Spring 2000

Fin 499/599 Problems in Finance: CFA Level I Preparatory Course

Course Description

The purpose of this course is to help students prepare for the Level I exam of the Chartered Financial Analyst (CFA) exam series. The CFA is a professional designation awarded by the Association of Investment Management and Research (AIMR). The CFA serves a similar purpose for investment professionals that the CPA does for accountants. It demonstrates a mastery of a comprehensive body of knowledge important in the investment decision-making process. The professional investment community relies heavily on the CFA designation in its hiring and promotion decisions. Many investment firms require entry-level employees to pursue the CFA designation as a condition of employment. However, it is unusual for an undergraduate student to be preparing for this exam. We are offering this course as one opportunity for our students to distinguish themselves in a competitive employment market and to help our finance program attain national recognition.

The series of CFA exams are based on the Candidate Body of Knowledge (CBOK), which is divided into ten topic areas: Time Value of Money (Finance); Quantitative Methods (statistics); Financial accounting; Fixed Income Securities; Equities Analysis; Derivative Instruments; Portfolio Management; Real Estate; Economics; and Ethics (Securities Laws). Candidates are expected to have a thorough grounding in all the above areas. For Level I, the exam is designed to test the candidate’s ability to recall facts and to understand the meaning of the basic concepts presented in the assigned readings. The exam places a premium on the ability to have a rote recall of facts and concepts. It requires a broad overview of all the basic tools of the analysis covered in the topical areas of the readings.

Course 499/599 will serve primarily as a forum for support, encouragement, and information about Level I exam. Drs. Frank Michello and Rajesh Barnwal will host weekly meetings during the spring semester to coordinate the studying activities of the students registered to take Level I exam in June 2000 and to answer questions from the study guides.

The prerequisites for enrolling in this course are Business Finance (Fin 301), Investments (Fin 381), Accounting (ACTG 212), Quantitative Methods (QM 261), and Economics (EC 241 & 242) or permission of instructor. Because the material covered on the Level I exam is extensive and requires months of study, only seriously committed students will be allowed to enroll in the course. Students must also enroll in Math 460 concurrently so that they will be able to cover the required readings. Dr. Michello will interview each prospective CFA Level I exam candidate before they are allowed to enroll in Fin 499. To reduce the cost of exam registration, Dr. Michello will make efforts to arrange for a scholarship program with Dr. Johnson at AIMR, the local finance association and from the local business community for students who enroll in the course.

The primary required readings for the 2000 CFA Level 1 exam are:

Level 1 CFA Candidate Readings (AIMR, 1999)

Standards of Practice Handbook, 8th Edition (AIMR, 1999)

Statistical Techniques in Business and Economics, 10th Edition, Robert D. Mason, Douglas A. Lind, and William G. Marchal (Irwin, 1999)

Fundamentals of Financial Management, 8th Edition, Eugene F. Brigham and Joel F. Houston (Dryden, 1998)

Investment Analysis and Portfolio Management, 5th Edition, Frank K. Reilly and Keith C. Brown (Dryden, 1997)

Economics: Private and Public Choice, 8th Edition, James D. Gwartney and Richard L. Stroup (Dryden, 1997)

The Analysis and Use of Financial Statements, 2nd Edition, Gerald I. White, Ashwinpaul C. Sondhi, and Dov Fried (Wiley, 1998)

Futures, Options and Swaps, 3rd edition, Robert W. Kolb (Blackwell Publishers, 1999).