CFA

Split into 3 levels, the requirement is the completion of all levels before gaining the CFA designation, as well as the prerequisite of having 4 years of relevant work experience (the requirement having recently been increased from 3 years).

Saying that, aside from being a three year commitment, those who have studied finance or have had work experience in finance have suggested that Levels 2 and 3 contain a lot of material and will be difficult for some individuals.

The CFA Body of Knowledge:

I. Ethical and Professional Standards

A. Professional Standards of Practice

B. Ethical Practices

II. Quantitative Methods

A. Time Value of Money

B. Probability

C. Probability Distributions and Descriptive Statistics

D. Sampling and Estimation

E. Hypothesis Testing

F. Correlation Analysis and Regression

G. Time Series Analysis

H. Simulation Analysis

I. Technical Analysis

III. Economics

A. Market Forces of Supply and Demand

B. The Firm and Industry Organization

C. Measuring National Income and Growth

D. Business Cycles

E. The Monetary System

F. Inflation

G. International Trade and Capital Flows

H. Currency Exchange Rates

I. Monetary and Fiscal Policy

J. Economic Growth and Development

K. Effects of Government Regulation

L. Impact of Economic Factors on Investment Markets

IV. Financial Reporting and Analysis

A. Financial Reporting System (IFRS and GAAP)

B. Principal Financial Statements

C. Financial Reporting Quality

D. Analysis of Inventories

E. Analysis of Long-Lived Assets

F. Analysis of Taxes

G. Analysis of Debt

H. Analysis of Off-Balance-Sheet Assets and Liabilities

I. Analysis of Pensions, Stock Compensation, and Other Employee Benefits

J. Analysis of Inter-Corporate Investments

K. Analysis of Business Combinations

L. Analysis of Global Operations

M. Ratio and Financial Analysis

V. Corporate Finance

A. Corporate Governance

B. Dividend Policy

C. Capital Investment Decisions

D. Business and Financial Risk

E. Long-Term Financial Policy

F. Short-Term Financial Policy

G. Mergers and Acquisitions and Corporate Restructuring

VI. Equity Investments

A. Types of Equity Securities and their Characteristics

B. Equity Markets: Characteristics, Institutions, and Benchmarks

C. Fundamental Analysis (Sector, Industry, Company) and the Valuation of Individual Equity Securities

D. Equity Market Valuation and Return Analysis

E. Special Applications of Fundamental Analysis (Residual Earnings)

F. Equity of Hybrid Investment Vehicles

VII. Fixed Income

A. Types of Fixed-Income Securities and their Characteristics

B. Fixed-Income Markets: Characteristics, Institutions, and Benchmarks

C. Fixed-Income Valuation (Sector, Industry, Company) and Return Analysis

D. Term Structure Determination and Yield Spreads

E. Analysis of Interest Rate Risk

F. Analysis of Credit Risk

G. Valuing Bonds with Embedded Options

H. Structured Products

VIII. Derivatives

A. Types of Derivative Instruments and their Characteristics

B. Forward Markets and Instruments

C. Futures Markets and Instruments

D. Options Markets and Instruments

E. Swaps Markets and Instruments

F. Credit Derivatives Markets and Instruments

IX. Alternative Investments

A. Types of Alternative Investments and their Characteristics

B. Real Estate

C. Private Equity/Venture Capital

D. Hedge Funds

E. Closely-held Companies and Inactively Traded Securities

F. Distressed Securities/Bankruptcies

G. Commodities

H. Tangible Assets with Low Liquidity

X. Portfolio Management and Wealth Planning

A. Portfolio Concepts

B. Management of Individual/Family Investor Portfolios

C. Management of Institutional Investor Portfolios

D. Pension Plans and Employee Benefit Funds

E. Investment Manager Selection

F. Other Institutional Investors

G. Mutual Funds, Pooled Funds, and ETFs

H. Economic Analysis and Setting Capital Market Expectations

I. Tax Efficiency

J. Asset Allocation (including Currency Overlay)

K. Portfolio Construction and Revision

L. Equity Portfolio Management Strategies

M. Fixed-Income Portfolio Management Strategies

N. Alternative Investments Management Strategies

O. Risk Management

P. Execution of Portfolio Decisions (Trading)

Q. Performance Evaluation

R. Presentation of Performance Results

Suitability:

If you are seeking to build a solid groundwork for a career in finance and banking or related industries, the CFA could be a useful asset to have. Many recruiters at asset management and investment houses now prefer an applicant to have a good understanding in finance, and having passed several levels of the CFA is a good indicator of this understanding. If you are working in research (equity or fixed income in particular), the CFA will help. However, those seeking more quantitative jobs (trading, quantitative research or risk management) might find the CFA to be a bit too broad and may prefer to seek alternative qualifications.

Conclusion:

The CFA is one of the largest and and most popular certifications today in finance and investments and has become one of the definitive norms for the investment community as well as increasingly set as a prerequisites for jobs in the industry. Some argue that the designation is not mathematical enough and some argue that there is too much abstract maths to be completely useful.

A study by the AIMR does shed some light on the benefits which come with having the CFA designation. Two striking features include:

Professionals with more than 10 years experience holding a CFA charter earn an average of 24 percent more than non-CFA charter holders with similar experience.
Ninety-two percent of those with a CFA charter believe that it expands one's career opportunities and increases chances of promotion

Source: AIMR

There is a strong indication across the industry that the CFA will provide value added in more than one form for an individual taking it. For more details, visit the AIMR website

- Note: All data and factual information was taken from the AIMR website and AIMR does not endorse nor contribute to this webpage.

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