The excel file containing the LOS changes for all the three levels can be downloaded from here – LOS Changes

**Changes in CFA level I curriculum in 2013: **There have been major changes in Economics.Few new topics have been added into macro economics. In Fixed Income, one new topic “Fundamentals of Credit Analysis” has been introduced. Almost all of the Alternative Investments has been revamped. It would take around 8 hours to go through the new readings. The new readings have their own importance. As they have been introduced for the first time, there are high chances that you might find comparatively more questions related to new readings in the exam.

**Table for changes in CFA level I curriculum in 2013 from 2012:**

Subject | LOS in 2012 | Description | LOS in 2013 | Description | Comparison | Additional time required |

Ethics | 1.1.c | explain the ethical responsibilities required by the Code and Standards, including the multiple sub-sections of each Standard | 1.1.c | explain the ethical responsibilities required by the Code and Standards, including the sub-sections of each Standard | Change in wordings | N.A. |

1.2.a | demonstrate and explain the application of the Code of Ethics and Standards of Professional Conduct to situations involving issues of professional integrity | 1.2.a | demonstrate the application of the Code of Ethics and Standards of Professional Conduct to situations involving issues of professional integrity | Change in wordings | N.A. | |

1.4.d | characterize the nine major sections of the GIPS standards | 1.4.d | describe the nine major sections of the GIPS standards | Change in wordings | N.A. | |

Quantitative Methods | 2.5.b | explain an interest rate as the sum of a real risk-free rate, expected inflation, and premiums that compensate investors for distinct types of risk | 2.5.b | explain an interest rate as the sum of a real risk-free rate, and premiums that compensate investors for bearing distinct types of risk | Change in wordings | N.A. |

2.6.d | calculate, interpret, and distinguish between the money-weighted and time-weighted rates of return of a portfolio, and evaluate the performance of portfolios based on these measures |
2.6.d | calculate and compare the money-weighted and time-weighted rates of return of a portfolio and evaluate the performance of portfolios based on these measures |
Change in wordings | N.A. | |

2.6.e | calculate and interpret the bank discount yield, holding period yield, effective annual yield, and money market yield for a U.S. Treasury bill | 2.6.e | calculate and interpret the bank discount yield, holding period yield, effective annual yield, and money market yield for US Treasury bills and other money market instruments | Change in wordings | N.A. | |

2.7.a | differentiate between descriptive statistics and inferential statistics, between a population and a sample, and among the types of measurement scales | 2.7.a | distinguish between descriptive statistics and inferential statistics, between a population and a sample, and among the types of measurement scales | Change in wordings | N.A. | |

2.7.e | calculate and interpret measures of central tendency, including the population mean, sample mean, arithmetic mean, weighted average or mean (including a portfolio return viewed as a weighted mean), geometric mean, harmonic mean, median, and mode | 2.7.e | calculate and interpret measures of central tendency, including the population mean, sample mean, arithmetic mean, weighted average or mean, geometric mean, harmonic mean, median, and mode | Change in wordings | N.A. | |

2.8.b | explain the two defining properties of probability and distinguish among empirical, subjective, and a priori probabilities | 2.8.b | state the two defining properties of probability and distinguish among empirical, subjective, and a priori probabilities | Change in wordings | N.A. | |

2.8.c | state the probability of an event in terms of odds for or against the event | 2.8.c | state the probability of an event in terms of odds for and against the event | Change in wordings | N.A. | |

2.8.e | define and explain the multiplication, addition, and total probability rules | 2.8.e | explain the multiplication, addition, and total probability rules | Change in wordings | N.A. | |

3.12.c | demonstrate the uses of trend, support, and resistance lines, and change in polarity | 3.12.c | explain the uses of trend, support, resistance lines, and change in polarity | Change in wordings | N.A. | |

Economics | 4.13.d | describe the process of aggregating demand and supply curves, including the concept of equilibrium and mechanisms by which markets achieve equilibrium | 4.13.d | describe the process of aggregating demand and supply curves, the concept of equilibrium, and mechanisms by which markets achieve equilibrium | Change in wordings | N.A. |

4.13.f | calculate and interpret individual and aggregate inverse demand and supply functions and individual and aggregate demand and supply curves | 4.13.f | calculate and interpret individual and aggregate demand, inverse demand and supply functions and interpret individual and aggregate demand and supply curves | Change in wordings | N.A. | |

4.13.l | analyze the causes of a demand or supply imbalance that affects a good or service | Dropped | N.A. | |||

4.13.j | describe the impact of government regulation and intervention on demand and supply | 4.13.j | analyze the effects of government regulation and intervention on demand and supply | Change in wordings | N.A. | |

4.13.m | calculate and interpret price, income, and cross-price elasticities of demand including factors that affect each measure | 4.13.l | calculate and interpret price, income, and cross-price elasticities of demand and describe factors that affect each measure | Change in wordings | N.A. | |

4.15.b | calculate and interpret total, average, and marginal revenue | 4.15.b | calculate and interpret and compare total, average, and marginal revenue | Change in wordings | N.A. | |

4.15.e | describe breakeven and shutdown points of production | 4.15.e | determine and describe breakeven and shutdown points of production | Change in wordings | N.A. | |

4.15.l | describe the optimal combination of resources that minimizes cost | 4.15.l | determine the optimal combination of resources that minimizes cost | Change in wordings | N.A. | |

4.16.a | describe the characteristics of different market structures: perfect competition, monopolistic competition, oligopoly, and pure monopoly | 4.16.a | describe the characteristics of perfect competition, monopolistic competition, oligopoly, and pure monopoly | Change in wordings | N.A. | |

4.16.d | describe and determine the profit-maximizing price and output for firms under each market structure |
4.16.d | describe and determine the optimal price and output for firms under each market structure | Change in wordings | N.A. | |

4.16.e | explain the effects of demand changes, entry and exit of firms, and other factors on long-run equilibrium under each market structure | 4.16.e | explain factors affecting long-run equilibrium under each market structure | Change in wordings | N.A. | |

4.16.f | describe pricing strategy under each market structure | New | 30 min | |||

4.16.g | identify the type of market structure within which a firm is operating. | 4.16.h | identify the type of market structure a firm is operating within | Change in wordings | N.A. | |

5.17.h | describe the causes of shifts in and movements along aggregate demand and supply curves | 5.17.h | explain the causes of movements along and shifts in aggregate demand and supply curves | Change in wordings | N.A. | |

5.17.j | explain how a short run macroeconomic equilibrium may occur at a level above or below full employment | New | 10 min | |||

5.17.k | analyze the effect of combined changes in aggregate supply and demand on the economy | New | 30 min | |||

5.18.b | describe what typically happens to inventory levels and labor and physical capital utilization levels as an economy moves through the business cycle | 5.18.b | explain the typical patterns of resource use fluctuation, housing sector activity, and external trade sector activity, as an economy moves through the business cycle | Change in wordings | N.A. | |

5.18.d | explain the types of unemployment and describe measures of unemployment | 5.18.d | describe types of unemployment and measures of unemployment | Change in wordings | N.A. | |

5.18.e | explain inflation, disinflation, and deflation | 5.18.e | explain inflation, hyperinflation, disinflation, and deflation | Change in wordings | N.A. | |

5.18.h | describe factors that affect price levels | 5.18.h | distinguish between cost-push and demand-pull inflation | Change in wordings | N.A. | |

5.19.b | explain the definition, qualities, and functions of money, and the money creation process | 5.19.b | describe functions and definitions of money | Converted into two | N.A. | |

5.19.c | explain the money creation process | Converted into two | N.A. | |||

5.19.g | contrast the costs of expected and unexpected | New | 15 min | |||

5.19.k | contrast the use of inflation, interest rate, and exchange rate targeting by central banks | New | 10 min | |||

6.20.a | compare gross domestic product and gross national product | New | 5 min | |||

6.20.g | explain how decisions by consumers, firms, and governments influence the balance of payments | 6.20.h | explain how decisions by consumers, firms, and governments affect the balance of payments | Change in wordings | N.A. | |

6.21.c | define direct and indirect foreign exchange quotations, and convert direct (indirect) foreign exchange quotations into indirect (direct) foreign exchange quotations |
Dropped | N.A. | |||

6.21.f | explain the arbitrage relationship between spot rates, forward rates and interest rates | New | 5 min | |||

9.29.e | compare cost of sales, ending inventory, and gross profit using different inventory valuation methods | 9.29.e | compare and contrast cost of sales, ending inventory, and gross profit using different inventory valuation methods | Change in wordings | N.A. | |

Financial Reporting | 9.32.b | describe the effective interest method and calculate interest expense, amortisation of bond discounts/premiums, and interest payments | 9.32.b | discuss the effective interest method and calculate interest expense, amortisation of bond discounts/premiums, and interest payments | Change in wordings | N.A. |

9.32.c | explain the derecognition of debt | 9.32.c | discuss the derecognition of debt | Change in wordings | N.A. | |

9.32.d | describe the role of debt covenants in protecting creditors | 9.32.d | explain the role of debt covenants in protecting creditors | Change in wordings | N.A. | |

9.32.e | describe the financial statement presentation of and disclosures relating to debt | 9.32.e | discuss the financial statement presentation of and disclosures relating to debt | Change in wordings | N.A. | |

9.32.f | explain the motivations for leasing assets instead of purchasing them | 9.32.f | discuss the motivations for leasing assets instead of purchasing them | Change in wordings | N.A. | |

10.35.b | forecast a company’s future net income and cash flow | 10.35.b | prepare a basic projection of a company’s future net income and cash flow | Change in wordings | N.A. | |

10.35.e | explain appropriate analyst adjustments to a company’s financial statements to facilitate comparison with another company | 10.35.e | determine and justify appropriate analyst adjustments to a company’s financial statements to facilitate comparison with another company | Change in wordings | N.A. | |

11.37.j | explain the country equity risk premium in the estimation of the cost of equity for a company located in a developing market | 11.37.j | explain the country risk premium in the estimation of the cost of equity for a company located in a developing market | Change in wordings | N.A. | |

11.41 | The candidate should be able to demonstrate the use of pro forma income and balance sheet statements | Dropped | N.A. | |||

12.43.d | describe mutual funds and compare them with other investment products | 12.42.d | describe mutual funds and compare them with other pooled investment products | Change in wordings | N.A. | |

Portfolio Management | 12.44.h | describe the selection of an optimal portfolio, given an investor’s utility (or risk aversion) and the capital allocation line. | 12.43.h | discuss the selection of an optimal portfolio, given an investor’s utility (or risk aversion) and the capital allocation line | Change in wordings | N.A. |

13.49.a | explain market efficiency and related concepts, including their importance to investment practitioners | 13.48.a | describe market efficiency and related concepts, including their importance to investment practitioners | Change in wordings | N.A. | |

Equity | 13.49.c | explain factors affecting a market’s efficiency | 13.48.c | explain factors that affect a market’s efficiency | Change in wordings | N.A. |

13.49.f | describe identified market pricing anomalies and explain possible inconsistencies with market efficiency | 13.48.f | describe selected market anomalies | Change in wordings | N.A. | |

14.51.h | explain effects of industry concentration, ease of entry, and capacity on return on invested capital and pricing power | 14.50.g | explain the effects of barriers to entry, industry concentration, industry capacity, and market share stability on pricing power and return on capital | Change in wordings | N.A. | |

15.55.f | state the motivation for creating a collateralized mortgage obligation | 15.54.f | explain the motivation for creating a collateralized mortgage obligation | Change in wordings | N.A. | |

Fixed Income | 15.56.f | describe a credit spread and the suggested relation between credit spreads and the well-being of the economy | 15.55.f | describe credit spreads and relationships between credit spreads and economic conditions | Change in wordings | N.A. |

16.58.f | distinguish the relations among the nominal spread, the zero-volatility spread, the option-adjusted spread, and option cost | 16.57.f | explain nominal, zero-volatility, and option-adjusted spreads and the relations among these spreads and option cost | Change in wordings | N.A. | |

16.59.a | describe credit risk and credit-related risks affecting corporate bonds | New | 10 min | |||

16.59.b | describe seniority rankings of corporate debt and explain the potential violation of the priority of claims in a bankruptcy proceeding | New | 5 min | |||

16.59.c | distinguish between corporate issuer credit ratings and issue credit ratings and describe the rating agency practice of “notching” | New | 10 min | |||

16.59.d | explain risks in relying on ratings from credit rating agencies | New | 10 min | |||

16.59.e | explain the components of traditional credit analysis | New | 30 min | |||

16.59.f | calculate and interpret financial ratios used in credit analysis | New | 30 min | |||

16.59.g | evaluate the credit quality of a corporate bond issuer and a bond of that issuer, given key financial ratios of the issuer and the industry | New | 15 min | |||

16.59.h | describe factors that influence the level and volatility of yield spreads | New | 15 min | |||

16.59.i | calculate the return impact of spread changes | New | 20 min | |||

16.59.j | explain special considerations when evaluating the credit of high yield, sovereign, and municipal debt issuers and issues | New | 40 min | |||

17.60.b | contrast forward commitments and contingent claims | New | 5 min | |||

Derivatives | 17.60.c | describe the purposes and criticisms of derivative markets | 17.60.d | describe purposes of and controversies related to derivative markets | Change in wordings | N.A. |

18.66.a | compare alternative investments with traditional investments | New | 10 min | |||

Alternative Investments | 18.66.b | describe categories of alternative investments | New | 15 min | ||

18.66.c | describe potential benefits of alternative investments in the context of portfolio management | New | 15 min | |||

18.66.d | describe hedge funds, private equity,real estate, commodities, and other alternative investments, including, as applicable, strategies, sub-categories, potential benefits and risks, fee structures, and due diligence | New | 60 min | |||

18.66.e | describe issues in valuing, and calculating returns on, hedge funds, private equity, real estate, and commodities | New | 40 min | |||

18.66.f | describe, calculate, and interpret management and incentive fees and net-of-fees returns to hedge funds | New | 15 min | |||

18.66.g | describe risk management of alternative investments | New | 20 min | |||

18.66.a | distinguish between an open-end and a closed-end fund, and explain how net asset value of a fund is calculated and the nature of fees charged by investment companies | Dropped | N.A. | |||

18.66.b | distinguish among style, sector, index, global, and stable value strategies | Dropped | N.A. | |||

18.66.c | distinguish among equity investment and exchange traded funds (ETFs), traditional mutual funds, and closed-end funds | Dropped | N.A. | |||

18.66.d | explain the advantages and risks of ETFs | Dropped | N.A. | |||

18.66.e | describe the forms of real estate investment and explain their characteristics as an investable asset class | Dropped | N.A. | |||

18.66.f | describe the various approaches to the valuation of real estate | Dropped | N.A. | |||

18.66.g | calculate the net operating income (NOI) from a real estate investment, the value of a property using the sales comparison and income approaches, and the after-tax cash flows, net present value, and yield of a real estate investment | Dropped | N.A. | |||

18.66.h | explain the stages in venture capital investing, venture capital investment characteristics, and challenges to venture capital valuation and performance measurement | Dropped | N.A. | |||

18.66.i | calculate the net present value (NPV) of a venture capital project, given the project’s possible payoff and conditional failure probabilities | Dropped | N.A. | |||

18.66.j | describe the objectives, legal structure, and fee structures typical of hedge funds, and describe the various classifications of hedge funds | Dropped | N.A. | |||

18.66.k | explain the benefits and drawbacks to fund of funds investing | Dropped | N.A. | |||

18.66.l | describe the leverage and unique risks of hedge funds | Dropped | N.A. | |||

18.66.m | describe the performance of hedge funds, the biases present in hedge fund performance measurement, and explain the effect of survivorship bias on the reported return and risk measures for a hedge fund database | Dropped | N.A. | |||

18.66.n | explain how the legal environment affects the valuation of closely held companies | Dropped | N.A. | |||

18.66.o | describe alternative valuation methods for closely held companies, and distinguish among the bases for the discounts and premiums for these companies | Dropped | N.A. | |||

18.66.p | describe distressed securities investing and compare venture capital investing with distressed securities investing | Dropped | N.A. | |||

18.66.q | explain the motivation for investing in commodities, commodities derivatives, and commodity-linked securities | Dropped | N.A. | |||

18.66.r | describe the sources of return on a collateralized commodity futures position | Dropped | N.A. |

**Changes in CFA level II curriculum in 2013: **CFAI has changed the CFA level II curriculum to a greater extent this time. Many old readings have been dropped and many new readings have been added. Total readings have been dropped from 64 to 56. Economics has been changed almost completely. In Equity, three readings (Note on Asset Valuation, Industry Analysis and Valuation in Emerging Markets) have been dropped. So, there is little less to study this time especially in Equity which has the highest weightage. In Fixed Income, a new reading regarding credit analysis has been added (The same reading has been added in level I curriculum as well). There has been major changes in Alternative Investments and Portfolio Management as well. International Asset Pricing has been dropped in Portfolio Management. In Alternative Investments, there has been major changes in real estate investments and two new readings have been added. It will take around 15 hours to go through the new readings.

**Table for changes in CFA level II curriculum in 2013 from 2012:**

Subject | LOS in 2012 | Description | LOS in 2013 | Description | Comparison | Additional time required |

Ethics | 1.1.b | explain the ethical responsibilities required by the Code and Standards, including the multiple sub-sections of each standard | 1.1.b | explain the ethical responsibilities required of CFA Institute members and candidates in the CFA Program by the Code and Standards | Change in wordings | N.A. |

2.8.b | discuss appropriate actions to take in response to trade allocation practices that do not adequately respect client interests | 2.8.b | describe appropriate actions to take in response to trade allocation practices that do not adequately respect client interests | Change in wordings | N.A. | |

Quantitative Methods | 3.11.h | calculate a predicted value for the dependent variable, given an estimated regression model and a value for the independent variable, and calculate and interpret a confidence interval for the predicted value of a dependent variable | 3.11.h | calculate the predicted value for the dependent variable, given an estimated regression model and a value for the independent variable, and calculate and interpret a confidence interval for the predicted value of the dependent variable | Change in wordings | N.A. |

3.12.e | calculate and interpret the F-statistic, and discuss how it is used in regression analysis | 3.12.e | calculate and interpret the F-statistic, and describe how it is used in regression analysis | Change in wordings | N.A. | |

Economics | 4.14.a | describe sources of and preconditions for economic growth | Dropped | N.A. | ||

4.14.b | discuss how the one-third rule can be used to explain the contributions of labor and technological change to growth in labor productivity | Dropped | N.A. | |||

4.15.b | explain potential benefits and possible negative side effects of social regulation | Dropped | N.A. | |||

4.15.c | distinguish between the capture hypothesis and the share-the-gains, share-the-pains theory of regulator behavior | Dropped | N.A. | |||

4.16.a | explain comparative advantage and how countries can gain from international trade | Dropped | N.A. | |||

4.16.b | compare tariffs, nontariff barriers, quotas, and voluntary export restraints | Dropped | N.A. | |||

4.16.c | evaluate arguments for trade restrictions | Dropped | N.A. | |||

4.17.a | define direct and indirect methods of foreign exchange quotations, and convert direct (indirect) foreign exchange quotations into indirect (direct) foreign exchange quotations | Dropped | N.A. | |||

4.17.b | calculate and interpret the spread on a foreign currency quotation, and explain how spreads on foreign currency quotations can differ as a result of market conditions, bank/dealer positions, and trading volume | 4.14.a | calculate and interpret the bid–ask spread on a spot or forward foreign currency quotation and describe the factors that affect the bid–offer spread | Change in wordings | N.A. | |

4.17.c | calculate and interpret currency cross rates, given two spot exchange quotations involving three currencies | Dropped | N.A. | |||

4.17.d | calculate the profit on a triangular arbitrage opportunity, given the bid–ask quotations for the currencies of three countries involved in the arbitrage | 4.14.b | identify a triangular arbitrage opportunity, and calculate its profit, given the bid–offer quotations for three currencies | Change in wordings | N.A. | |

4.17.e | distinguish between the spot and forward markets for foreign exchange | Dropped | N.A. | |||

4.17.f | calculate and interpret the spread on a forward foreign currency quotation, and explain how spreads on forward foreign currency quotations can differ as a result of market conditions, bank/dealer positions, trading volume, and maturity/length of contract | Dropped | N.A. | |||

4.17.g | calculate and interpret a forward discount or premium and express it as an annualized rate | Dropped | N.A. | |||

4.17.h | explain interest rate parity and covered interest arbitrage | Dropped | N.A. | |||

4.17.l | distinguish between spot and forward transactions, calculate the annualized forward premium/discount for a given currency, and determine whether the currency is “strong” or “weak.” | 4.14.c | distinguish between spot and forward rates and calculate the forward premium/ discount for a given currency | Change in wordings | N.A. | |

4.14.d | calculate the mark-to-market value of a forward contract | New | 30 min | |||

4.14.e | explain international parity relations— covered and uncovered interest rate parity, purchasing power parity, and the international Fisher effect | New | 45 min | |||

4.14.f | describe relations among the international parity conditions | New | 15 min | |||

4.14.g | evaluate the use of the current spot rate, the forward rate, purchasing power parity, and uncovered interest parity to forecast future spot exchange rates | New | 5 min | |||

4.14.h | explain approaches to assessing the long-run fair value of an exchange rate | New | 10 min | |||

4.14.i | describe the carry trade and its relation to uncovered interest rate parity and calculate the profit from such a strategy | New | 15 min | |||

4.14.j | explain how flows in the balance of payment accounts affect currency exchange rates | New | 20 min | |||

4.14.k | describe the Mundell–Fleming model, the monetary approach, and the asset market (portfolio balance) approach to exchange rate determination | New | 10 min | |||

4.14.l | forecast the direction of the expected change in an exchange rate based on balance of payment, Mundell–Fleming, monetary, and asset market approaches to exchange rate determination | New | 10 min | |||

4.18.e | explain how monetary and fiscal policies affect the exchange rate and balance of payments components | 4.14.m | explain the potential impacts of monetary and fiscal policies on exchange rates | Change in wordings | N.A. | |

4.14.n | describe the objectives and effectiveness of central bank intervention and capital controls | New | 10 min | |||

4.14.o | describe warning signs of a currency crisis | New | 5 min | |||

4.14.p | describe the use of technical analysis in forecasting exchange rates | New | 15 min | |||

4.15.a | describe and compare factors favoring and limiting economic growth in developed and developing economies | New | 15 min | |||

4.15.b | describe the relation between the long-run rate of stock market appreciation and the sustainable growth rate of the economy |
New | 5 min | |||

4.15.c | explain the importance of potential GDP and its growth rate in the investment decisions of equity and fixed income investors | New | 10 min | |||

4.15.d | distinguish between capital deepening investment and technological process and explain the impact of each on economic growth and labor productivity | New | 20 min | |||

4.15.e | forecast potential GDP based on growth accounting relations | New | 15 min | |||

4.15.f | explain the impact of natural resources on economic growth and evaluate the argument that limited availability of natural resources constrains economic growth | New | 10 min | |||

4.15.g | explain the effects of demographics, immigration, and labor force participation on the rate and sustainability of economic growth | New | 15 min | |||

4.14.c | explain how faster economic growth can be achieved by increasing the growth of physical capital, technological advances, and investment in human capital | 4.15.h | explain how investment in physical capital, human capital, and technological development affects economic growth | Change in wordings | N.A. | |

4.14.d | compare classical growth theory, neoclassical growth theory, and new growth theory | 4.15.i | compare classical growth theory, neoclassical growth theory, and endogenous growth theory | Change in wordings | N.A. | |

4.15.j | explain and evaluate convergence hypotheses | New | 10 min | |||

4.15.k | explain the economic rationale for governments to provide incentives to private investment in technology and knowledge | New | 5 min | |||

4.15.l | describe the expected impact of removing trade barriers on capital investment and profits, employment and wages, and growth in the economies involved | New | 10 min | |||

4.16.a | describe classifications of regulations and regulators | New | 10 min | |||

4.16.b | describe uses of self-regulation in financial markets | New | 10 min | |||

4.15.a | explain the rationale for government regulation in the form of 1) economic regulation of natural monopolies and 2) social regulation of nonmonopolistic industries | 4.16.c | describe the economic rationale for regulatory intervention | Change in wordings | N.A. | |

4.16.d | describe regulatory interdependencies and their effects | New | 10 min | |||

4.16.e | describe tools of regulatory intervention in markets | New | 10 min | |||

4.16.f | explain purposes in regulating commerce and financial markets | New | 15 min | |||

4.16.g | describe anticompetitive behaviors targeted by antitrust laws globally and evaluate the antitrust risk associated with a given business strategy | New | 5 min | |||

4.16.h | describe benefits and costs of regulation | New | 10 min | |||

4.16.i | evaluate effects on an industry, company, or security of a specific regulation | New | 10 min | |||

4.18.a | explain how exchange rates are determined in a flexible (or floating) exchange rate system | Dropped | N.A. | |||

4.18.b | explain the role of each component of the balance of payments accounts | Dropped | N.A. | |||

4.18.c | explain how current account deficits or surpluses and financial account deficits or surpluses affect an economy | Dropped | N.A. | |||

4.18.d | describe factors that cause a nation’s currency to appreciate or depreciate | Dropped | N.A. | |||

4.18.f | describe a fixed exchange rate and a pegged exchange rate system | Dropped | N.A. | |||

4.18.g | explain absolute purchasing power parity and relative purchasing power parity | Dropped | N.A. | |||

4.18.h | calculate the end-of-period exchange rate implied by purchasing power parity, given the beginning-of-period exchange rate and the inflation rates | Dropped | N.A. | |||

4.18.i | explain the international Fisher relation | Dropped | N.A. | |||

4.18.j | calculate the real interest rate, given nominal interest rates and expected inflation rates, using the international Fisher relation and its linear approximation | Dropped | N.A. | |||

4.18.k | explain the theory of uncovered interest rate parity and the theory’s relation to other exchange rate parity theories | Dropped | N.A. | |||

4.18.l | calculate the expected change in the exchange rate, given interest rates and the assumption that uncovered interest rate parity holds | Dropped | N.A. | |||

4.18.m | explain the foreign exchange expectation relation between the forward exchange rate and the expected exchange rate | Dropped | N.A. | |||

4.19.a | distinguish between the measures of economic activity (i.e., gross domestic product (GDP), gross national income, and net national income), including their components | Dropped | N.A. | |||

4.19.b | distinguish between GDP at market prices and GDP at factor cost | Dropped | N.A. | |||

4.19.c | distinguish between current and constant prices, and describe the GDP deflator | Dropped | N.A. | |||

Financial Reporting | 6.23.c | describe the components of a company’s defined benefit pension expense | 6.20.c | describe the components of a company’s defined benefit pension costs | Change in wordings | N.A. |

6.23.d | explain and calculate the impact of a defined benefit plan’s assumptions on the defined benefit obligation and periodic expense | 6.20.d | explain and calculate the impact of a defined benefit plan’s assumptions on the defined benefit obligation and periodic pension cost | Change in wordings | N.A. | |

6.23.e | explain the impact on financial statements of adjustments for items of pension and other post-employment benefits that are reported in the notes to the financial statements rather than in the financial statements | 6.20.e | explain and calculate the effects on financial statements of adjusting for items of pension and other post-employment benefits that are reported in the notes to the financial statements |
Change in wordings | N.A. | |

6.23.g | evaluate the underlying economic liability (or asset) of a company’s pension and other post-employment benefits | Dropped | N.A. | |||

6.23.h | calculate the underlying economic pension expense (income) and other post-employment expense (income) based on disclosures | Dropped | N.A. | |||

6.24.c | compare and contrast the current rate method and the temporal method, evaluate the effects of each on the parent company’s balance sheet and income statement, and determine which method is appropriate in various scenarios | 6.21.c | compare the current rate method and the temporal method, evaluate the effects of each on the parent company’s balance sheet and income statement, and determine which method is appropriate in various scenarios | Change in wordings | N.A. | |

6.24.d | calculate the translation effects, evaluate the translation of a subsidiary’s balance sheet and income statement into the parent company’s currency, and analyze the different effects of the current rate method and the temporal method on the subsidiary’s financial ratios | 6.21.d | calculate the translation effects, evaluate the translation of a subsidiary’s balance sheet and income statement into the parent company’s currency, and analyze the effects of the current rate method and the temporal method on the subsidiary’s financial ratios | Change in wordings | N.A. | |

Corporate Finance | 8.28.a | calculate the yearly cash flows of an expansion capital project and a replacement capital project, and evaluate how the choice of depreciation method affects those cash flows | 8.25.a | determine the yearly cash flows of expansion and replacement capital projects, and evaluate how the choice of depreciation method affects those cash flows | Change in wordings | N.A. |

8.28.c | evaluate and select the optimal capital project in situations of 1) mutually exclusive projects with unequal lives, using either the least common multiple of lives approach or the equivalent annual annuity approach, and 2) capital rationing | 8.25.c | evaluate capital projects and determine the optimal capital project in situations of 1) mutually exclusive projects with unequal lives, using either the least common multiple of lives approach or the equivalent annual annuity approach, and 2) capital rationing | Change in wordings | N.A. | |

8.28.e | explain the procedure for determining the discount rate to be used in valuing a capital project, and calculate a project’s required rate of return using the capital asset pricing model (CAPM) | 8.25.e | explain and calculate the discount rate, based on market risk methods, to use in valuing a capital project | Change in wordings | N.A. | |

8.28.g | explain common capital budgeting pitfalls | 8.25.g | describe common capital budgeting pitfalls | Change in wordings | N.A. | |

8.29.e | describe international differences in financial leverage and their implications for investment analysis | 8.26.e | describe international differences in financial leverage, factors that explain these differences, and implications of these differences for investment analysis | Change in wordings | N.A. | |

8.30.e | calculate and interpret the effective tax rate on a given currency unit of corporate earnings under double-taxation, split rate, and tax imputation dividend tax regimes |
8.27.e | calculate and interpret the effective tax rate on a given currency unit of corporate earnings under double taxation, dividend imputation, and split-rate tax systems | Change in wordings | N.A. | |

8.30.f | compare stable dividend, target payout, and residual dividend payout policies, and calculate the dividend under each policy | 8.27.f | compare stable dividend, constant dividend payout ratio, and residual dividend payout policies, and calculate the dividend under each policy | Change in wordings | N.A. | |

8.30.h | describe global trends in corporate dividend policies | 8.27.h | describe broad trends in corporate dividend policies | Change in wordings | N.A. | |

9.31.a | explain corporate governance, describe the objectives and core attributes of an effective corporate governance system, and evaluate whether a company’s corporate governance has those attributes | 9.28.a | define corporate governance, describe the objectives and core attributes of an effective corporate governance system, and evaluate whether a company’s corporate governance has those attributes | Change in wordings | N.A. | |

9.28.g | describe environmental, social, and governance risk exposures | New | 20 min | |||

9.32.a | classify merger and acquisition (M&A) activities based on forms of integration and types of mergers | 9.29.a | classify merger and acquisition (M&A) activities based on forms of integration and relatedness of business activities | Change in wordings | N.A. | |

9.32.d | explain the relation between merger motivations and types of mergers based on industry life cycles | 9.29.d | explain, based on industry life cycles, the relation between merger motivations and types of mergers | Change in wordings | N.A. | |

9.32.g | calculate the Herfindahl–Hirschman Index, and evaluate the likelihood of an antitrust challenge for a given business combination | 9.29.g | calculate and interpret the Herfindahl– Hirschman Index, and evaluate the likelihood of an antitrust challenge for a given business combination | Change in wordings | N.A. | |

9.32.k | evaluate a merger bid, calculate the estimated post-merger value of an acquirer, and calculate the gains accrued to the target shareholders versus the acquirer shareholders | 9.29.k | evaluate a merger bid, and calculate the estimated post-merger value of an acquirer and the gains accrued to the target shareholders versus the acquirer shareholders | Change in wordings | N.A. | |

9.32.m | describe empirical evidence related to the distribution of benefits in a merger | 9.29.m | describe the characteristics of merger and acquisition transactions that create value | Change in wordings | N.A. | |

9.32.n | distinguish among divestitures, equity carve-outs, spin-offs, split-offs, and liquidation | 9.29.n | distinguish among equity carve-outs, spin-offs, split-offs, and liquidation | Change in wordings | N.A. | |

9.32.o | explain major reasons for divestitures | 9.29.o | explain common reasons for restructuring | Change in wordings | N.A. | |

Equity | 10.33 | The candidate should be able to explain how the classic works on asset valuation by Graham and Dodd and John Burr Williams are reflected in modern techniques of equity valuation | Dropped | N.A. | ||

10.34.a | define valuation and intrinsic value, and explain possible sources of perceived mispricing | 10.30.a | define valuation and intrinsic value, and explain sources of perceived mispricing | Change in wordings | N.A. | |

10.34.b | explain the going concern assumption, contrast a going concern value to a liquidation value, and identify the definition of value most relevant to public company valuation | 10.30.b | explain the going concern assumption and contrast a going concern value to a liquidation value | Converted into two | N.A. | |

10.30.c | describe definitions of value, and justify which definition of value is most relevant to public company valuation | Converted into two | N.A. | |||

10.34.d | explain the elements of industry and competitive analysis and the importance of evaluating the quality of financial statement information | 10.30.e | describe questions that should be addressed in conducting an industry and competitive analysis | Change in wordings | N.A. | |

10.30.g | describe sum-of-the-parts valuation, and explain a conglomerate discount | New | 10 min | |||

10.35.c | estimate the required return on an equity investment using the capital asset pricing model (CAPM), the Fama– French model (FFM), the Pastor– Stambaugh model (PSM), macroeconomic multifactor models, and the build-up method (e.g., bond yield plus risk premium) | 10.31.c | estimate the required return on an equity investment using the capital asset pricing model, the Fama–French model, the Pastor–Stambaugh model, macro-economic multifactor models, and the build-up method (eg, bond yield plus risk premium) | Change in wordings | N.A. | |

11.36.a | distinguish among the five competitive forces that drive industry profitability in the medium and long run | 11.32.a | distinguish among the five competitive forces and explain how they drive industry profitability in the medium and long run | Change in wordings | N.A. | |

11.36.b | explain how competitive forces drive industry profitability | Dropped | N.A. | |||

11.37.a | explain key components that should be included in an industry analysis model | Dropped | N.A. | |||

11.37.b | describe the life cycle of a typical industry | Dropped | N.A. | |||

11.37.c | analyze the effects of business cycles on industry classification (i.e., growth, defensive, cyclical) | Dropped | N.A. | |||

11.37.d | analyze the impact of external factors (e.g., technology, government, foreign influences, demography, and social changes) on industries | Dropped | N.A. | |||

11.37.e | describe inputs and methods used in preparing industry demand and supply analyses | Dropped | N.A. | |||

11.37.f | explain factors that affect industry pricing practices | Dropped | N.A. | |||

11.38.a | describe how inflation affects the estimation of cash flows for a company domiciled in an emerging market | Dropped | N.A. | |||

11.38.b | evaluate an emerging market company using a discounted cash flow model based on nominal and real financial projections | Dropped | N.A. | |||

11.38.c | explain arguments for adjusting cash flows, rather than adjusting the discount rate, to account for emerging market risks (e.g., inflation, macroeconomic volatility, capital control, and political risk) in a scenario analysis | Dropped | N.A. | |||

11.38.d | estimate the cost of capital for emerging market companies, and calculate and interpret a country risk premium | Dropped | N.A. | |||

11.39.a | compare dividends, free cash flow, and residual income as measures in discounted cash flow models, and identify investment situations for which each measure is suitable | 11.33.a | compare dividends, free cash flow, and residual income as inputs to discounted cash flow models, and identify investment situations for which each measure is suitable | Change in wordings | N.A. | |

11.39.b | calculate and interpret the value of a common stock using the dividend discount model (DDM) for one-, two-, and multiple-period holding periods | 11.33.b | calculate and interpret the value of a common stock using the dividend discount model (DDM) for single and multiple holding periods | Change in wordings | N.A. | |

11.39.d | calculate the implied growth rate of dividends using the Gordon growth model and current stock price | 11.33.d | calculate and interpret the implied growth rate of dividends using the Gordon growth model and current stock price | Change in wordings | N.A. | |

11.39.f | calculate the justified leading and trailing P/Es using the Gordon growth model | 11.33.f | calculate and interpret the justified leading and trailing P/Es using the Gordon growth model | Change in wordings | N.A. | |

11.39.o | demonstrate the use of spreadsheet modeling to forecast dividends and value common shares | 11.33.n | explain the use of spreadsheet modeling to forecast dividends and to value common shares | Change in wordings | N.A. | |

12.40.b | contrast the ownership perspective implicit in the FCFE approach to the ownership perspective implicit in the dividend discount approach | 12.34.a | explain the ownership perspective implicit in the FCFE approach | Change in wordings | N.A. | |

12.40.f | contrast the recognition of value in the FCFE model with recognition of value in dividend discount models | 12.34.f | compare the FCFE model and dividend discount models | Change in wordings | N.A. | |

12.34.m | evaluate whether a stock is overvalued, fairly valued, or undervalued based on a free cash flow valuation model | New | 2 min | |||

12.41.b | interpret a justified price multiple | 12.35.b | calculate and interpret a justified price multiple | Change in wordings | N.A. | |

12.41.c | describe rationales for and possible drawbacks to using price multiples (including P/E, P/B, P/S, P/CF) and dividend yield in valuation | 12.35.c | describe rationales for and possible drawbacks to using alternative price multiples and dividend yield in valuation | Change in wordings | N.A. | |

12.42.c | calculate the intrinsic value of a common stock using the residual income model, and contrast the recognition of value in the residual income model to value recognition in other present value models | 12.36.c | calculate the intrinsic value of a common stock using the residual income model, and compare value recognition in residual income and other present value models | Change in wordings | N.A. | |

12.42.j | explain strengths and weaknesses of residual income models | 12.36j | explain strengths and weaknesses of residual income models, and justify the selection of a residual income model to value a company’s common stock | Converted two into one | N.A. | |

12.42.k | justify the selection of a residual income model to value a company’s common stock | Converted two into one | N.A. | |||

Alternative Investments | 12.43.c | explain alternative definitions of value, and demonstrate how different definitions can lead to different estimates of value | 12.37.c | explain various definitions of value, and demonstrate how different definitions can lead to different estimates of value | Change in wordings | N.A. |

12.43.f | demonstrate the free cash flow, capitalized cash flow, and excess earnings methods of private company valuation | 12.37.f | calculate the value of private company using free cash flow, capitalized cash flow, and/or excess earnings methods | Change in wordings | N.A. | |

12.43.i | demonstrate the market approaches to private company valuation (for example, guideline public company method, guideline transaction method, and prior transaction method), and describe advantages and disadvantages of each | 12.37.i | determine the value of a private company based on market approach methods, and describe advantages and disadvantages of each method | Change in wordings | N.A. | |

12.43.j | demonstrate the asset-based approach to private company valuation | 12.37.j | describe the asset-based approach to private company valuation | Change in wordings | N.A. | |

13.44.a | explain, for each type of real property investment, the main value determinants, investment characteristics, principal risks, and most likely investors | 13.38.a | classify and describe basic forms of real estate investments | Change in wordings | N.A. | |

13.44.b | evaluate a real estate investment using net present value (NPV) and internal rate of return (IRR) from the perspective of an equity investor | Dropped | N.A. | |||

13.44.c | calculate the after-tax cash flow and the after-tax equity reversion from real estate properties | Dropped | N.A. | |||

13.44.d | explain potential problems associated with using IRR as a measurement tool in real estate investments | Dropped | N.A. | |||

13.38.b | describe the characteristics, the classification, and basic segments of real estate | New | 20 min | |||

13.38.c | explain the role in a portfolio, the major economic value determinants, investment characteristics, and principal risks of private real estate | New | 20 min | |||

13.38.d | describe commercial property types, including their distinctive investment characteristics | New | 15 min | |||

13.38.e | compare the income, cost, and sales comparison approaches to valuing real estate properties | New | 20 min | |||

13.38.f | estimate and interpret the inputs (for example, net operating income, capitalization rate, and discount rate) to the direct capitalization and discounted cash flow valuation methods | New | 20 min | |||

13.38.g | calculate the value of a property using the direct capitalization and discounted cash flow methods | New | 30 min | |||

13.45.a | explain the relation between a real estate capitalization rate and a discount rate | 13.38.h | compare the direct capitalization and discounted cash flow methods | Change in wordings | N.A. | |

13.45.b | estimate the capitalization rate by the market-extraction method, band-of-investment method, and built-up method, and justify each method’s use in capitalization rate determination | Dropped | N.A. | |||

13.45.c | estimate the market value of a real estate investment using the direct income capitalization approach and the gross income multiplier technique | Dropped | N.A. | |||

13.45.d | contrast limitations of the direct capitalization approach to those of the gross income multiplier technique | Dropped | N.A. | |||

13.38.i | calculate the value of a property using the cost and sales comparison approaches | New | 30 min | |||

13.38.j | describe due diligence in private equity real estate investment | New | 10 min | |||

13.38.k | discuss private equity real estate investment indices, including their construction and potential biases | New | 15 min | |||

13.38.l | explain the role in a portfolio, the major economic value determinants, investment characteristics, principal risks, and due diligence of private real estate debt investment; and | New | 10 min | |||

13.38.m | calculate and interpret financial ratios used to analyze and evaluate private real estate investments | New | 20 min | |||

13.39.a | describe types of publicly traded real estate securities | New | 10 min | |||

13.39.b | explain advantages and disadvantages of investing in real estate through publicly traded securities | New | 20 min | |||

13.39.c | explain economic value determinants, investment characteristics, principal risks, and due diligence considerations for real estate investment trust (REIT) shares | New | 20 min | |||

13.39.d | describe types of REITs | New | 25 min | |||

13.39.e | justify the use of net asset value per share (NAVPS) in REIT valuation and estimate NAVPS based on forecasted cash net operating income | New | 15 min | |||

13.39.f | describe the use of funds from operations (FFO) and adjusted funds from operations (AFFO) in REIT valuation | New | 15 min | |||

13.39.g | compare the net asset value, relative value (price-to-FFO and price-to-AFFO), and discounted cash flow approaches to REIT valuation | New | 10 min | |||

13.39.h | calculate the value of a REIT share using net asset value, price-to-FFO and price-to-AFFO, and discounted cash flow approaches | New | 25 min | |||

Fixed Income | 14.48.a | distinguish among default risk, credit spread risk, and downgrade risk | Dropped | N.A. | ||

14.48.b | explain and analyze capacity, collateral, covenants, and character as components of credit analysis | Dropped | N.A. | |||

14.42.a | describe credit risk and credit-related risks affecting corporate bonds | New | 10 min | |||

14.42.b | describe seniority rankings of corporate debt and explain the potential violation of the priority of claims in a bankruptcy proceeding | New | 10 min | |||

14.42.c | distinguish between corporate issuer credit ratings and issue credit ratings and describe the rating agency practice of “notching” | New | 10 min | |||

14.42.d | explain risks in relying on ratings from credit rating agencies | New | 10 min | |||

14.42.e | explain the components of traditional credit analysis | New | 20 min | |||

14.48.c | calculate and interpret key financial ratios used by credit analysts | 14.42.f | calculate and interpret financial ratios used in credit analysis | Change in wordings | N.A. | |

14.48.d | evaluate the credit quality of an issuer of a corporate bond, given such data as key financial ratios for the issuer and the industry | 14.42.g | evaluate the credit quality of a corporate bond issuer and a bond of that issuer, given key financial ratios for the issuer and the industry | Change in wordings | N.A. | |

14.42.h | describe factors that influence the level and volatility of yield spreads | New | 10 min | |||

14.42.i | calculate the return impact of spread changes | New | 20 min | |||

14.48.e | analyze why and how cash flow from operations is used to assess the ability of an issuer to service its debt obligations and to assess the financial flexibility of a company | Dropped | N.A. | |||

14.48.f | explain and interpret typical elements of the corporate structure and debt structure of a high-yield issuer and the effect of these elements on the risk position of the lender | Dropped | N.A. | |||

14.48.g | describe factors considered by rating agencies in rating asset-backed securities | Dropped | N.A. | |||

14.48.h | explain how the credit worthiness of municipal bonds is assessed, and contrast the analysis of tax-backed debt with the analysis of revenue obligations | Dropped | N.A. | |||

14.48.i | describe considerations used by Standard & Poor’s in assigning sovereign ratings, and explain why two ratings are assigned to each national government | Dropped | N.A. | |||

14.48.j | contrast the credit analysis required for corporate bonds to that required for 1) asset-backed securities, 2) municipal securities, and 3) sovereign debt | 14.42.j | explain special considerations when evaluating the credit of high yield, sovereign, and municipal debt issuers and issues | Change in wordings | N.A. | |

14.49.a | explain parallel and nonparallel shifts in the yield curve, a yield curve twist, and a change in the curvature of the yield curve (i.e., a butterfly shift) | 14.43.a | explain parallel and nonparallel shifts in the yield curve | Change in wordings | N.A. | |

14.49.g | calculate and interpret yield volatility, distinguish between historical yield volatility and implied yield volatility, and explain how yield volatility is forecasted | 14.43.g | calculate and interpret yield volatility, distinguish between historical yield volatility and implied yield volatility, and explain how to forecast yield volatility | Change in wordings | N.A. | |

14.50.a | evaluate, using relative value analysis, whether a security is undervalued or overvalued | 14.44.a | evaluate, using relative value analysis, whether a security is undervalued, fairly valued, or overvalued | Change in wordings | N.A. | |

15.51.c | calculate the prepayment amount for a month, given the single monthly mortality rate | 15.45.c | calculate the prepayment amount on a mortgage passthrough security for a month, given the single monthly mortality rate | Change in wordings | N.A. | |

Derivatives | 16.55.g | describe the difficulties in pricing Eurodollar futures | 16.49.g | describe the difficulties in pricing Eurodollar futures and creating a pure arbitrage opportunity | Change in wordings | N.A. |

17.56.h | demonstrate the historical volatility and implied volatility methods for estimating the future volatility of the underlying asset | 17.50.h | determine the historical and implied volatilities of an underlying asset | Change in wordings | N.A. | |

17.59.a | describe the characteristics of a credit default swap, and compare a credit default swap with a corporate bond | 17.53.a | describe the structure and features (reference entity, credit events, settlement method, CDS spread) of credit default swaps (CDS) | Change in wordings | N.A. | |

17.59.b | explain advantages of using credit derivatives over other credit instruments | Dropped | N.A. | |||

17.53.b | describe obligations of the protection buyer and seller and risks faced by each | New | 10 min | |||

17.53.c | compare CDS, total return swaps, asset swaps, and credit spread options | New | 15 min | |||

17.59.c | explain the use of credit derivatives by the various market participants | 17.53.d | identify uses of CDS (such as, hedging exposure to credit risk, enabling action on a negative credit view, engaging in arbitrage between markets) | Change in wordings | N.A. | |

15.59.d | describe credit derivatives trading strategies, and explain how they are used by hedge funds and other managers | Dropped | N.A. | |||

17.53.e | explain the relation among CDS spread, expected spread payments, and expected default losses | New | 10 min | |||

17.53.f | describe risk management roles and activities of credit derivative dealers | New | 10 min | |||

Portfolio Management | 18.61.a | explain the efficiency of the market portfolio in the CAPM and the relation between the expected return and beta of an asset when restrictions on borrowing at the risk-free rate and on short selling exist | Dropped | N.A. | ||

18.61.b | describe practical consequences that follow when restrictions on borrowing at the risk-free rate and on short selling exist. | Dropped | N.A. | |||

18.62.a | explain international market integration and segmentation and the impediments to international capital mobility | Dropped | N.A. | |||

18.62.b | describe factors that favor international market integration | Dropped | N.A. | |||

18.62.c | explain the assumptions of the domestic capital asset pricing model (CAPM) | Dropped | N.A. | |||

18.62.d | justify extension of the domestic CAPM to an international context (extended CAPM), and describe the assumptions needed to make the extension | Dropped | N.A. | |||

18.62.e | determine whether the real exchange rate has changed in a period | Dropped | N.A. | |||

18.62.f | calculate the expected 1) exchange rate and 2) domestic-currency holding period return on a foreign bond (security) | Dropped | N.A. | |||

18.62.g | calculate the end-of-period real exchange rate and the domestic-currency ex-post return on a foreign bond (security) |
Dropped | N.A. | |||

18.62.h | calculate a foreign currency risk premium, and explain a foreign currency risk premium in terms of interest rate differentials and forward rates | Dropped | N.A. | |||

18.62.i | state the risk pricing relation and the formula for the international capital asset pricing model (ICAPM), and calculate the expected return on a stock using the model | Dropped | N.A. | |||

18.62.j | explain the effect of market segmentation on the ICAPM | Dropped | N.A. | |||

18.62.k | define currency exposure, and explain exposures in terms of correlations | Dropped | N.A. | |||

18.62.l | describe the likely exchange rate exposure of a company based on the company’s activities, and explain the impact of both real and nominal exchange rate changes on the valuation of the company | Dropped | N.A. | |||

18.62.m | explain currency exposures of national economies, equity markets, and bond markets | Dropped | N.A. | |||

18.62.n | contrast the traditional trade approach (J-curve) and the money demand approach to modeling the relation between real exchange rate changes and domestic economic activity | Dropped | N.A. |

**Changes in CFA level III curriculum in 2013: **There is hardly 1-2% change in CFA level III curriculum. Most of the readings have been untouched and only the statements of LOS have been modified a bit. There have changed only 1 topic: Corporate Performance, Governance and Business Ethics in Equity Portfolio Management. It will take hardly 2 hours to go through all the minor changes in CFA level III curriculum.

**Table for changes in CFA level III curriculum in 2013 from 2012:**

Subject | LOS in 2012 | Description | LOS in 2013 | Description | Comparison | Additional time required |

Ethics | 2.3.a | explain the ethical responsibilities required by each of the six provisions of the Code of Ethics and the seven Standards of Professional Conduct | 2.3.a | explain the ethical and professional responsibilities required by each of the six provisions of the Code of Ethics and the seven Standards of Professional Conduct | Change in wordings | N.A. |

2.6.a | explain the ethical responsibilities required by the six components of the Asset Manager Code | 2.6.a | explain the ethical and professional responsibilities required by the six components of the Asset Manager Code | Change in wordings | N.A. | |

2.6.b | determine whether an asset manager’s practices and procedures are consistent with the Asset Manager Code | New | 30 min | |||

2.6.b | interpret the Asset Manager Code in situations that present issues of compliance, disclosure, or professional conduct | Dropped | N.A. | |||

Behavioral Finance | 3.7.d | contrast traditional and behavioral finance perspectives on capital markets and portfolio construction | 3.7.d | compare traditional and behavioral finance perspectives on portfolio construction and the behavior of capital markets | Change in wordings | N.A. |

3.9.c | discuss how behavioral factors influence portfolio construction | New | 15 min | |||

3.9.c | discuss how behavioral finance has been applied to portfolio construction | 3.9.d | explain how behavioral finance can be applied to the process of portfolio construction | Change in wordings | N.A. | |

3.9.d | discuss how behavioral factors affect analyst forecasts and remedial actions for analyst biases | 3.9.e | discuss how behavioral factors affect analyst forecasts and recommend remedial actions for analyst biases | Change in wordings | N.A. | |

3.9.e | discuss how behavioral factors affect investment committee decision making and techniques of structuring operating committees to address the behavioral factors | 3.9.f | discuss how behavioral factors affect investment committee decision making and recommend techniques for mitigating their effects | Change in wordings | N.A. | |

3.9.f | describe how the behavior of investors can lead to market anomalies and observed market characteristics | 3.9.g | describe how behavioral biases of investors can lead to market anomalies and observed market characteristics | Change in wordings | N.A. | |

Equity Management | 12.28.a | explain the ways in which management may act that are not in the best interest of the firm’s owners (moral hazard) and describe how dysfunctional corporate governance can lead to moral hazard | Dropped | N.A. | ||

12.28.b | evaluate explicit and implicit incentives that can align management’s interests with those of the firm’s shareholders | Dropped | N.A. | |||

12.28.c | explain the shortcomings of boards of directors as monitors of management and discuss approaches for improving board oversight | Dropped | N.A. | |||

12.28.d | discuss why active monitoring by investors requires control, the various mechanisms by which control is exercised, and the limitations of active monitoring | Dropped | N.A. | |||

12.28.e | critique the effectiveness of debt as a corporate governance mechanism | Dropped | N.A. | |||

12.28.f | explain the social responsibilities of the corporation in a “stakeholder society” and evaluate the advantages and disadvantages of a corporate governance structure based on stakeholder rather than shareholder interests | Dropped | N.A. | |||

12.28.g | discuss the Cadbury Report recommendations for best practice in maintaining an effective board of directors whose interests are aligned with those of shareholders | Dropped | N.A. | |||

12.28.a | compare interests of key stakeholder groups and explain the purpose of a stakeholder impact analysis | New | 25 min | |||

12.28.b | discuss problems that can arise in principal-agent relationships and mechanisms that may mitigate such problems | New | 15 min | |||

12.28.c | discuss roots of unethical behavior and how managers might ensure that ethical issues are considered in business decision making | New | 10 min | |||

12.28.d | compare the Friedman doctrine, Utilitarianism, Kantian Ethics, and Rights and Justice Theories as approaches to ethical decision making | New | 20 min | |||

12.20.c | discuss the major issues confronting emerging market investors, including excess correlations during times of crisis (contagion), corporate governance, price discovery, and liquidity | 12.30.c | discuss issues confronting emerging market investors, including excess correlations during times of crisis (contagion), corporate governance, price discovery, and liquidity | Change in wordings | N.A. | |

Derivative Applications | 15.37.b | calculate and interpret the value at expiration, profit, maximum profit, maximum loss, breakeven underlying price at expiration, and general shape of the graph for the major option strategies (bull spread, bear spread, butterfly spread, collar, straddle, box spread) | 15.37.b | calculate and interpret the value at expiration, profit, maximum profit, maximum loss, breakeven underlying price at expiration, and general shape of the graph for the following option strategies: bull spread, bear spread, butterfly spread, collar, straddle, box spread | Change in wordings | N.A. |

17.41.b | explain the basic components of portfolio evaluation (performance measurement, performance attribution, and performance appraisal) | 17.41.b | explain the following components of portfolio evaluation (performance measurement, performance attribution, and performance appraisal) | Change in wordings | N.A. | |

17.41.e | demonstrate the analysis of portfolio returns into components attributable to the market, to style, and to active management | 17.41.e | demonstrate the decomposition of portfolio returns into components attributable to the market, to style, and to active management | Change in wordings | N.A. | |

GIPS | 18.43.a | discuss the reasons for the creation of the GIPS standards (the Standards), their evolution, and their benefits to prospective clients and investment managers | 18.43.a | discuss the reasons for the creation of the GIPS standards, their evolution, and their benefits to prospective clients and investment managers | Change in wordings | N.A. |

Tagged: CFA level I, CFA level II, CFA level III

Abhinav KhattarJanuary 15, 2013 at 10:21 amawesome work. It can be great help.

KennethOctober 13, 2013 at 4:57 pmWould happen to have all CFA Level 1 2013 LOS on excel?