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Ethical and Professional Standards and Quantitative Methods2018 Level I Notes2018 CFA Exam PrepIFT Study NotesVolume 1Ethical and Professional StandardsQuantitative MethodsThis document should be read in conjunction with the corresponding reading in the 2018 Level ICFA Program curriculum. Some of the graphs, charts, tables, examples, and figures arecopyright 2017, CFA Institute. Reproduced and republished with permission from CFA Institute.All rights reserved.Required disclaimer: CFA Institute does not endorse, promote, or warrant the accuracy or qualityof the products or services offered by IFT. CFA Institute, CFA , and Chartered FinancialAnalyst are trademarks owned by CFA Institute. IFT. All rights reserved1
Ethical and Professional Standards and Quantitative Methods2018 Level I NotesTable of ContentsR01 Ethics and Trust in the Investment Profession . 61. Introduction . 62. Ethics . 63. Ethics and Professionalism . 74. Challenges to Ethical Conduct . 75. The Importance of Ethical Conduct in the Investment Industry . 86. Ethical vs. Legal Standards . 97. Ethical Decision-Making Frameworks .10Summary.12Practice Questions .14R02 Code of Ethics and Standards of Professional Conduct Profession . 17Introduction .17CFA Institute Professional Conduct Program.17Code of Ethics .18Standards of Professional Conduct .18Summary.23R03 Guidance for Standards I-VII . 24Introduction .24Standard I: Professionalism .24Standard II: Integrity of Capital Markets .29Standard III: Duties to Clients .32Standard IV: Duties to Employers.38Standard V: Investment Analysis, Recommendations, and Actions .42Standard VI: Conflicts of Interest .46Standard VII: Responsibilities as a CFA Institute Member or CFA Candidate .50Summary.53Practice Questions .56R04 Introduction to GIPS . 65Introduction .651. Why Were the GIPS Standards Created? .65 IFT. All rights reserved2
Ethical and Professional Standards and Quantitative Methods2018 Level I Notes2. Who Can Claim Compliance? . 653. Who Benefits from Compliance? . 664. Composites . 665. Verification . 676. The Structure of the GIPS Standards . 67Summary . 68Practice Questions . 69R05 The GIPS Standard . 71Introduction . 71Goals of the GIPS Executive Committee . 71Key Features of the GIPS Standards . 71Historical Performance Record . 72Compliance . 72Implementing a Global Standard . 73Nine Major Sections of the GIPS Standards . 73Sample Presentation . 77Summary . 80Practice Questions . 81R06 Time Value of Money. 83Introductory Note . 831. Introduction . 832. Interest Rates: Interpretation . 843. The Future Value of a Single Cash Flow. 864. The Future Value of a Series of Cash Flows . 915. The Present Value of a Single Cash Flow . 936. The Present Value of a Series of Cash Flows. 967. Solving for Rates, Number of Periods, or Size of Annuity Payments. 101Summary . 105Practice Questions . 108R07 Discounted Cash Flow Applications . 1121. Introduction . 1122. Net Present Value and Internal Rate of Return . 112 IFT. All rights reserved3
Ethical and Professional Standards and Quantitative Methods2018 Level I Notes3. Portfolio Return Measurement . 1164. Money Market Yields. 119Summary. 124Practice Questions . 126R08 Statistical Concepts and Market Return. 1301. Introduction . 1302. Some Fundamental Concepts. 1303. Summarizing Data Using Frequency Distributions . 1314. The Graphic Presentation of Data . 1325. Measures of Central Tendency . 1336. Other Measures of Location: Quantiles . 1367. Measures of Dispersion . 1378. Symmetry and Skewness in Return Distributions . 1419. Kurtosis in Return Distributions . 14310. Using Geometric and Arithmetic Means . 143Summary. 145Practice Questions . 149R09 Probability Concepts . 1561. Introduction . 1562. Probability, Expected Value, and Variance . 1563. Portfolio Expected Return and Variance of Return . 1624. Topics in Probability . 164Summary. 168Practice Questions . 172R10 Common Probability Distributions . 1771. Int
CFA Institute, CFA , and Chartered Financial Analyst are trademarks owned by CFA Institute. Ethical and Professional Standards and Quantitative Methods 2018 Level I Notes
