CFA Level 1 Equity Investments PDF

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Are you looking for a CFA Level 1 Equity Investment PDF for learning? You may now be here because you are looking for information about that. You may need this because you want to take the CFA Level 1 exam. If so, you are able to check what I found regarding the CFA Level 1 Equity Investment PDF below.

When I tried to find the information about CFA Level 1 Equity Investments PDF, the thing that I found was this: https://www.cfainstitute.org/-/media/documents/study-session/2022-l1-ss11.pdf where it is the form of PDF and there you are able to know what you should be able to after you learn each part of Equity Investments.

Here are some contents in the PDF above.

Reading Assignments

  • Reading 33

Market Organization and Structure by Larry Harris, PhD, CFA

  • Reading 34

Security Market Indexes by Paul D. Kaplan, PhD, CFA, and Dorothy C. Kelly, CFA

  • Reading 35

Market Efficiency by Sean Cleary, PhD, CFA, Howard J. Atkinson, CIMA, ICD.D, CFA, and Pamela Peterson Drake, PhD, CFA.

Learning Outcomes

Reading 33. Market Organization and Structure

The candidate should be able to:

  1. explain the main functions of the financial system;
  2. describe classifications of assets and markets;
  3. describe the major types of securities, currencies, contracts, commodities, and

real assets that trade in organized markets, including their distinguishing characteristics and major subtypes;

  1. describe types of financial intermediaries and services that they provide;
  2. compare positions an investor can take in an asset;
  3. calculate and interpret the leverage ratio, the rate of return on a margin transaction, and the security price at which the investor would receive a margin call;
  4. compare execution, validity, and clearing instructions;
  5. compare market orders with limit orders;
  6. define primary and secondary markets and explain how secondary markets

support primary markets;

  1. describe how securities, contracts, and currencies are traded in quote-driven,

order-driven, and brokered markets;

  1. describe characteristics of a well-functioning financial system;
  2. describe objectives of market regulation.

To know more the content, you can access the website address that I shared above.

Besides, I also find these PDFs:

You are able to access it by yourself, who knows that it can be beneficial for you to prepare for your CFA Level 1 exam.

CFA Level 1 Equity Investment Cheat Sheet

If you need a CFA Level 1 Equity Investment Cheat Sheet, you are able to access the 300 Hours site that you can access at https://300hours.com/cfa-level-1-equity-cheat-sheet/ and below, I provide some contents of the site.

The Overview of CFA Level 1 Equity

In finance, Equity Investment is an important asset class. In the CFA Level 1 Equity Investment section, there are 6 readings, but there are only 3 of them that focus exclusively on equities. And here is a summary of Level 1 Equity Investments chapter readings according to the 300 Hours.

  • Reading Number: 33
    Sub-topic: Market Organization and Structure
    Description: This is an overview of how various types of markets operate and the actors who take part in them.
  • Reading Number: 34
    Sub-topic: Security Market Indexes
    Description: This is a helpful summary of how different types of indexes, how they are constructed and also what they are used for.
  • Reading Number: 35
    Sub-topic: Market Efficiency
    Description: This is a discussion on whether market prices reflect the intrinsic value of securities.
  • Reading Number: 36
    Sub-topic: Overview of Equity Securities
    Description: This is a qualitative analysis of the features that differentiate equity securities from other asset classes.
  • Reading Number: 37
    Sub-topic: Introduction to Industry & Company Analysis
    Description: Here, you will look at the qualitative frameworks that are usually used to analyze equities.
  • Reading Number: 38
    Sub-topic: Equity Valuation: Concepts and Basic Tools
    Description: This is the most quantitative and here you will get the details about how investors arrive at the valuations that they used when determining whether a stock is trading at an attractive price.

Reading 33: Market Organization and Structure

Leveraged positions (buying stock on margin)

The amount borrowed relative to the total of the asset is measured by Leverage ratio. It is the reciprocal of the initial margin as well (trader’s equity).

Leverage ratio = Position value / Equity value

When the price of equity falls below the maintenance margin requirement, traders get a margin call.

Margin call price = P0 x (1 – Initial margin) / (1 – Maintenance margin)

Execution instructions types for orders

  • Market orders
    Order is executed soon at the best price available.
  • Limit orders
    It sets a minimum price for sell orders, or a maximum price for buy orders. However, orders may not be executed at all if markets are fast moving or there is not enough liquidity.
  • All-or-nothing orders
    Order will only be executed if the whole quantity is able to be traded.
  • Hidden orders
    These are large orders that are only known to brokers/ exchanges that are executing them, until the trades are executed.
  • Iceberg orders
    This is a small % of a large hidden order that is executed first to gauge market liquidity, before the whole order is executed.

Market Order vs Limit Order

Market Order Limit Order
Execution It is executed soon at best market price It sets a minimum sell price or a maximum purchase price on orders.

Here are the types of limit orders:

A. Marketable (aggressively priced) ensures soon execution:

Limit buy order > best ask, OR

Limit sell order < best bid

B.  Making a new market / inside the market:

Best bid < Limit price < Best ask

C. Behind the market:

Limit buy price < Best bid

Limit sell price > Best ask

Pros Quick execution It ensures that price limits are never breached in transaction, more trade price certainty
Cons Trade price uncertainty Order may not be partially filled, or not executed at all in a volatile market

Well, that’s all some of the contents of CFA Level 1 Equity Investments cheat sheet from 300Hours site, if you want to know more complete, you are able to access the site directly.

If you will take CFA Level 1 exam soon, I hope that you are able to be successful and get the best results.

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