Apply CFA Program concepts and skills to real-world wealth and portfolio management for the 2019 exam
The same official curricula that CFA Program candidates receive with program registration is now publicly available for purchase. CFA Program Curriculum 2019 Level III, Volumes 1-6 provides complete, authoritative guidance on synthesizing the entire CFA Program Candidate Body of Knowledge (CBOK) into professional practice for the 2019 exam. This book helps you bring together the skills and concepts from Levels I and II to formulate a detailed, professional response to a variety of real-world scenarios. Coverage spans all CFA Program topics and provides a rigorous treatment of portfolio management, all organized into individual study sessions with clearly defined Learning Outcome Statements. Visual aids clarify complex concepts, and practice questions allow you to test your understanding while reinforcing major content areas.
Levels I and II equipped you with foundational investment tools and complex analysis skill; now, you'll learn how to effectively synthesize that knowledge to facilitate effective portfolio management and wealth planning. This study set helps you convert your understanding into a professional body of knowledge that will benefit your clients' financial futures.
- Master essential portfolio management and compliance topics
- Synthesize your understanding into professional guidance
- Reinforce your grasp of complex analysis and valuation
- Apply ethical and professional standards in the context of real-world cases
CFA Institute promotes the highest standards of ethics, education, and professional excellence among investment professionals. The CFA Program curriculum guides you through the breadth of knowledge required to uphold these standards. The three levels of the program build on each other. Level I provides foundational knowledge and teaches the use of investment tools; Level II focuses on application of concepts and analysis, particularly in the valuation of assets; and Level III builds toward synthesis across topics with an emphasis on portfolio management.
Table of Contents:
How to Use the CFA Program Curriculum vii
Curriculum Development Process vii
Organization of the Curriculum viii
Features of the Curriculum viii
Designing Your Personal Study Program ix
Feedback xi
Ethical and Professional Standards
Study Session 1 Ethical and Professional Standards (1) 3
Reading 1 Code of Ethics and Standards of Professional Conduct 5
Preface 5
Evolution of the CFA Institute Code of Ethics and Standards of Professional Conduct 6
Standards of Practice Handbook 6
Summary of Changes in the Eleventh Edition 7
CFA Institute Professional Conduct Program 9
Adoption of the Code and Standards 10
Acknowledgments 10
Ethics and the Investment Industry 11
Why Ethics Matters 11
CFA Institute Code of Ethics and Standards of Professional Conduct 15
Preamble 15
The Code of Ethics 15
Standards of Professional Conduct 16
Reading 2 Guidance for Standards I–VII 21
Standard I: Professionalism 21
Standard I(A) Knowledge of the Law 21
Guidance 21
Recommended Procedures for Compliance 26
Application of the Standard 27
Standard I(B) Independence and Objectivity 30
Guidance 30
Recommended Procedures for Compliance 35
Application of the Standard 36
Standard I(C) Misrepresentation 43
Guidance 43
Recommended Procedures for Compliance 46
Application of the Standard 48
Standard I(D) Misconduct 53
Guidance 53
Recommended Procedures for Compliance 54
Application of the Standard 54
Standard II: Integrity of Capital Markets 56
Standard II(A) Material Nonpublic Information 56
Guidance 56
Recommended Procedures for Compliance 60
Application of the Standard 63
Standard II(B) Market Manipulation 68
Guidance 68
Application of the Standard 69
Standard III: Duties to Clients 73
Standard III(A) Loyalty, Prudence, and Care 73
Guidance 73
Recommended Procedures for Compliance 77
Application of the Standard 78
Standard III(B) Fair Dealing 82
Guidance 82
Recommended Procedures for Compliance 84
Application of the Standard 86
Standard III(C) Suitability 90
Guidance 90
Recommended Procedures for Compliance 93
Application of the Standard 94
Standard III(D) Performance Presentation 97
Guidance 97
Recommended Procedures for Compliance 98
Application of the Standard 98
Standard III(E) Preservation of Confidentiality 101
Guidance 101
Recommended Procedures for Compliance 103
Application of the Standard 103
Standard IV: Duties to Employers 105
Standard IV(A) Loyalty 105
Guidance 105
Recommended Procedures for Compliance 109
Application of the Standard 109
Standard IV(B) Additional Compensation Arrangements 116
Guidance 116
Recommended Procedures for Compliance 116
Application of the Standard 116
Standard IV(C) Responsibilities of Supervisors 118
Guidance 118
Recommended Procedures for Compliance 120
Application of the Standard 122
Standard V: Investment Analysis, Recommendations, and Actions 126
Standard V(A) Diligence and Reasonable Basis 126
Guidance 126
Recommended Procedures for Compliance 130
Application of the Standard 130
Standard V(B) Communication with Clients and Prospective Clients 137
Guidance 138
Recommended Procedures for Compliance 140
Application of the Standard 141
Standard V(C) Record Retention 146
Guidance 146
Recommended Procedures for Compliance 147
Application of the Standard 148
Standard VI: Conflicts of Interest 149
Standard VI(A) Disclosure of Conflicts 149
Guidance 149
Recommended Procedures for Compliance 152
Application of the Standard 152
Standard VI(B) Priority of Transactions 157
Guidance 157
Recommended Procedures for Compliance 158
Application of the Standard 160
Standard VI(C) Referral Fees 162
Guidance 162
Recommended Procedures for Compliance 162
Application of the Standard 162
Standard VII: Responsibilities as a CFA Institute Member or CFA Candidate 165
Standard VII(A) Conduct as Participants in CFA Institute Programs 165
Guidance 165
Application of the Standard 167
Standard VII(B) Reference to CFA Institute, the CFA Designation, and the CFA Program 170
Guidance 170
Recommended Procedures for Compliance 172
Application of the Standard 173
Practice Problems 175
Solutions 185
Study Session 2 Ethical and Professional Standards (2) 193
Reading 3 Application of the Code and Standards 195
Introduction 195
The Consultant 196
Mark Vernley 196
The Consulting Contract 197
Evaluation of the Situation 197
Pearl Investment Management (A) 200
Knowledge of the Law and Obligation to Obey 201
Responsibilities of Supervisors 202
Trading for Personal Accounts 202
Maintaining Confidential Client Information 203
Pearl Investment Management (B) 203
Responsibility of Candidates to Comply with the Code and Standards 204
Dealing with Clients 204
Errors in Client Accounts 205
Pearl Investment Management (C) 206
Proper Care and Independent Judgment 207
Use of Insider Information 208
Using the Research of Others 209
Reasonable Basis for a Research Opinion 209
Relevant Factors and Fact versus Opinion in Research Reports 209
Misrepresentation of Services and Performance Presentation 210
Practice Problems 211
Solutions 228
Reading 4 Asset Manager Code of Professional Conduct 235
Introduction 235
Adopting the Code and Claiming Compliance 237
Acknowledgement of Claim of Compliance to CFA Institute 237
General Principles of Conduct 237
Asset Manager Code of Professional Conduct 238
Loyalty to Clients 238
Investment Process and Actions 238
Trading 238
Risk Management, Compliance, and Support 239
Performance and Valuation 239
Disclosures 239
Appendix 6—Recommendations and Guidance 240
Loyalty to Clients 240
Investment Process and Actions 241
Trading 244
Risk Management, Compliance, and Support 246
Performance and Valuation 250
Disclosures 251
Practice Problems 255
Solutions 260
Portfolio Management
Study Session 3 The Asset Management Industry and Professionalism 265
Reading 5 Overview of the Asset Management Industry and Portfolio Management 267
Introduction 267
The Asset Management Industry 268
Industry Overview 268
Active versus Passive Management 269
Traditional versus Alternative Asset Managers 270
Ownership Structure 271
Asset Management Clients 271
Major Investment Products 275
Asset Management Industry Trends 278
The Portfolio Management Process 281
Fundamentals of Investment Governance 283
Governance Structures 284
Articulating Investment Objectives 284
Allocation of Rights and Responsibilities 285
Investment Policy Statement 287
Asset Allocation and Rebalancing Policy 288
Reporting Framework 288
The Governance Audit 288
Summary 291
Reading 6 Professionalism in Investment Management 293
Introduction 293
Professions 294
How Professions Establish Trust 294
Professions Are Evolving 296
Professionalism in Investment Management 296
Trust in Investment Management 297
CFA Institute as an Investment Management Professional Body 298
Expectations of Investment Management Professionals 299
Challenges for Investment Management Professionals 300
Summary 301
Practice Problems 303
Solutions 304
Glossary G-1
Index I-1
