Allocation whether to include an additional asset whether to include an additional asset
class in an existing portfolio class in an existing portfolio
describe risk, cost, and opportunities describe risk, cost, and opportunities
Asset
8.19.l associated with nondomestic equities 8.18.l associated with nondomestic equities
Allocation
and bonds and bonds
explain the importance of conditional explain the importance of conditional
Asset return correlations in evaluating the return correlations in evaluating the
8.19.m 8.18.m
Allocation diversification benefits of nondomestic diversification benefits of nondomestic
investments investments
explain expected effects on share explain expected effects on share
prices, expected returns, and return prices, expected returns, and return
Asset
8.19.n volatility as a segmented market 8.18.n volatility as a segmented market
Allocation
becomes integrated with global becomes integrated with global
markets markets
explain the major steps involved in explain the major steps involved in
Asset
8.19.o establishing an appropriate asset 8.18.o establishing an appropriate asset
Allocation
allocation allocation
discuss the strengths and limitations of discuss the strengths and limitations of
the following approaches to asset the following approaches to asset
Asset allocation: mean–variance, resampled allocation: mean–variance, resampled
8.19.p 8.18.p
Allocation efficient frontier, Black–Litterman, efficient frontier, Black–Litterman,
Monte Carlo simulation, ALM, and Monte Carlo simulation, ALM, and
experience based experience based
discuss the structure of the minimum- discuss the structure of the minimum-
Asset
8.19.q variance frontier with a constraint 8.18.q variance frontier with a constraint
Allocation
against short sales against short sales
formulate and justify a strategic asset formulate and justify a strategic asset
Asset allocation, given an investment policy allocation, given an investment policy
8.19.r 8.18.r
Allocation statement and capital market statement and capital market
expectations expectations
compare the considerations that affect compare the considerations that affect
asset allocation for individual investors asset allocation for individual investors
Asset
8.19.s versus institutional investors and 8.18.s versus institutional investors and
Allocation
critique a proposed asset allocation in critique a proposed asset allocation in
light of those considerations light of those considerations

www.passingscore.net 14
 formulate and justify tactical asset formulate and justify tactical asset
Asset allocation (TAA) adjustments to allocation (TAA) adjustments to
8.19.t 8.18.t
Allocation strategic asset class weights, given a strategic asset class weights, given a
TAA strategy and expectational data TAA strategy and expectational data
discuss the need for float adjustment in
Asset
12.24.a the construction of international equity Removed
Allocation
benchmarks
discuss trade-offs involved in
constructing international indices,
including 1) breadth versus
Asset
12.24.b investability, 2) precise float Removed
Allocation
adjustment versus transaction costs
from rebalancing, and 3) objectivity
and transparency versus judgment
discuss the effect that a country’s
classification as either a developed or
Asset
12.24.c an emerging market can have on Removed
Allocation
market indices and on investment in
the country’s capital markets.
compare interests of key stakeholder
Asset
12.25.a groups and explain the purpose of a Removed
Allocation
stakeholder impact analysis
discuss problems that can arise in
Asset principal-agent relationships and
12.25.b Removed
Allocation mechanisms that may mitigate such
problems
discuss roots of unethical behavior and
Asset how managers might ensure that
12.25.c Removed
Allocation ethical issues are considered in
business decision making
compare the Friedman doctrine,
Asset Utilitarianism, Kantian Ethics, and
12.25.d Removed
Allocation Rights and Justice Theories as
approaches to ethical decision making
Risk analyze the effects of currency analyze the effects of currency
14.28.a 9.19.a
Management movements on portfolio risk and return movements on portfolio risk and return
Risk discuss strategic choices in currency discuss strategic choices in currency
14.28.b 9.19.b
Management management management

www.passingscore.net 15
 formulate an appropriate currency formulate an appropriate currency
Risk management program given market management program given market Wording
14.28.c 9.19.c
Management facts and client objectives and facts and client’s objectives and Change
constraints constraints
compare active currency trading
Risk compare active currency trading strategies based on economic Wording
14.28.d 9.19.d
Management strategies (fundamental, technical, fundamentals, technical analysis, carry- Change
carry, and volatility-based) trade, and volatility trading
describe how changes in the factors describe how changes in factors
Risk Wording
14.28.e underlying active trading strategies 9.19.e underlying active trading strategies
Management Change
affect tactical trading decisions affect tactical trading decisions
describe how forward contracts and FX
Risk Wording
14.28.f describe how forward contracts and FX 9.19.f (foreign exchange) swaps are used to
Management Change
swaps are used to adjust hedge ratios adjust hedge ratios
describe trading strategies used to describe trading strategies used to
Risk reduce hedging costs and modify the reduce hedging costs and modify the
14.28.g 9.19.g
Management risk–return characteristics of a foreign- risk–return characteristics of a foreign-
currency portfolio currency portfolio
describe the use of cross-hedges, describe the use of cross-hedges,
Risk macro-hedges, and minimum-variance- macro-hedges, and minimum-variance-
14.28.h 9.19.h
Management hedge ratios in portfolios exposed to hedge ratios in portfolios exposed to
multiple foreign currencies multiple foreign currencies
discuss special considerations for
Risk
14.28.i managing emerging market currency 9.19.i discuss challenges for managing
Management
exposures emerging market currency exposures
Risk distinguish between benchmarks and
9.20.a New
Management market indexes
Risk describe investment uses of
9.20.b New
Management benchmarks
Risk
9.20.c New
Management compare types of benchmarks
Risk contrast liability-based benchmarks
9.20.d New
Management with asset-based benchmarks
Risk describe investment uses of market
9.20.e New
Management indexes
Risk discuss tradeoffs in constructing
9.20.f New
Management market indexes
Risk discuss advantages and disadvantages
9.20.g New
Management of index weighting schemes

www.passingscore.net 16
Risk
Management
compare, with respect to investment
objectives, the use of liabilities as a
Fixed Income 9.20.a
benchmark and the use of a bond index
as a benchmark
compare pure bond indexing, enhanced
indexing, and active investing with
Fixed Income 9.20.b respect to the objectives, advantages,
disadvantages, and management of
each
discuss the criteria for selecting a
benchmark bond index and justify the
Fixed Income 9.20.c selection of a specific index when given
a description of an investor’s risk
aversion, income needs, and liabilities
Fixed Income
describe and evaluate techniques, such
as duration matching and the use of
key rate durations, by which an
Fixed Income 9.20.d
enhanced indexer may seek to align
the risk exposures of the portfolio with
those of the benchmark bond index
contrast and demonstrate the use of
total return analysis and scenario
Fixed Income 9.20.e
analysis to assess the risk and return
characteristics of a proposed trade
formulate a bond immunization
strategy to ensure funding of a
Fixed Income 9.20.f predetermined liability and evaluate
the strategy under various interest rate
scenarios
demonstrate the process of rebalancing
Fixed Income 9.20.g a portfolio to reestablish a desired
dollar duration
explain the importance of spread
Fixed Income 9.20.h
duration
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evaluate the selection of a benchmark
9.20.h New
for a particular investment strategy
compare, with respect to investment
objectives, the use of liabilities as a
10.21.a
benchmark and the use of a bond index
as a benchmark
compare pure bond indexing, enhanced
indexing, and active investing with
10.21.b respect to the objectives, advantages,
disadvantages, and management of
each
discuss the criteria for selecting a
benchmark bond index and justify the
10.21.c selection of a specific index when given
a description of an investor’s risk
aversion, income needs, and liabilities
critique the use of bond market indexes
10.21.d New
as benchmarks
describe and evaluate techniques, such
as duration matching and the use of
key rate durations, by which an
10.21.e
enhanced indexer may seek to align
the risk exposures of the portfolio with
those of the benchmark bond index
contrast and demonstrate the use of
total return analysis and scenario
10.21.f
analysis to assess the risk and return
characteristics of a proposed trade
formulate a bond immunization
strategy to ensure funding of a
10.21.g predetermined liability and evaluate
the strategy under various interest rate
scenarios
demonstrate the process of rebalancing
10.21.h a portfolio to reestablish a desired
dollar duration
explain the importance of spread
10.21.i
duration
17
 discuss the extensions that have been
made to classical immunization theory,
Fixed Income 9.20.i
including the introduction of contingent
immunization
explain the risks associated with
managing a portfolio against a liability
Fixed Income 9.20.j
structure, including interest rate risk,
contingent claim risk, and cap risk
compare immunization strategies for a
Fixed Income 9.20.k single liability, multiple liabilities, and
general cash flows
compare risk minimization with return
Fixed Income 9.20.l
maximization in immunized portfolios
demonstrate the use of cash flow
matching to fund a fixed set of future
liabilities and compare the advantages
Fixed Income 9.20.m
and disadvantages of cash flow
matching to those of immunization
strategies
explain classic relative-value analysis,
based on top-down and bottom-up
Fixed Income 9.21.a
approaches to credit bond portfolio
management
discuss the implications of cyclical
supply and demand changes in the
Fixed Income 9.21.b primary corporate bond market and the
impact of secular changes in the
market’s dominant product structures
explain the influence of investors’ short-
Fixed Income 9.21.c and long-term liquidity needs on
portfolio management decisions
discuss common rationales for
Fixed Income 9.21.d
secondary market trading
discuss corporate bond portfolio
Fixed Income 9.21.e strategies that are based on relative
value
evaluate the effect of leverage on
Fixed Income 10.22.a portfolio duration and investment
returns
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discuss the extensions that have been
made to classical immunization theory,
10.21.j
including the introduction of contingent
immunization
explain the risks associated with
managing a portfolio against a liability
10.21.k
structure, including interest rate risk,
contingent claim risk, and cap risk
compare immunization strategies for a
10.21.l single liability, multiple liabilities, and
general cash flows
compare risk minimization with return
10.21.m
maximization in immunized portfolios
demonstrate the use of cash flow
matching to fund a fixed set of future
liabilities and compare the advantages
10.21.n
and disadvantages of cash flow
matching to those of immunization
strategies
explain classic relative-value analysis,
based on top-down and bottom-up
10.22.a
approaches to credit bond portfolio
management
discuss the implications of cyclical
supply and demand changes in the
10.22.b primary corporate bond market and the
impact of secular changes in the
market’s dominant product structures
explain the influence of investors’ short-
10.22.c and long-term liquidity needs on
portfolio management decisions
discuss common rationales for
10.22.d
secondary market trading
discuss corporate bond portfolio
10.22.e strategies that are based on relative
value
evaluate the effect of leverage on
11.23.a portfolio duration and investment
returns
18
 discuss the use of repurchase
agreements (repos) to finance bond
Fixed Income 10.22.b
purchases and the factors that affect
the repo rate
critique the use of standard deviation,
target semivariance, shortfall risk, and
Fixed Income 10.22.c
value at risk as measures of fixed-
income portfolio risk
demonstrate the advantages of using
Fixed Income 10.22.d futures instead of cash market
instruments to alter portfolio risk
formulate and evaluate an
Fixed Income 10.22.e immunization strategy based on
interest rate futures
explain the use of interest rate swaps
Fixed Income 10.22.f and options to alter portfolio cash flows
and exposure to interest rate risk
compare default risk, credit spread
risk, and downgrade risk and
demonstrate the use of credit
Fixed Income 10.22.g
derivative instruments to address each
risk in the context of a fixed-income
portfolio
explain the potential sources of excess
Fixed Income 10.22.h return for an international bond
portfolio
evaluate 1) the change in value for a
foreign bond when domestic interest
rates change and 2) the bond’s
Fixed Income 10.22.i
contribution to duration in a domestic
portfolio, given the duration of the
foreign bond and the country beta
recommend and justify whether to
Fixed Income 10.22.j hedge or not hedge currency risk in an
international bond investment
describe how breakeven spread
analysis can be used to evaluate the
Fixed Income 10.22.k
risk in seeking yield advantages across
international bond markets
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discuss the use of repurchase
agreements (repos) to finance bond
11.23.b
purchases and the factors that affect
the repo rate
critique the use of standard deviation,
target semivariance, shortfall risk, and
11.23.c
value at risk as measures of fixed-
income portfolio risk
demonstrate the advantages of using
11.23.d futures instead of cash market
instruments to alter portfolio risk
formulate and evaluate an
11.23.e immunization strategy based on
interest rate futures
explain the use of interest rate swaps
11.23.f and options to alter portfolio cash flows
and exposure to interest rate risk
compare default risk, credit spread
risk, and downgrade risk and
demonstrate the use of credit
11.23.g
derivative instruments to address each
risk in the context of a fixed-income
portfolio
explain the potential sources of excess
11.23.h return for an international bond
portfolio
evaluate 1) the change in value for a
foreign bond when domestic interest
rates change and 2) the bond’s
11.23.i
contribution to duration in a domestic
portfolio, given the duration of the
foreign bond and the country beta
recommend and justify whether to
11.23.j hedge or not hedge currency risk in an
international bond investment
describe how breakeven spread
analysis can be used to evaluate the
11.23.k
risk in seeking yield advantages across
international bond markets
19
 discuss the advantages and risks of
Fixed Income 10.22.l
investing in emerging market debt
discuss the criteria for selecting a fixed-
Fixed Income 10.22.m
income manager
Equity discuss the role of equities in the
11.23.a
Management overall portfolio
discuss the rationales for passive,
active, and semiactive (enhanced
Equity index) equity investment approaches
11.23.b
Management and distinguish among those
approaches with respect to expected
active return and tracking risk
recommend an equity investment
Equity approach when given an investor’s
11.23.c
Management investment policy statement and beliefs
concerning market efficiency
distinguish among the predominant
Equity
11.23.d weighting schemes used in the
Management
construction of major equity share
indices and evaluate the biases of each
compare alternative methods for
establishing passive exposure to an
equity market, including indexed
Equity
11.23.e separate or pooled accounts, index
Management
mutual funds, exchange-traded funds,
equity index futures, and equity total
return swaps
compare full replication, stratified
sampling, and optimization as
approaches to constructing an indexed
Equity
11.23.f portfolio and recommend an approach
Management
when given a description of the
investment vehicle and the index to be
tracked
explain and justify the use of equity
Equity investment–style classifications and
11.23.g
Management discuss the difficulties in applying style
definitions consistently
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discuss the advantages and risks of
11.23.l
investing in emerging market debt
discuss the criteria for selecting a fixed-
11.23.m
income manager
discuss the role of equities in the
12.24.a
overall portfolio
discuss the rationales for passive,
active, and semiactive (enhanced
index) equity investment approaches
12.24.b
and distinguish among those
approaches with respect to expected
active return and tracking risk
recommend an equity investment
approach when given an investor’s
12.24.c
investment policy statement and beliefs
concerning market efficiency
distinguish among the predominant
Wording
12.24.d weighting schemes used in the
Change
construction of major equity market
indices and evaluate the biases of each
compare alternative methods for
establishing passive exposure to an
equity market, including indexed
12.24.e separate or pooled accounts, index
mutual funds, exchange-traded funds,
equity index futures, and equity total
return swaps
compare full replication, stratified
sampling, and optimization as
approaches to constructing an indexed
12.24.f portfolio and recommend an approach
when given a description of the
investment vehicle and the index to be
tracked
explain and justify the use of equity
investment–style classifications and
12.24.g
discuss the difficulties in applying style
definitions consistently
20
 explain the rationales and primary
Equity concerns of value investors and growth
11.23.h
Management investors and discuss the key risks of
each investment style
compare techniques for identifying
investment styles and characterize the
style of an investor when given a
Equity description of the investor’s security
11.23.i
Management selection method, details on the
investor’s security holdings, or the
results of a returns-based style
analysis
Equity compare the methodologies used to
11.23.j
Management construct equity style indices
interpret the results of an equity style
Equity
11.23.k box analysis and discuss the
Management
consequences of style drift
distinguish between positive and
negative screens involving socially
Equity
11.23.l responsible investing criteria and
Management
discuss their potential effects on a
portfolio’s style characteristics
compare long–short and long-only
investment strategies, including their
Equity
11.23.m risks and potential alphas, and explain
Management
why greater pricing inefficiency may
exist on the short side of the market
explain how a market-neutral portfolio
can be “equitized” to gain equity
Equity
11.23.n market exposure and compare
Management
equitized market-neutral and short-
extension portfolios
Equity compare the sell disciplines of active
11.23.o
Management investors
contrast derivatives-based and stock-
based enhanced indexing strategies
Equity
11.23.p and justify enhanced indexing on the
Management
basis of risk control and the
information ratio
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explain the rationales and primary
concerns of value investors and growth
12.24.h
investors and discuss the key risks of
each investment style
compare techniques for identifying
investment styles and characterize the
style of an investor when given a
description of the investor’s security
12.24.i
selection method, details on the
investor’s security holdings, or the
results of a returns-based style
analysis
compare the methodologies used to
12.24.j
construct equity style indices
interpret the results of an equity style
12.24.k box analysis and discuss the
consequences of style drift
distinguish between positive and
negative screens involving socially
12.24.l responsible investing criteria and
discuss their potential effects on a
portfolio’s style characteristics
compare long–short and long-only
investment strategies, including their
12.24.m risks and potential alphas, and explain
why greater pricing inefficiency may
exist on the short side of the market
explain how a market-neutral portfolio
can be “equitized” to gain equity
12.24.n market exposure and compare
equitized market-neutral and short-
extension portfolios
compare the sell disciplines of active
12.24.o
investors
contrast derivatives-based and stock-
based enhanced indexing strategies
12.24.p and justify enhanced indexing on the
basis of risk control and the
information ratio
21
 recommend and justify, in a risk-return
Equity framework, the optimal portfolio
11.23.q
Management allocations to a group of investment
managers
explain the core-satellite approach to
portfolio construction and discuss the
Equity
11.23.r advantages and disadvantages of
Management
adding a completeness fund to control
overall risk exposures
distinguish among the components of
total active return (“true” active return
Equity and “misfit” active return) and their
11.23.s
Management associated risk measures and explain
their relevance for evaluating a
portfolio of managers
recommend and justify, in a risk-return
framework, the optimal portfolio
12.24.q
allocations to a group of investment
managers
explain the core-satellite approach to
portfolio construction and discuss the
12.24.r advantages and disadvantages of
adding a completeness fund to control
overall risk exposures
distinguish among the components of
total active return (“true” active return
and “misfit” active return) and their
12.24.s
associated risk measures and explain
their relevance for evaluating a
portfolio of managers

Equity explain alpha and beta separation as explain alpha and beta separation as
11.23.t 12.24.t
Management an approach to active management and an approach to active management and
demonstrate the use of portable alpha demonstrate the use of portable alpha
describe the process of identifying, describe the process of identifying,
Equity
11.23.u selecting, and contracting with equity 12.24.u selecting, and contracting with equity
Management
managers managers
Equity contrast the top-down and bottom-up contrast the top-down and bottom-up
11.23.v 12.24.v
Management approaches to equity research approaches to equity research
describe common features of describe common features of
alternative investments and their alternative investments and their
Alternative
13.26.a markets and how alternative 13.25.a markets and how alternative
Investments
investments may be grouped by the investments may be grouped by the
role they typically play in a portfolio role they typically play in a portfolio
explain and justify the major due explain and justify the major due
Alternative diligence checkpoints involved in diligence checkpoints involved in
13.26.b 13.25.b
Investments selecting active managers of selecting active managers of
alternative investments alternative investments
explain distinctive issues that explain distinctive issues that
Alternative alternative investments raise for alternative investments raise for
13.26.c 13.25.c
Investments investment advisers of private wealth investment advisers of private wealth
clients clients

www.passingscore.net 22
 distinguish among the principal classes distinguish among the principal classes
of alternative investments, including of alternative investments, including
Alternative real estate, private equity, commodity real estate, private equity, commodity
13.26.d 13.25.d
Investments investments, hedge funds, managed investments, hedge funds, managed
futures, buyout funds, infrastructure futures, buyout funds, infrastructure
funds, and distressed securities funds, and distressed securities
discuss the construction and discuss the construction and
Alternative interpretation of benchmarks and the interpretation of benchmarks and the
13.26.e 13.25.e
Investments problem of benchmark bias in problem of benchmark bias in
alternative investment groups alternative investment groups
evaluate the return enhancement evaluate the return enhancement
and/or risk diversification effects of and/or risk diversification effects of
Alternative adding an alternative investment to a adding an alternative investment to a
13.26.f 13.25.f
Investments reference portfolio (for example, a reference portfolio (for example, a
portfolio invested solely in common portfolio invested solely in common
equity and bonds) equity and bonds)
describe advantages and disadvantages describe advantages and disadvantages
Alternative
13.26.g of direct equity investments in real 13.25.g of direct equity investments in real
Investments
estate estate
discuss the major issuers and suppliers discuss the major issuers and suppliers
of venture capital, the stages through of venture capital, the stages through
Alternative which private companies pass (seed which private companies pass (seed
13.26.h 13.25.h
Investments stage through exit), the characteristic stage through exit), the characteristic
sources of financing at each stage, and sources of financing at each stage, and
the purpose of such financing the purpose of such financing
Alternative compare venture capital funds and compare venture capital funds and
13.26.i 13.25.i
Investments buyout funds buyout funds
discuss the use of convertible preferred discuss the use of convertible preferred
Alternative
13.26.j stock in direct venture capital 13.25.j stock in direct venture capital
Investments
investment investment
explain the typical structure of a explain the typical structure of a
Alternative private equity fund, including the private equity fund, including the
13.26.k 13.25.k
Investments compensation to the fund’s sponsor compensation to the fund’s sponsor
(general partner) and typical timelines (general partner) and typical timelines
discuss issues that must be addressed discuss issues that must be addressed
Alternative
13.26.l in formulating a private equity 13.25.l in formulating a private equity
Investments
investment strategy investment strategy
Alternative compare indirect and direct commodity compare indirect and direct commodity
13.26.m 13.25.m
Investments investment investment

www.passingscore.net 23
 explain the three components of return explain the three components of return
for a commodity futures contract and for a commodity futures contract and
Alternative
13.26.n the effect that an upward- or 13.25.n the effect that an upward- or
Investments
downward-sloping term structure of downward-sloping term structure of
futures prices will have on roll yield futures prices will have on roll yield
describe the principle roles suggested describe the principal roles suggested
for commodities in a portfolio and for commodities in a portfolio and
Alternative
13.26.o explain why some commodity classes 13.25.o explain why some commodity classes sp
Investments
may provide a better hedge against may provide a better hedge against
inflation than others inflation than others
identify and explain the style identify and explain the style
Alternative
13.26.p classification of a hedge fund, given a 13.25.p classification of a hedge fund, given a
Investments
description of its investment strategy description of its investment strategy
discuss the typical structure of a hedge discuss the typical structure of a hedge
Alternative fund, including the fee structure, and fund, including the fee structure, and
13.26.q 13.25.q
Investments explain the rationale for high-water explain the rationale for high-water
mark provisions mark provisions
describe the purpose and describe the purpose and
Alternative
13.26.r characteristics of fund-of-funds hedge 13.25.r characteristics of fund-of-funds hedge
Investments
funds funds
Alternative discuss concerns involved in hedge discuss concerns involved in hedge
13.26.s 13.25.s
Investments fund performance evaluation fund performance evaluation
describe trading strategies of managed describe trading strategies of managed
Alternative
13.26.t futures programs and the role of 13.25.t futures programs and the role of
Investments
managed futures in a portfolio managed futures in a portfolio
Alternative
13.26.u describe strategies and risks associated 13.25.u describe strategies and risks associated
Investments
with investing in distressed securities with investing in distressed securities
explain event risk, market liquidity risk, explain event risk, market liquidity risk,
Alternative market risk, and “J-factor risk” in market risk, and “J-factor risk” in
13.26.v 13.25.v
Investments relation to investing in distressed relation to investing in distressed
securities securities
discuss features of the risk discuss features of the risk
Risk management process, risk governance, management process, risk governance,
14.27.a 14.26.a
Management risk reduction, and an enterprise risk risk reduction, and an enterprise risk
management system management system
Risk evaluate strengths and weaknesses of evaluate strengths and weaknesses of
14.27.b 14.26.b
Management a company’s risk management process a company’s risk management process
Risk describe steps in an effective enterprise describe steps in an effective enterprise
14.27.c 14.26.c
Management risk management system risk management system

www.passingscore.net 24
 evaluate a company’s or a portfolio’s evaluate a company’s or a portfolio’s
Risk
14.27.d exposures to financial and nonfinancial 14.26.d exposures to financial and nonfinancial
Management
risk factors risk factors
calculate and interpret value at risk calculate and interpret value at risk
Risk (VAR) and explain its role in measuring (VAR) and explain its role in measuring
14.27.e 14.26.e
Management overall and individual position market overall and individual position market
risk risk
compare the analytical compare the analytical
(variance–covariance), historical, and (variance–covariance), historical, and
Risk
14.27.f Monte Carlo methods for estimating 14.26.f Monte Carlo methods for estimating
Management
VAR and discuss the advantages and VAR and discuss the advantages and
disadvantages of each disadvantages of each
discuss advantages and limitations of discuss advantages and limitations of
Risk VAR and its extensions, including cash VAR and its extensions, including cash
14.27.g 14.26.g
Management flow at risk, earnings at risk, and tail flow at risk, earnings at risk, and tail
value at risk value at risk
compare alternative types of stress compare alternative types of stress
Risk
14.27.h testing and discuss advantages and 14.26.h testing and discuss advantages and
Management
disadvantages of each disadvantages of each
evaluate the credit risk of an evaluate the credit risk of an
Risk
14.27.i investment position, including forward 14.26.i investment position, including forward
Management
contract, swap, and option positions contract, swap, and option positions
demonstrate the use of risk budgeting, demonstrate the use of risk budgeting,
Risk
14.27.j position limits, and other methods for 14.26.j position limits, and other methods for
Management
managing market risk managing market risk
demonstrate the use of exposure demonstrate the use of exposure
limits, marking to market, collateral, limits, marking to market, collateral,
Risk
14.27.k netting arrangements, credit 14.26.k netting arrangements, credit
Management
standards, and credit derivatives to standards, and credit derivatives to
manage credit risk manage credit risk
discuss the Sharpe ratio, risk-adjusted discuss the Sharpe ratio, risk-adjusted
return on capital, return over return on capital, return over
Risk
14.27.l maximum drawdown, and the Sortino 14.26.l maximum drawdown, and the Sortino
Management
ratio as measures of risk-adjusted ratio as measures of risk-adjusted
performance performance
Risk demonstrate the use of VAR and stress demonstrate the use of VAR and stress
14.27.m 14.26.m
Management testing in setting capital requirements testing in setting capital requirements

www.passingscore.net 25
 demonstrate the use of equity futures demonstrate the use of equity futures
contracts to achieve a target beta for a contracts to achieve a target beta for a
Derivative
15.29.a stock portfolio and calculate and 15.27.a stock portfolio and calculate and
Applications
interpret the number of futures interpret the number of futures
contracts required contracts required
construct a synthetic stock index fund construct a synthetic stock index fund
Derivative
15.29.b using cash and stock index futures 15.27.b using cash and stock index futures
Applications
(equitizing cash) (equitizing cash)
explain the use of stock index futures explain the use of stock index futures
Derivative
15.29.c to convert a long stock position into 15.27.c to convert a long stock position into
Applications
synthetic cash synthetic cash
demonstrate the use of equity and demonstrate the use of equity and
Derivative
15.29.d bond futures to adjust the allocation of 15.27.d bond futures to adjust the allocation of
Applications
a portfolio between equity and debt a portfolio between equity and debt
demonstrate the use of futures to demonstrate the use of futures to
adjust the allocation of a portfolio adjust the allocation of a portfolio
Derivative across equity sectors and to gain across equity sectors and to gain
15.29.e 15.27.e
Applications exposure to an asset class in advance exposure to an asset class in advance
of actually committing funds to the of actually committing funds to the
asset class asset class
explain exchange rate risk and explain exchange rate risk and
demonstrate the use of forward demonstrate the use of forward
Derivative
15.29.f contracts to reduce the risk associated 15.27.f contracts to reduce the risk associated
Applications
with a future receipt or payment in a with a future receipt or payment in a
foreign currency foreign currency
explain the limitations to hedging the explain the limitations to hedging the
Derivative exchange rate risk of a foreign market exchange rate risk of a foreign market
15.29.g 15.27.g
Applications portfolio and discuss feasible strategies portfolio and discuss feasible strategies
for managing such risk for managing such risk
compare the use of covered calls and compare the use of covered calls and
Derivative
15.30.a protective puts to manage risk 15.28.a protective puts to manage risk
Applications
exposure to individual securities exposure to individual securities
calculate and interpret the value at calculate and interpret the value at
expiration, profit, maximum profit, expiration, profit, maximum profit,
maximum loss, breakeven underlying maximum loss, breakeven underlying
Derivative price at expiration, and general shape price at expiration, and general shape
15.30.b 15.28.b
Applications of the graph for the following option of the graph for the following option
strategies: bull spread, bear spread, strategies: bull spread, bear spread,
butterfly spread, collar, straddle, box butterfly spread, collar, straddle, box
spread spread

www.passingscore.net 26
 calculate the effective annual rate for a calculate the effective annual rate for a
given interest rate outcome when a given interest rate outcome when a
Derivative
15.30.c borrower (lender) manages the risk of 15.28.c borrower (lender) manages the risk of
Applications
an anticipated loan using an interest an anticipated loan using an interest
rate call (put) option rate call (put) option
calculate the payoffs for a series of calculate the payoffs for a series of
interest rate outcomes when a floating interest rate outcomes when a floating
Derivative
15.30.d rate loan is combined with 1) an 15.28.d rate loan is combined with 1) an
Applications
interest rate cap, 2) an interest rate interest rate cap, 2) an interest rate
floor, or 3) an interest rate collar floor, or 3) an interest rate collar
explain why and how a dealer delta explain why and how a dealer delta
Derivative hedges an option position, why delta hedges an option position, why delta
15.30.e 15.28.e
Applications changes, and how the dealer adjusts to changes, and how the dealer adjusts to
maintain the delta hedge maintain the delta hedge
interpret the gamma of a delta-hedged interpret the gamma of a delta-hedged
portfolio and explain how gamma portfolio and explain how gamma
Derivative
15.30.f changes as in-the-money and out-of- 15.28.f changes as in-the-money and out-of-
Applications
the-money options move toward the-money options move toward
expiration expiration
demonstrate how an interest rate swap demonstrate how an interest rate swap
Derivative can be used to convert a floating-rate can be used to convert a floating-rate
15.31.a 15.29.a
Applications (fixed-rate) loan to a fixed-rate (fixed-rate) loan to a fixed-rate
(floating-rate) loan (floating-rate) loan
Derivative calculate and interpret the duration of calculate and interpret the duration of
15.31.b 15.29.b
Applications an interest rate swap an interest rate swap
Derivative explain the effect of an interest rate explain the effect of an interest rate
15.31.c 15.29.c
Applications swap on an entity’s cash flow risk swap on an entity’s cash flow risk
determine the notional principal value determine the notional principal value
Derivative needed on an interest rate swap to needed on an interest rate swap to
15.31.d 15.29.d
Applications achieve a desired level of duration in a achieve a desired level of duration in a
fixed-income portfolio fixed-income portfolio
explain how a company can generate explain how a company can generate
savings by issuing a loan or bond in its savings by issuing a loan or bond in its
Derivative
15.31.e own currency and using a currency 15.29.e own currency and using a currency
Applications
swap to convert the obligation into swap to convert the obligation into
another currency another currency
demonstrate how a firm can use a demonstrate how a firm can use a
Derivative currency swap to convert a series of currency swap to convert a series of
15.31.f 15.29.f
Applications foreign cash receipts into domestic foreign cash receipts into domestic
cash receipts cash receipts

www.passingscore.net 27
 explain how equity swaps can be used explain how equity swaps can be used
to diversify a concentrated equity to diversify a concentrated equity
Derivative portfolio, provide international portfolio, provide international
15.31.g 15.29.g
Applications diversification to a domestic portfolio, diversification to a domestic portfolio,
and alter portfolio allocations to stocks and alter portfolio allocations to stocks
and bonds and bonds
demonstrate the use of an interest rate demonstrate the use of an interest rate
Derivative swaption 1) to change the payment swaption 1) to change the payment
15.31.h 15.29.h
Applications pattern of an anticipated future loan pattern of an anticipated future loan
and 2) to terminate a swap and 2) to terminate a swap
compare market orders with limit compare market orders with limit
Portfolio
16.32.a orders, including the price and 16.30.a orders, including the price and
Execution
execution uncertainty of each execution uncertainty of each
calculate and interpret the effective calculate and interpret the effective
Portfolio spread of a market order and contrast spread of a market order and contrast
16.32.b 16.30.b
Execution it to the quoted bid–ask spread as a it to the quoted bid–ask spread as a
measure of trading cost measure of trading cost
Portfolio compare alternative market structures compare alternative market structures
16.32.c 16.30.c
Execution and their relative advantages and their relative advantages
Portfolio compare the roles of brokers and compare the roles of brokers and
16.32.d 16.30.d
Execution dealers dealers
explain the criteria of market quality explain the criteria of market quality
Portfolio and evaluate the quality of a market and evaluate the quality of a market
16.32.e 16.30.e
Execution when given a description of its when given a description of its
characteristics characteristics
explain the components of execution explain the components of execution
Portfolio costs, including explicit and implicit costs, including explicit and implicit
16.32.f 16.30.f
Execution costs, and evaluate a trade in terms of costs, and evaluate a trade in terms of
these costs these costs
calculate and discuss implementation calculate and discuss implementation
Portfolio
16.32.g shortfall as a measure of transaction 16.30.g shortfall as a measure of transaction
Execution
costs costs
contrast volume weighted average contrast volume weighted average
Portfolio price (VWAP) and implementation price (VWAP) and implementation
16.32.h 16.30.h
Execution shortfall as measures of transaction shortfall as measures of transaction
costs costs
explain the use of econometric explain the use of econometric
Portfolio
16.32.i methods in pretrade analysis to 16.30.i methods in pretrade analysis to
Execution
estimate implicit transaction costs estimate implicit transaction costs

www.passingscore.net 28
 discuss the major types of traders,
Portfolio based on their motivation to trade,
16.32.j
Execution time versus price preferences, and
preferred order types
describe the suitable uses of major
trading tactics, evaluate their relative
costs, advantages, and weaknesses,
Portfolio
16.32.k and recommend a trading tactic when
Execution
given a description of the investor’s
motivation to trade, the size of the
trade, and key market characteristics
explain the motivation for algorithmic
Portfolio
16.32.l trading and discuss the basic classes of
Execution
algorithmic trading strategies
discuss the factors that typically
determine the selection of a specific
Portfolio algorithmic trading strategy, including
16.32.m
Execution order size, average daily trading
volume, bid–ask spread, and the
urgency of the order
Portfolio explain the meaning and criteria of
16.32.n
Execution best execution
evaluate a firm’s investment and
Portfolio trading procedures, including
16.32.o
Execution processes, disclosures, and record
keeping, with respect to best execution
Portfolio
16.32.p
Execution discuss the role of ethics in trading
Portfolio discuss a fiduciary’s responsibilities in
16.33.a
Execution monitoring an investment portfolio
discuss the monitoring of investor
circumstances, market/economic
Portfolio conditions, and portfolio holdings and
16.33.b
Execution explain the effects that changes in each
of these areas can have on the
investor’s portfolio
recommend and justify revisions to an
Portfolio investor’s investment policy statement
16.33.c
Execution and strategic asset allocation, given a
change in investor circumstances
www.passingscore.net
discuss the major types of traders,
based on their motivation to trade,
16.30.j
time versus price preferences, and
preferred order types
describe the suitable uses of major
trading tactics, evaluate their relative
costs, advantages, and weaknesses,
16.30.k and recommend a trading tactic when
given a description of the investor’s
motivation to trade, the size of the
trade, and key market characteristics
explain the motivation for algorithmic
16.30.l trading and discuss the basic classes of
algorithmic trading strategies
discuss the factors that typically
determine the selection of a specific
algorithmic trading strategy, including
16.30.m
order size, average daily trading
volume, bid–ask spread, and the
urgency of the order
explain the meaning and criteria of
16.30.n
best execution
evaluate a firm’s investment and
trading procedures, including
16.30.o
processes, disclosures, and record
keeping, with respect to best execution
16.30.p
discuss the role of ethics in trading
discuss a fiduciary’s responsibilities in
16.31.a
monitoring an investment portfolio
discuss the monitoring of investor
circumstances, market/economic
conditions, and portfolio holdings and
16.31.b
explain the effects that changes in each
of these areas can have on the
investor’s portfolio
recommend and justify revisions to an
investor’s investment policy statement
16.31.c
and strategic asset allocation, given a
change in investor circumstances
29
 discuss the benefits and costs of
Portfolio
16.33.d rebalancing a portfolio to the investor’s
Execution
strategic asset allocation
Portfolio contrast calendar rebalancing to
16.33.e
Execution percentage-of-portfolio rebalancing
discuss the key determinants of the
Portfolio optimal corridor width of an asset class
16.33.f
Execution in a percentage-of-portfolio rebalancing
program
compare the benefits of rebalancing an
Portfolio asset class to its target portfolio weight
16.33.g
Execution versus rebalancing the asset class to
stay within its allowed range
explain the performance consequences
in up, down, and nontrending markets
Portfolio of 1) rebalancing to a constant mix of
16.33.h
Execution equities and bills, 2) buying and
holding equities, and 3) constant
proportion portfolio insurance (CPPI)
Portfolio distinguish among linear, concave, and
16.33.i
Execution convex rebalancing strategies
judge the appropriateness of constant
mix, buy-and-hold, and CPPI
Portfolio
16.33.j rebalancing strategies when given an
Execution
investor’s risk tolerance and asset
return expectations
demonstrate the importance of
performance evaluation from the
Performance 17.34.a
perspective of fund sponsors and the
perspective of investment managers
explain the following components of
Performance 17.34.b portfolio evaluation (performance
measurement, performance attribution,
and performance appraisal)
calculate, interpret, and contrast time-
Performance 17.34.c weighted and money-weighted rates of
return and discuss how each is affected
by cash contributions and withdrawals
www.passingscore.net
discuss the benefits and costs of
16.31.d rebalancing a portfolio to the investor’s
strategic asset allocation
contrast calendar rebalancing to
16.31.e
percentage-of-portfolio rebalancing
discuss the key determinants of the
optimal corridor width of an asset class
16.31.f
in a percentage-of-portfolio rebalancing
program
compare the benefits of rebalancing an
asset class to its target portfolio weight
16.31.g
versus rebalancing the asset class to
stay within its allowed range
explain the performance consequences
in up, down, and nontrending markets
of 1) rebalancing to a constant mix of
16.31.h
equities and bills, 2) buying and
holding equities, and 3) constant
proportion portfolio insurance (CPPI)
distinguish among linear, concave, and
16.31.i
convex rebalancing strategies
judge the appropriateness of constant
mix, buy-and-hold, and CPPI
16.31.j rebalancing strategies when given an
investor’s risk tolerance and asset
return expectations
demonstrate the importance of
performance evaluation from the
17.32.a
perspective of fund sponsors and the
perspective of investment managers
explain the following components of
17.32.b portfolio evaluation: performance
measurement, performance attribution,
and performance appraisal
calculate, interpret, and contrast time-
17.32.c weighted and money-weighted rates of
return and discuss how each is affected
by cash contributions and withdrawals
30
 identify and explain potential data
Performance 17.34.d quality issues as they relate to
calculating rates of return
demonstrate the decomposition of
portfolio returns into components
Performance 17.34.e
attributable to the market, to style,
and to active management
discuss the properties of a valid
benchmark and explain advantages and
Performance 17.34.f
disadvantages of alternative types of
performance benchmarks
explain the steps involved in
Performance 17.34.g constructing a custom security-based
benchmark
discuss the validity of using manager
Performance 17.34.h
universes as benchmarks
evaluate benchmark quality by
Performance 17.34.i applying tests of quality to a variety of
possible benchmarks
discuss issues that arise when
Performance 17.34.j
assigning benchmarks to hedge funds
distinguish between macro and micro
Performance 17.34.k performance attribution and discuss
the inputs typically required for each
demonstrate and contrast the use of
macro and micro performance
Performance 17.34.l
attribution methodologies to identify
the sources of investment performance
discuss the use of fundamental factor
Performance 17.34.m models in micro performance
attribution
evaluate the effects of the external
interest rate environment and active
Performance 17.34.n
management on fixed-income portfolio
returns
explain the management factors that
contribute to a fixed-income portfolio’s
Performance 17.34.o total return and interpret the results of
a fixed-income performance attribution
analysis
www.passingscore.net
identify and explain potential data
17.32.d quality issues as they relate to
calculating rates of return
demonstrate the decomposition of
portfolio returns into components
17.32.e
attributable to the market, to style,
and to active management
discuss the properties of a valid
performance benchmark and explain Wording
17.32.f
advantages and disadvantages of Change
alternative types of benchmarks
explain the steps involved in
17.32.g constructing a custom security-based
benchmark
discuss the validity of using manager
17.32.h
universes as benchmarks
evaluate benchmark quality by
17.32.i applying tests of quality to a variety of
possible benchmarks
discuss issues that arise when
17.32.j
assigning benchmarks to hedge funds
distinguish between macro and micro
17.32.k performance attribution and discuss
the inputs typically required for each
demonstrate and contrast the use of
macro and micro performance
17.32.l
attribution methodologies to identify
the sources of investment performance
discuss the use of fundamental factor
17.32.m models in micro performance
attribution
evaluate the effects of the external
interest rate environment and active
17.32.n
management on fixed-income portfolio
returns
explain the management factors that
contribute to a fixed-income portfolio’s
17.32.o total return and interpret the results of
a fixed-income performance attribution
analysis
31
 calculate, interpret, and contrast
alternative risk-adjusted performance
Performance 17.34.p measures, including (in their ex post
forms) alpha, information ratio, Treynor
measure, Sharpe ratio, and M2
explain how a portfolio’s alpha and beta
are incorporated into the information
Performance 17.34.q
ratio, Treynor measure, and Sharpe
ratio
demonstrate the use of performance
Performance 17.34.r quality control charts in performance
appraisal
discuss the issues involved in manager
continuation policy decisions, including
Performance 17.34.s
the costs of hiring and firing
investment managers
contrast Type I and Type II errors in
Performance 17.34.t
manager continuation decisions
discuss the objectives, key
characteristics, and scope of the GIPS
GIPS 18.35.a standards and their benefits to
prospective clients and investment
managers
explain the fundamentals of compliance
with the GIPS standards, including the
GIPS 18.35.b
definition of the firm and the firm’s
definition of discretion
explain the requirements and
recommendations of the GIPS
standards with respect to input data,
GIPS 18.35.c
including accounting policies related to
valuation and performance
measurement
discuss the requirements of the GIPS
standards with respect to return
calculation methodologies, including
GIPS 18.35.d
the treatment of external cash flows,
cash and cash equivalents, and
expenses and fees
www.passingscore.net
calculate, interpret, and contrast
alternative risk-adjusted performance
17.32.p measures, including (in their ex post
forms) alpha, information ratio, Treynor
measure, Sharpe ratio, and M2
explain how a portfolio’s alpha and beta
are incorporated into the information
17.32.q
ratio, Treynor measure, and Sharpe
ratio
demonstrate the use of performance
17.32.r quality control charts in performance
appraisal
discuss the issues involved in manager
continuation policy decisions, including
17.32.s
the costs of hiring and firing
investment managers
contrast Type I and Type II errors in
17.32.t
manager continuation decisions
discuss the objectives, key
characteristics, and scope of the GIPS
18.33.a standards and their benefits to
prospective clients and investment
managers
explain the fundamentals of compliance
with the GIPS standards, including the
18.33.b
definition of the firm and the firm’s
definition of discretion
explain the requirements and
recommendations of the GIPS
standards with respect to input data,
18.33.c
including accounting policies related to
valuation and performance
measurement
discuss the requirements of the GIPS
standards with respect to return
calculation methodologies, including
18.33.d
the treatment of external cash flows,
cash and cash equivalents, and
expenses and fees
32
 explain the requirements and
recommendations of the GIPS
GIPS 18.35.e standards with respect to composite
return calculations, including methods
for asset-weighting portfolio returns
explain the meaning of “discretionary”
in the context of composite
construction and, given a description of
GIPS 18.35.f
the relevant facts, determine whether a
portfolio is likely to be considered
discretionary
explain the role of investment
GIPS 18.35.g mandates, objectives, or strategies in
the construction of composites
explain the requirements and
recommendations of the GIPS
standards with respect to composite
construction, including switching
GIPS 18.35.h portfolios among composites, the
timing of the inclusion of new portfolios
in composites, and the timing of the
exclusion of terminated portfolios from
composites
explain the requirements of the GIPS
GIPS 18.35.i standards for asset class segments
carved out of multi-class portfolios
explain the requirements and
recommendations of the GIPS
standards with respect to disclosure,
including fees, the use of leverage and
GIPS 18.35.j
derivatives, conformity with laws and
regulations that conflict with the GIPS
standards, and noncompliant
performance periods
www.passingscore.net
explain the requirements and
recommendations of the GIPS
18.33.e standards with respect to composite
return calculations, including methods
for asset-weighting portfolio returns
explain the meaning of “discretionary”
in the context of composite
construction and, given a description of
18.33.f
the relevant facts, determine whether a
portfolio is likely to be considered
discretionary
explain the role of investment
18.33.g mandates, objectives, or strategies in
the construction of composites
explain the requirements and
recommendations of the GIPS
standards with respect to composite
construction, including switching
18.33.h portfolios among composites, the
timing of the inclusion of new portfolios
in composites, and the timing of the
exclusion of terminated portfolios from
composites
explain the requirements of the GIPS
18.33.i standards for asset class segments
carved out of multi-class portfolios
explain the requirements and
recommendations of the GIPS
standards with respect to disclosure,
including fees, the use of leverage and
18.33.j
derivatives, conformity with laws and
regulations that conflict with the GIPS
standards, and noncompliant
performance periods
33
 explain the requirements and
recommendations of the GIPS
standards with respect to presentation
GIPS 18.35.k and reporting, including the required
timeframe of compliant performance
periods, annual returns, composite
assets, and benchmarks
explain the conditions under which the
performance of a past firm or affiliation
GIPS 18.35.l must be linked to or used to represent
the historical performance of a new or
acquiring firm
evaluate the relative merits of
high/low, range, interquartile range,
and equal-weighted or asset-weighted
GIPS 18.35.m
standard deviation as measures of the
internal dispersion of portfolio returns
within a composite for annual periods
identify the types of investments that
GIPS 18.35.n are subject to the GIPS standards for
real estate and private equity
explain the provisions of the GIPS
GIPS 18.35.o standards for real estate and private
equity
explain the provisions of the GIPS
GIPS 18.35.p standards for Wrap fee/Separately
Managed Accounts
explain the requirements and
GIPS 18.35.q recommended valuation hierarchy of
the GIPS Valuation Principles
determine whether advertisements
GIPS 18.35.r comply with the GIPS Advertising
Guidelines
discuss the purpose, scope, and
GIPS 18.35.s
process of verification
discuss challenges related to the
GIPS 18.35.t
calculation of after-tax returns
www.passingscore.net
explain the requirements and
recommendations of the GIPS
standards with respect to presentation
18.33.k and reporting, including the required
timeframe of compliant performance
periods, annual returns, composite
assets, and benchmarks
explain the conditions under which the
performance of a past firm or affiliation
18.33.l must be linked to or used to represent
the historical performance of a new or
acquiring firm
evaluate the relative merits of
high/low, range, interquartile range,
and equal-weighted or asset-weighted
18.33.m
standard deviation as measures of the
internal dispersion of portfolio returns
within a composite for annual periods
identify the types of investments that
18.33.n are subject to the GIPS standards for
real estate and private equity
explain the provisions of the GIPS
18.33.o standards for real estate and private
equity
explain the provisions of the GIPS
18.33.p standards for Wrap fee/Separately
Managed Accounts
explain the requirements and
18.33.q recommended valuation hierarchy of
the GIPS Valuation Principles
determine whether advertisements
18.33.r comply with the GIPS Advertising
Guidelines
discuss the purpose, scope, and
18.33.s
process of verification
discuss challenges related to the
18.33.t
calculation of after-tax returns
34
 identify and explain errors and
omissions in given performance
GIPS 18.35.u presentations and recommend changes
that would bring them into compliance
with GIPS standards
identify and explain errors and
omissions in given performance
18.33.u presentations and recommend changes
that would bring them into compliance
with GIPS standards

www.passingscore.net 35