CFA Level II Exam Prep

About this course

What you'll learn

• Multiple regression, model fit and misspecification, extensions such as dummy and logistic models, time-series analysis, machine learning and big data projects.
• Exchange-rate quotes and arbitrage, international parity conditions, carry trades, balance-of-payments and policy influences on currencies, and the drivers and theories of economic growth.
• Intercorporate investments, post-employment and share-based compensation, multinational operations, financial institutions, financial reporting quality and integrated analysis.
• Dividend and share repurchase policy, ESG considerations in investment analysis, advanced cost of capital estimation and corporate restructuring.
• The equity valuation process, dividend discount and free cash flow models, price and enterprise value multiples, residual income valuation and private company valuation.
• Term structure and interest rate dynamics, arbitrage-free valuation with binomial trees, bonds with embedded options, credit analysis models and credit default swaps.
• Pricing and valuation of forwards, futures and swaps on equities, bonds, currencies and rates; and valuation of options using binomial models, Black–Scholes–Merton and Black, with Greeks and hedging.
• Commodities and commodity derivatives, private and public real estate investment and valuation, and hedge fund strategies and their risk profiles.
• Economics and investment markets, active portfolio management and the fundamental law, ETF mechanics, multifactor models, market risk measurement and backtesting and simulation.
• Applying the Code of Ethics and Standards of Professional Conduct in Level II case settings: professionalism, integrity of capital markets, duties to clients and employers, investment analysis, conflicts of interest and responsibilities as a member or candidate.

Course details

Level

advanced

What's included

• 30 lessons
• Progress tracking
• Certificate of completion

Curriculum

1. 01

   Lesson 1: Multiple Regression: Assumptions, Model Fit and Misspecification

   Estimating and interpreting multiple regression, testing coefficients and joint hypotheses, and diagnosing heteroskedasticity, serial correlation and multicollinearity.

   90m
2. 02

   Lesson 2: Extensions of Multiple Regression and Time-Series Analysis

   Influential observations, dummy variables, logistic regression, trend and autoregressive models, unit roots, seasonality, ARCH and cointegration.

   90m
3. 03

   Lesson 3: Machine Learning and Big Data Projects

   Supervised, unsupervised and deep learning algorithms, overfitting and its remedies, and the steps of a big data project including text data and model evaluation.

   80m
4. 04

   Lesson 4: Currency Quotes, Arbitrage and International Parity Conditions

   Bid–offer quotes, triangular arbitrage, forward points, covered and uncovered interest rate parity, purchasing power parity and the international Fisher effect.

   85m
5. 05

   Lesson 5: Carry Trades, Balance of Payments and Policy Influences on Exchange Rates

   FX carry trades and their crash risk, current and capital account effects on currencies, the Mundell–Fleming and portfolio balance models, capital controls and currency crises.

   80m
6. 06

   Lesson 6: Economic Growth

   Determinants and measurement of growth, growth accounting and the production function, classical, neoclassical and endogenous theories, convergence and the link between growth and equity markets.

   80m
7. 07

   Lesson 7: Intercorporate Investments and Employee Compensation

   Accounting for financial assets, associates, joint ventures and business combinations; defined benefit pensions and share-based compensation.

   90m
8. 08

   Lesson 8: Multinational Operations and Analysis of Financial Institutions

   Foreign currency transactions, translation using current rate and temporal methods, hyperinflation, and the CAMELS-based analysis of banks and insurers.

   85m
9. 09

   Lesson 9: Financial Reporting Quality and Integrated Analysis

   The spectrum of reporting quality, warning signs of manipulation, accrual measures, and integrating DuPont, segment and cash-flow analysis into an investment conclusion.

   85m
10. 10

    Lesson 10: Dividends, Share Repurchases and ESG in Investment Analysis

    Payout theories and signaling, payout policies, repurchase effects on EPS and book value, and integrating ESG factors into security analysis.

    85m
11. 11

    Lesson 11: Cost of Capital: Advanced Topics

    Top-down and bottom-up drivers of the cost of capital, estimating the equity risk premium, CAPM and multifactor models, build-up approaches, country risk and the cost of debt.

    85m
12. 12

    Lesson 12: Corporate Restructuring

    Investment, divestment and restructuring actions, motivations, valuation of targets using comparable companies, comparable transactions and DCF, and evaluating deal effects.

    80m
13. 13

    Lesson 13: Equity Valuation Process and Discounted Dividend Models

    Intrinsic value, required return, the Gordon growth model, PVGO, two-stage, H-model and three-stage dividend models, and sustainable growth.

    90m
14. 14

    Lesson 14: Free Cash Flow Valuation and Residual Income Valuation

    FCFF and FCFE definitions and calculations, single- and multistage FCF models, residual income, the residual income model and its relationship to other approaches.

    90m
15. 15

    Lesson 15: Market-Based Valuation and Private Company Valuation

    Price and enterprise value multiples, method of comparables versus fundamentals, momentum indicators, and valuing private companies including discounts for lack of control and marketability.

    85m
16. 16

    Lesson 16: The Term Structure and Interest Rate Dynamics

    Spot, par and forward rates, riding the yield curve, swap rates and spreads, term structure theories, yield curve factor models and key rate durations.

    85m
17. 17

    Lesson 17: Arbitrage-Free Valuation and Bonds with Embedded Options

    Binomial interest rate trees, pathwise valuation, Monte Carlo methods, callable and putable bonds, OAS, effective duration and convexity, and convertible bonds.

    90m
18. 18

    Lesson 18: Credit Analysis Models and Credit Default Swaps

    Expected loss, probability of default and loss given default, structural and reduced-form models, credit valuation adjustment, credit spreads, and CDS pricing and strategies.

    85m
19. 19

    Lesson 19: Pricing and Valuation of Forwards and Futures

    Carry arbitrage, equity and fixed-income forwards, forward rate agreements, currency forwards and the valuation of existing forward positions.

    85m
20. 20

    Lesson 20: Swaps: Pricing and Valuation

    Interest rate, currency and equity swaps priced as portfolios of bonds or forwards, swap rates from discount factors, and marking swaps to market.

    80m
21. 21

    Lesson 21: Valuation of Contingent Claims

    One- and two-period binomial models, risk-neutral valuation, American options, the Black–Scholes–Merton and Black models, Greeks, delta hedging and implied volatility.

    90m
22. 22

    Lesson 22: Commodities and Commodity Derivatives

    Commodity sectors and life cycles, futures pricing and term structure theories, components of futures returns, commodity indexes and swaps.

    80m
23. 23

    Lesson 23: Real Estate: Private Investment and Public Securities

    Real estate characteristics and property types, income and cost approaches to appraisal, debt service measures, REIT valuation using NAV, FFO, AFFO and DCF.

    90m
24. 24

    Lesson 24: Hedge Fund Strategies

    Equity, event-driven, relative value, opportunistic, specialist and multi-manager strategies, their risk exposures, and conditional factor models for evaluating hedge fund returns.

    80m
25. 25

    Lesson 25: Economics, Investment Markets and Active Portfolio Management

    Linking the business cycle to discount rates, bond yields, credit spreads and equity valuations; value added, information ratio and the fundamental law of active management.

    85m
26. 26

    Lesson 26: Exchange-Traded Funds and Multifactor Models

    ETF creation/redemption, tracking error and premiums/discounts, total costs, ETF uses; arbitrage pricing theory and macroeconomic, fundamental and statistical factor models.

    85m
27. 27

    Lesson 27: Measuring and Managing Market Risk; Backtesting and Simulation

    Value at risk methods, expected shortfall, sensitivity and scenario measures, risk constraints; backtesting process, pitfalls and simulation methods.

    85m
28. 28

    Lesson 28: The Code and Standards; Professionalism and Integrity of Capital Markets

    The Code of Ethics, Standard I (knowledge of the law, independence and objectivity, misrepresentation, misconduct) and Standard II (material nonpublic information, market manipulation) applied to cases.

    85m
29. 29

    Lesson 29: Duties to Clients and Duties to Employers

    Standard III (loyalty, prudence and care; fair dealing; suitability; performance presentation; confidentiality) and Standard IV (loyalty to employer, additional compensation, responsibilities of supervisors) in case settings.

    85m
30. 30

    Lesson 30: Investment Analysis, Conflicts of Interest, Member Responsibilities and Case Application

    Standard V (diligence and reasonable basis; communication; record retention), Standard VI (disclosure of conflicts; priority of transactions; referral fees), Standard VII (conduct as participants in CFA Institute programs; reference to CFA Institute and the designation), and integrated case analysis.

    85m