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All posts for the month January, 2014

Investments in Financial Assets

Posted by Bill Campbell III, CFA on January 18, 2014
Posted in: Level I Financial Reporting and Analysis, Level II Financial Reporting and Analysis.

When one company buys securities (stock or bonds) issued by another company, the accounting treatment for those investments depends on the amount of influence/control that the investing company has over the issuing company.  When the investor has no influence (generally assumed when the investment represents less than 20% ownership), then the investment is treated as […]

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Leases III: Effect on Financial Statements and Ratios

Posted by Bill Campbell III, CFA on January 18, 2014
Posted in: Level I Financial Reporting and Analysis, Level II Financial Reporting and Analysis.

A lease is a contract that lets one party use an asset owned by another party, in exchange for periodic payments. The owner of the asset is the lessor; the user of the asset is the lessee. For the purposes of financial reporting, leases are divided into two categories, based on the economic substance of […]

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CFA® Level I Membership, CFA® Level I Financial Reporting and Analysis (FRA) Membership, CFA® Level II Membership, CFA® Level II Financial Reporting and Analysis (FRA) Membership

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Leases II: Calculations

Posted by Bill Campbell III, CFA on January 16, 2014
Posted in: Level I Financial Reporting and Analysis, Level II Financial Reporting and Analysis.

A lease is a contract that lets one party use an asset owned by another party, in exchange for periodic payments. The owner of the asset is the lessor; the user of the asset is the lessee. For the purposes of financial reporting, leases are divided into two categories, based on the economic substance of […]

This article is for members only.  You can become a member now by purchasing a

CFA® Level I Membership, CFA® Level I Financial Reporting and Analysis (FRA) Membership, CFA® Level II Membership, CFA® Level II Financial Reporting and Analysis (FRA) Membership

This will give you access to this and all other articles at that membership level.

Leases I: Criteria for Classification

Posted by Bill Campbell III, CFA on January 16, 2014
Posted in: Level I Financial Reporting and Analysis, Level II Financial Reporting and Analysis.

A lease is a contract that lets one party use an asset owned by another party, in exchange for periodic payments.  The owner of the asset is the lessor; the user of the asset is the lessee.  For the purposes of financial reporting, leases are divided into two categories, based on the economic substance of […]

This article is for members only.  You can become a member now by purchasing a

CFA® Level I Membership, CFA® Level I Financial Reporting and Analysis (FRA) Membership, CFA® Level II Membership, CFA® Level II Financial Reporting and Analysis (FRA) Membership

This will give you access to this and all other articles at that membership level.

Arbitrage

Posted by Bill Campbell III, CFA on January 14, 2014
Posted in: Level I General, Level II General.

Arbitrage means the ability to earn a profit without risk.  One method by which arbitrage is commonly accomplished by buying an asset in one market, and simultaneously selling an identical asset in another market at a higher price (e.g., T-Notes or T-Bonds).  Another is by borrowing an asset (e.g., a currency) and investing it at […]

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Covariance and Correlation

Posted by Bill Campbell III, CFA on January 13, 2014
Posted in: Level I Quantitative Methods.

Covariance Covariance is just an extension of the idea of variance: instead of looking at how numbers in one data set deviate from their mean, you look at how numbers in two data sets deviate from their respective means together.  We start with the formula for variance (of a population): \[\sigma^2\ =\ \frac{\sum_{i=1}^N \left(X_i\ –\ […]

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Beta

Posted by Bill Campbell III, CFA on January 9, 2014
Posted in: Level I Portfolio Management.

It is not surprising that many CFA candidates (at all levels, not just Level I) have a poor understanding of beta, because a survey of a number of financial websites with glossaries (not the little, obscure ones; the big boys, such as Charles Schwab, Citibank, Deutsche Bank, E-Trade, Investopedia, Putnam Investments, TD Ameritrade, and others) […]

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CFA® Level I Membership

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