CFA Level 1 Syllabus 2024: Essential Insights | Aswini Bajaj

let's discuss the CFA level 1 syllabus first of all why do you need to understand the syllabus want to decide in terms of you know you'll be spending so much time studying you are going to be working learning something so you need to know what you're learning you need to know all the subjects so that you have a broad overview of everything that you're going to study the interrelationship between the chapters so that you know in your mind you know okay these are the pieces I'm studying right now so that you can put it all together and you're going to be studying most of the subjects are going to be new to you so that is the reason why you need to understand and do this syllabus lecture very very well because you need to know exactly what you're studying how everything is related second is when you're looking at the structure what happens is the Institute divides the structure devises syllabus in a very very methodical manner please understand we're looking at Global examinations over here when we're looking at Global exams students would be studying across the world we cannot have confusion like out of syllabus question what is in the syllabus what is out of the syllabus so therefore the subject and the entire curriculum is defined in a very organized manner so how does a so basically we have let's say 10 subjects in each of the levels in level two level three the subjects might change I'll discuss that also we have subjects like Qantas there economics is there Etc so we have let's say 10 subjects for every subject we have something called The Learning modules so suppose we have a chapter on time value of money we have something on statistics we have something on probability so we have these chapters every chapter the subheadings have been defined which is known as learning outcome statements so the chapters subheadings have also been defined now I call it chapter because we've been calling them some school you can call them reading or chapter or learning module whatever it is ultimately it is chapter for me so whatever is comfortable to you it's okay so these are your subjects then you have your chapters or reading numbers or learning modules so the nomenclature keeps on changing and this is your learning outcome statement so at the very minute level the syllabus is defined so that there is absolutely no confusion in terms of what the syllabus is what is going to be testable in the exam 99.99 from my understanding is that the Institute is going to ask questions only what is there in the syllabus you would barely find maybe one out of 200 questions 300 questions that is tested which is something going above your head or out of syllabus so that is no problem or anything material to think about also the loss is defined to such a level where an loss if it tells you explain or describe that means numerical is not going to come on that but if it tells you you should be able to calculate x y z so in that case the numericals the numbers the calculation is going to be there so the elements are going to be very well defined so that there is absolutely no confusion and anyways once we study the chapters and all you know with sums to do with chapters and what concepts are there and everything so the entire syllabus has to be covered thoroughly there is no selective studying with respect to the non-finance or non-commer students during graduation level so what happens is I've seen common students somehow having a little challenge with quants that is the maths part of it so they will not like quants they will be better at financial reporting analysis that's the accounts related chapter if I could say so I'll explain all the chapters in detail so what we see is the Commerce student might have an edge in fra but may not like once that way an engineering student or a science student might be better of doing at once and may not be that good at fra so you'll obviously have to put in more effort at fra there would be an economics on a student who might be good at quants and economics but may not be at fra so it will depend on what is your background in terms of Bachelors but there is absolutely no problem because everything is taken from scratch in fact you're not supposed to be phobic with quants I'll discuss the Quan's bit also so those who have a problem with maths do not worry we'll discuss that part there'll be absolutely no issues with maths just a little extra hard work with Maxwell's needed we don't have algebra and trigonometry and all that so let me come to the subject and then I'll give you the details about it but every student from different stream will have different edges in different subjects so that will not be a problem but mostly it's going to be Finance subjects derivatives fixed income Equity alternate Investments ethics Etc so most of the subjects I think is going to be new to you and to understand you know when you're moving forward with your career and when you're looking into Finance the syllabus gives you an outline as to what is finance all about also so you need to understand that very very well next is with respect to changes so the civil table stays the same throughout the year so in one calendar year so let's say January to December all the exams are going to have exactly the same syllabus the syllabus changes from one year to the other and that change is also not so much there could be a couple of chapters deleted a couple of chapters might have some changes a couple of chapters might be new so those changes are covered regularly in the live class it's shared with all of all of you so that is not a problem as and when the new syllabus every year turns up we do the changes lecture but otherwise the syllabus is more or less 90 95 would be constant and the basics are going to be the same there could be some reshuffling one one loss of a chapter one part of the chapter might change or might be deleted Etc so broadly we need to understand what is finance all about and what is the syllabus all about right and the Order of starting so also to understand the syllabus is very important because there are some interconnections between the subjects so there has to be a flow of your study so to know the syllabus and making sure that you know you study in the particular order in fact the order of study is provided to you I try to you know alternate between Theory and practical subject I try to alternate between easy and difficult subject I try to put those subjects at the end which have more retention issues so that you know it is closer to the exam Etc so you follow the order and there will be some indoor relationships between the chapters which you need to understand so let's get into the syllabus so subjects 10 subjects which have chapters and each chapter is divided into smaller subheadings of the chapter half page one page Etc right so let's move forward so the first subject we're going to be talking about is quants so again those people who are phobic with maths or something don't worry you have to work a little extra hard so let me explain what the curriculum is first so when I'm looking at quants I am not using the exact name of the chapters over here I'm trying to explain the syllabus over here so we'll be doing the examples and all I'm not describing every single chapter at length we are discussing broadly what the subject is so the terms I've used is Broad terms like statistics the chapter name might be a little different like time value of money you will have rates and returns time value of money except network but I am discussing the outline over here so as to how the syllabus and the subject is looking like so when I'm looking at time value of money you might have done simple interest and compound interest in class eight so any time you take any decision even if you want to take a home loan you have to make a decision so how do you do that you have to understand numbers you have to understand the money related calculation the simple interest and the compound interest and trust me I don't know if I'm supposed to say this because there could be a lot of Bankers so when the banks sell wealth products they will try to sell you the product in which the bank will give you less return right because then only the bank will make more money so you have to understand very well because I end up not buying most of the bank products which they try to sell me so you have to understand that okay whether a three year FD is better or two year FD is better whether it be MD is giving you quarterly interest every three months you will get interest is that better or every one year you will get interest is that better so you have to understand the nuances of money even if I'm coming up let's say I'm going to start a factory of my own so in the coming three years let's say I'm going to be investing money and fourth year onwards I will start making sales my factory will start running so how do I do the calculation I need to understand the time value of money I need to understand because 100 rupees today is not the same as 100 rupees after five years you would always choose 100 rupee today than 100 rupees after five years because if I get 100 today I can deposit that in the bank and I can get more money after five years so how do we do that calculation so all the money related calculation is what we study in the time value of money part and what kind of interest rate to use for example I'm going to demand let's say seven percent from a bank but if I am investing in a stock let's say I'm investing in a Tata Motors I'm going to demand a 12 return because Tata Motors or stock is risky when I'm putting the money in the bank the bank is guaranteeing the amount of money that they will pay me right the interest rate is fixed but a Tata Motors is not gonna do that there is risk when you're investing in a stock like that so therefore the interest rate that you use for different kinds of security one is a FD guidance Bank fixed deposit fixed income one is an Equity like shares markets there is Market risk so that way next when we are taking any kind of decision for the future you have to understand suppose I believe that India's growth rate there is a 50 probability India's growth rate will be seven percent there is a 30 probably it will be six percent and there is a 20 probability that the growth rate will be four percent so on an average I'm expecting the growth rate will be somewhere around five five and a half six ish so how do you do that calculation that is probability so we need to understand probability in order to make forecasts but how do you assess probability you study okay last 10 years how is the growth rate been last 10 years what is the data so always you have to study data the past data right data is a new oil so statistics becomes very important so TVM and probability is still small but seventy percent of the content is going to be statistics and statistics in 11 12 those who have studied maths you know mean median mode standard deviation Etc you've kind of mucked up the formulas mostly from what I've seen but you need to understand the logic what is the difference between a mean and a median let me give you an example over here so say Suppose there there are 10 students in a college since everybody is very concerned about the placements and all and rightly so so there are 10 students let's say every student is going to get 10 lakh Rupees as salary so there are 10 students all 10 lakh Rupees salary so the average is also equal to 10 lakh now suppose I make a change in these 10 students everybody's got 10 lakh salary except one student so nine students have 10 lakh salary one students get a 100 lakh salary now what will happen your average is going to shoot up this 9 times 10 is 90. so 190 divided by 10 your average is 19 lakh now when I'm looking at this college let's say it is saying that you know my placement is 10 lakh Rupees average pay now over here everybody is getting more or less 10 the median is 10 median is basically Beach car value we'll discuss this don't worry I'm giving examples so don't get worried that you're not understanding the details of it because I'm not teaching right now I'm just giving you a very basic broad overview so even if there are some formulas or something you're not comfortable with it's okay we'll prove the formulas in all in the class so median would be the beach value the value like so the fifth value let's say fifth or sixth value or so I arrange the data in a sending order I'm taking the beach value so 50 students got below 10 lakh 50 students got above 10 lakh that is what median is telling about the average is 10. over here the medium will also be 10 lakh because there are 9 times 10 all are 10 over here so 50 students got below 10 lakh and 50 students got above 10 lakh but one student all the 50 students got Above This 10 lakh value but one student got 100 lakh salary let's say one crore average is 19 lakh but do you think 19 lakh is the average of the 10 students only one student got 100 all the other are 10. so don't you think studying this data looking at the mean and the median there is a difference that is why I always notice whether this whatever placement record you're seeing whether mean salary is being published on median salary or both you will see most colleges outside India generally publish the median salary also so understanding data mean median mode you know the standard deviation so say suppose the stock is moving this way and there's another stock whose price movement is this way so this way the standard deviation is very high so we measure standard deviation to understand risk so dispersion startups now what happens is we say 90 of the startups are going to be failing in the first year because they're very risky new models business models Etc we don't know how it will work but one startup could give you an extraordinary profit so it is possible that most of the startup will be giving me losses over here more startups but there could be just one startup which might give me extreme profit 90 startups here but one startup over here so understanding the data understanding how the data is distributed analyzing that data because any decision that I make for the future has to be based on data so statistics is going to be 70 of your work right so central tendency is your mean median mode and all dispersion is your standard deviation Etc hypothesis testing a little complicated chapter but again it's new so statistics even if you have not done in 11 12 as such you'll have to just put in a little extra effort but we will have to understand the formula this is how we need to understand the difference between mean and a median you can't mug up the formulas and do well because the questions are going to be Finance Centric application based now when I'm looking at a hypothesis let me give you a simple example if any statement is given in finance we need to check analyze the pass data and give a confirmation whether that statement is correct or not I think I'm complicating let me give you another debate so normally when there are these court cases and all you know and all that so what happens is the judge is not going to say whether the person is a culprit or innocent it's guilty or not guilty it's not guilty or innocent based on evidence but the judge cannot say that you are innocent the verdict is not that you are innocent similar logic we apply in hypothesis so there is a statement given and we study the data and based on the data we will try to say that whether the statement is true whether the statement is false or we are not able to prove it false so something of that sort I don't want to get into details because I don't think I'll be able to experience such a short while it's a little difficult chapter but very very doable regression is when we try to plot those graphs that let's say for example how the oil prices are changing and how will ongc share price change so whether it's going to be upward sloping whether it's going to be downward sloping if oil price increases does ongc price go up or does ongc price goes down so how does a value a variable y behaves on the basis of x again linear regression is going to be from scratch we'll have to prove the formula we have to understand it is not complicated so when we are not looking at calculus we are not looking at trigonometry we are not looking at congruency and similar triangles and all we're not looking at geometry at all we're not looking at implicated logarithm or all that we're just looking at applying the basics and predominantly it'll be statistics and even if you're looking at marketing HR Etc you have to understand past data to make future decisions so looking at data understanding numbers and data is extremely extremely important for all profiles so for those who are having a little bit of a challenge in maths you'll have to work a little extra you'll have to put in a little extra effort and it is doable even if you do not have maps in class 11 and 12 that is not a problem but you have to work a little extra right so this is your quants and second of course Big Data there is a small chapter added so big data basically say suppose if I'm watching something on Netflix so it is going to give me a recommendation that you may also like this how does Netflix come up with that recommendation because there are people like me so if I have watched 10 shows and you have watched nine out of the same 10 shows then my 10th show is basically a recommendation to you because our profiles are very similar because I am liking the same nine kind of shows and watching them and you're also watching the same so my profile and your profile is kind of working out so there are clusters in which you can group People based on their likes dislikes and all that is also very advanced level of regression if you see we're trying to find relationships between data right so big data and all again there is no numerical in all as such and Big Data barely anything because obviously you need softwares and all to do this but the understanding the basics the understanding you can call it Big Data you can call it fintech machine learning AI Etc so all those things are also there so this is basically what your quants is all about big data is an easy small chapter so don't have to worry about that we're getting into AI or Tech or coding there's absolutely nothing of that sort it's just understanding the basics as to how it works type the concepts part and that is again very small so TVM probability is going to be barely like 10 15 20 big data is like five ten percent but 70 80 percent is just statistics since we are talking about the level one curriculum I want to give you an idea about the CFA at large level two again what happens is it's more about regression and we take this a little forward and with a little bit of big data or fintech aspect I would rather call it fintech the application of regression and machine learning and all that so bit of that but the content is lesser in level two quants level three we do not have coins right so it is only it's not not maths that we are trying to study we are trying to study Financial mathematics the application of numbers in finance that is what we are trying to understand with Once also I forgot to mention there are certain prerequisites that might be there so the syllabus is this the questions the exam is going to test you on this but some basics of probability which may not be over here that might be a part of prereading material so you need to know the concepts right so say for example simple interest compound interest let's say is not there but I'm taking calculations of money over here so simple interest compound interest will have to assume you know so obviously the pre-reading or the prerequisite that is there that Basics is not testable in the exam you not have questions in the exam on that but I am going to cover that in the class conceptually you have to know you may be a little casual about the practice from that part but conceptually you have to be strong to understand this next we are going to discuss is economics so we can look at economics and micro macro and international some portion of Economics is again in the prerequisite pre-reading material you need to understand the concept like demand Supply because if you don't understand demand Supply there are a lot of places where you'll need to know what is demand and supply and all so exam will not test you on questions around demand and Supply but the basics you need to know and don't worry the basics will be covered so let's stick to the discussion of syllabus right now when I'm looking at microeconomics predominantly I'm looking at you know Monopoly etc those Market structures and all because say for example when I'm evaluating suppose relax so shares relax those slippers so is there a monopoly over there when I'm looking at an Apple so because the hardware and software manufacturer is the same so therefore that is what is probably helping them grab a larger market share so it's not a monopoly it's a monopolistic competition Railways is a monopoly so when I'm evaluating an industry when I'm doing Equity valuation whether to invest in a company or not when I'm looking at you know acquiring a company or not so how do I take decisions around that I need to know what kind of Market it is telecom oligopoly because Telecom you have barely two or three players in India I don't know how far Vodafone is going to survive but any which ways right so what is the market structure because Market structure tells me because how you know Geo did pricing it kind of gave throw away prices pay internet and everything to the people and the prices in the market went down now they increased it because there is no competition so yes I can expect that jio or Airtel kind of companies might generate huge profits in the future because there is not much competition but if there is a lot of competitors you can't earn a lot of profit because there's so much competition so understanding that becomes important next I need to understand macroeconomics so for example how the business cycle is you know unemployment inflation levels the Cycles in the business Etc because there are certain stocks who which react that way for example as the market is going up or down fmcg is not going to get so much impacted because you are going to be consuming food products and toothpaste or whatever but automobile industry might get impacted if you do not have that much money discretionary spending goes down Necessities what you need you have to spend on that but the discretionary expenditure and all you can cut down probably so understanding business cycles and all becomes important and how does the monetary and fiscal policy work so monetary policies you know how the Central Bank RBI for India Federal Bank for the US how does a monetary policy work whether they're increasing money supply reducing it we've seen 2008 Federal Bank printed money like crazy U.S again the inflation levels get impacted because of the interest rates moving the way they are because of the interest rate in U.S and what the central bank is doing over there Investments may or may not flow to India start-up space investment has dried up because of high interest rates etc for a time period so how do you look at the business cycle how is the Central Bank reacting Central Bank becomes monetary policy the government is the government doing a lot of infrastructure spending which we are seeing in India right now or whether the government is increasing taxes or reducing taxes so the taxation is where the government earns money from what is the amount of loan that the government has taken budget deficit and all so that is your fiscal policy that also impacts us how because inflation levels inflation interest rate because of interest rate is very low you will buy a house you will buy a car but if interest rate is very very high you will be concerned you will probably not be able to afford a house or a car one of the most aspirational purchases for an Indian is about you know buying a house and one of the bulkiest investment that you make is a house so the house and car becomes extremely important and interest rate becomes extremely important for that when we're looking at International economics let's say we are talking about let's say geopolitics and that has become extremely important today earlier people were talking about just globalization so much of production was outsourced to China but now people are saying that no the necessity is a basic production facility should also be in my country in fact I do not want to just buy from one country I should have two three alternatives Kobe times have taught a lot so geopolitics how does that impact us then we're looking at International Trade and all these custom duty Etc because the prices in my country will depend on the Imports exports for example the steel industry got impacted when people were not willing to sell Steel in the country they were rather exporting it because there was so much demand and you were getting higher price by exporting it so the government imposed export Duty for a while so how does that work so the trade part and the currency foreign currency and the currency related all the calculations and all now for example Infosys and TCS get impacted by currency because Infosys TCS is selling the services outside dominantly to us in fact their business cycle their interest rate Etc also impacts them how much of business will you get whether there is a recession in the US or not and because I'm getting all my income in USD so whether I will convert my 1 lakh USD into 80 rupees per dollar I will get 80 lakh rupees revenue for 82 rupees per dollar I will get 82 lakh rupees Revenue so the exchange rate is very important when I'm looking at a company like in Infosys TCS even for example if you're looking at Tata Motors I'm again going back to this talk so when I'm looking at Tata Motors it owns Jaguar which is there in UK so the pound the exchange rate is going to be important for Tata Motors because Tata Motors balance sheet is Made in India that is made in rupee terms so how do I incorporate Jaguar on my balance sheet how do I convert a pound into rupee so currency exchange rates Etc become very important and this part is also going to be covered when we talk about financial statements and all in Tata Motors financial statement you'll find jaguar and all right so currency becomes extremely important so we need to understand economics in a lot of detail and we've seen you know Greece going bankrupt and there's so much of risk when you're looking at the international and there's so much of globalization I mean there's everybody is probably working across borders because of Internet because of the kind of logistics we have just imagine you order something today and you get something tomorrow in Amazon just imagine the power of logistics the amount of products available the amount of trade the magnanimity of trade that is going on right now humongous it's very very into economics becomes extremely important to decide for example what kind of Market it is relax so Apple so we need to understand the basics of Economics to make forecast also even when I'm investing in a company I'm not liking Infosys let's say if there is a U.S recession I would not want to buy stocks of Infosys for example so I need to evaluate I need to understand economy is extremely important you know even a small shopkeeper would be having some idea because if the market is not good he knows I'll not be able to sell much so I should not buy a lot of inventory because when I buy a lot of inventory the stock will get outdated obsolete just imagine when a sweet shop has to forecast that how much wheat I'll be selling today how much to repair today because it's a perishable product it might uh go stale just imagine there's so much of Economics that ready use in our day-to-day lives right and when we're looking at the level two curriculum for economics again the content goes down quite significantly we have more of currency and one chapter on growth and all so the content for level two is very minimal level three the content is more aligned with portfolio but again we need to understand for example whether to invest in emerging market or not Emerging Market Brazil Russia India China becomes little risky so it will be from the portfolio perspective but you will not have economics as a subject when you're looking at level three and there is some pre-read about demand Supply which I've already mentioned so this is economics for you next we're looking at financial reporting analysis which is what the non-commerce students are a little scared of but to my disappointment I was thinking of not saying this but anyways to be very honest to my disappointment I've seen Commerce students also having a little bit of a challenge when it comes to the basics and the concepts in terms of you know doing a depreciation calculation or something now firstly you need to understand of course non-commer students will have to work a little extra economics honors and non-commerce but everything as I told you will be from scratch second what you need to understand is we're not here to prepare accounts we're not here to make annual reports prepare balance sheet PL account Etc that's not what we're looking at if I'm looking at an Asian Payne's annual report I should be able to see that okay last year these guys this much this year there cost has gone down their profit has gone up taken a lot of loan they have repaid something they've built an asset so I should be able to analyze okay there's a lot of there is the cash flows have gone down but there's a huge investment they have made so I have to be able to analyze understand the report and that could be from multiple perspectives whether I'm planning to invest in in Asian paints or not it could be from the point of view that let's say whether a Tata motor should be acquiring another company or how do we look at the annual report of a company to give loan to adani or not so there are so many questions that is out there so how do you analyze an annual report in fact now forensic financials are also there like the Hindenburg report that they did and not getting into the validity of the report and the claims and all they've made that's another question altogether but to understand standard right so that becomes important for example in fact I don't know if you've seen that Jack Ryan CIA there's a series on Amazon Prime it's quite good one so it starts with you know you trace the money where it is and then you understand okay this is a terrorist activity happening Etc and that's how the season goes around anyways coming back to it in fact satyam scam we are seeing in India earlier now we've seen a list of scans like yes bank and all of that so how do you analyze the annual report How Could You forecast that Jet Airways is gonna go bankrupt can I do that so how do I look at the annual report whether I'm able to read understand analyze the annual report that is the question over here preparing the annual report is a financial reporting team's job the accounting job and even when you're looking at accounting people do not sit and past journal entries when you're looking at the financial reporting bit but here we are looking at financial reporting analysis so we need to be able to understand how to read understand analyze the annual reports right so the introduction will be you know what are the sources of data so even if you go to an idc's website and you go and check the investor presentation their annual report they will also file quarterly reports since it's a listed stock ITC you can buy and sell shares so it is listed so there will be some sebi regulations Stock Exchange Board of India you have sec in the US so you could have a lot of filings and regulations over there now there is a company's act so because of that you have to file some details and data and all so MCA website you can find all that Ministry of copyright Affairs and all so basically whatever sources of information where all I can collect information that is what I'm discussing in the introduction part then to understand the income statement basically how much did I sell what is my cost what is my profit obviously it's not going to be that simple then the balance sheet what are the assets line building plan Goodwill how to include or not to include Goodwill all that we will see and what are the liabilities the loans and all have taken then you have your cash flow statement I might be making a lot of sales but what if I have not received money for it I'm booking sales but I'm not showing the money so there's a lot of manipulation of accounts happens this way then I'm showing that I've made so much on sales but they're all bad that they will not give me the money back bank loans npas we've seen so much of these things happening so understanding all that and then the ratios to analyze all this right at two equity ratio net profit margin so what percentage of my sales is profit what percentage Etc so analyzing the numbers and all that all of that then we actually get so this is going to be fairly easy and then we get into the specifics inventory so there's a chapter on inventory you're closing stock opening stock Etc the inventory that you're selling you will have a chapter on assets so you can have patent copyright these are intangible assets nowadays when you're looking at so much of iot companies and all everybody talks about you know asset light companies big basketball you will not own any store uberola do not own any cars but they have intangible asset the customer base the technology Etc so how do we look at those intangible assets as well or heavy planned Machinery how do we put the valuations on the balance sheet right say for example something became obsolete now how do you value suppose I was showing some machine at 100 rupees on my balance sheet now the value of that machine has come down to 20 because of some technical analogy change so how do you record that how do you recognize these losses how do we analyze all these things if a company is becoming a redundant if a technology is getting redundant how do we approach that then liabilities companies might take loans so there is liabilities pension liabilities companies and all have to pay a lot of pension for their employees Etc so how do we study those liabilities right leases so when I'm taking leads nowadays when you're looking at business models like we work and all so that is wework the startup so there are so many cases wherein you're not buying the office space but you're leasing out you're not buying the heavy machinery but you're taking the Machinery on lease because everybody wants to be asset light you don't want to put in that huge bulky investment right so all those things we study how do we treat how do we read the annual report and analyze that so how do you compare the annual report of a dmart dmart is a store dmart owns all the stores dmart is a hypermarket grocery you know and when I'm looking at Reliance fresh they do not own the stores so their balance sheet PL will be very different because Dima does not have rent cost but Reliance fresh will have rent but dmart will have a huge asset Reliance fresh will not have that huge asset on the balance sheet so how do I analyze the two together and the treatment of taxes now it is not income tax report that we are filing or something taxes is basically how do I save taxes how is the taxes going to be impacting my balance sheet I'll give you a simple example what if there is a company that does business in India and it does business in three other countries in those three countries let's say the tax rate is 20 over here let's say it is 25 now what happens is what if my sales is growing in those three countries on an average I'm paying 20 tax over there but over here I'm paying 30 or 25 so if I'm growing more in those countries my average tax rate will come down but if I'm doing more sales in India my average tax rate should go up and lot of other details and treatment but we will stick to this much so that way we are going to be approaching taxes in terms of the impact on balance GPL right we are not going to be calculating taxes and tax laws and all because anyways we're looking at finance and a very very Global designation you can't study any one particular country's tax laws right and Reporting quality so how is the reporting quality are you overstating your sales for example at times companies will come up with a lot of sales and offers and all that in month of March because they want to show that I have done so much of sales and then in the month of April there will be a lot of sales return so whatever at times even Flipkart and all these guys you must have seen that a lot of orders are placed and then they cancel those orders because they are overbooked they take orders they want to show that this amount of sales we've done but they at times may not book A lot of times what happens is in the month of March they will come out with offers and they will do those sale on approval basis they will inflate their sales they want to show a higher sales for the month of March that see we've done this month sales in this year right but ultimately what happens in April all that sales is going to be returned back so that is not actual sales so what is your reporting quality are you properly maintaining was not that was a scam right what is the quality of your reports what is the quality of your PL account and all so say for example if I'm using a machine for five years I'm going to depreciate it over 10 years or two years so do I allocate that suppose I'm buying a 50 000 rupees machine so do I show 10 000 rupees cost for five years ten thousand ten thousand will be total fifty thousand or do I be more conservative that no I may not be able to use it for five years I may be able to use it only for four years so let me recognize twelve thousand five hundred basically the idea is do I want to show more income fast or do I want to conservative I want to acknowledge more costs at the beginning the non-commer students will find it a little bit of a challenge over here to understand right now but once we get into the details that'll be fine and then the financial statement modeling is basically how we work is that suppose I have got the last five years data sales cost Etc I will make certain assumptions in order to forecast the next five years obviously how do I forecast what will be my sales next year cost next year profit next year that will be based on the past data and past ratios and all right so I will analyze my financial statement in order to make projections forecast projections that is financial statement modeling it's going to be very basic we'll just try to understand how to go about it because the details are you know going to be done on Excel and all that and level two you'll have financial statement modeling chapter and all so it's going to be very very basic what you're going to be doing over here so but very interesting this is your financial reporting analysis it's going to be a little lengthier in terms of volume so quants is there economics FR is also quite a few number of chapters are there some Basics you'll have to do beforehand like understanding the basics of accounts and all obviously all that will be done we'll do the classes and everything you can do a little less practice over there in the prerequisite part this is your syllabus this you have to be thyroid level two get little complicated but that's again from scratch so it's not that our students have studied that part so you know in level two we have something called multinational operation at Jaguar incorporating NATA Motors incorporating Jaguar on the balance sheet multinational operation one is going to be on pension one is going to be an inter corporate investment so say for example grassim holds ultra Tech and ID grassim owns Ultra texture so how do I look at grassim's balance sheet only textile and grassum's balance sheet including the cement of ultra attack so that business combination so inter corporate Investments when multiple companies are investing in each other and then some analysis and all that is there in level two level three fra is not there right so this is your financial reporting analysis our focus is on understanding level one curriculum but I'm just giving you a brief about level two and level three as well not very difficult but you have to conceptually understand mugging up won't help now we are moving to corporate finance they're calling it corporate issuers or whatever but I want to call it corporate finance that is what it is see when I am investing in the shares of ITC that's an equity subject I am not inside ITC when I am working inside itc's finance department I am the one who's taking financial decisions for the company that is Corporate Finance so Basics is basically what is a proprietorship what is a partnership Etc very basic what is a company and all very easy next is I'll come to corporate governance in a bit next is your capital investment so if I'm going to lay down a factory and it's going to cost me this much the next three years I'll have to spend this much money invest this much money in seven years I'll make these cash flows whether or not to take a project I'll give you a very simple example there is this air conditioner over here it's become a little old my question is whether to get it repaired and keep closing it for the next three years or should I replace it because if I replace the cost is going to be much more than repairing but I'll be able to use it for 10 years and there will be Savings in electricity because newer technology generally is more energy efficient how do I decide between the two so capital investment decisions so this is a very simple example you know household example that I've given you but when you're looking at a company whether should I replace this technology this Machinery where to invest my money in how to evaluate between two projects suppose I have only 20 million dollars to invest now project a is also requiring 20 million to invest and Project B is also requiring 20 million investment which one should I take up so Capital Investments capital structure so adani has got a huge amount of debt on its capital structure so how much Equity preference debt Etc do I want to have in my capital structure what is most optimal say for example right now interest rates are very high in the market I don't want to take too much debt I'll probably take more Equity but if interest rates are very low in the market I'll probably be comfortable taking a little more amount of debt so how should the capital structure be how do I evaluate that that part is there then we talk about working capital so when I'm looking at the balance sheet let's say I'm looking at current assets current liabilities a lot of times what happens is because of poor liquidity when there is Market grants suppose you made a lot of sales your customers are not paying you money but you have to pay to the suppliers Air India we perhaps read so much about the working capital challenges that these guys are not being able to pay interest on time pay salaries on time how will the company function and move forward in the future so working capital you know to run your business the capital that you need not the plant Machinery or aircraft and all but the basic money that you need to buy inventory to buy fuel for your aircraft to pay salaries Etc so how do you go about doing that that is your working capital and liquidity and all business model is an extremely interesting chapter so business model is understanding what is the entire business model for example is it a subscription-based model what is Google's business model you're providing so much of facilities for free it is an advertisement based model a magazine which is providing your subscription as a subscription-based model so how do we look at different business models and all in or your room or an Ola Uber or so much of tech companies are there or their proper brick and mortar stores so what are the different business models to understand business model because how do I forecast cash flows how do I take financial decisions if I do not understand the business model of the company so business model is a very interesting chapter actually there's some relationship of this with Equity we will discuss the subject corporate governance is extremely important we have seen Bharat pay issues happening and all this then we've seen in a while obviously but uh Cyrus mystery versus Cyrus mystery was how stood out he was removed as a chairman Etc if I were to take another example in fact Uber also did not have a CEO for a good amount of time now what happens is I'm not running ITC I do not have the time to run ITC and I'm obviously not a part of the company to run that but I own the shares there is a management CEO CFO management Etc running the company we need to make sure that the management is running the company for the benefit of the shareholders to take the company forward they're not using companies money and resources for their personal requirement and all so corporate governance how is the governance structure of the company is there any loophole is the company being governed properly other people working for the benefit of the shareholders in fact we also want to see that you know you cannot even defraud your customers and all when you're looking at a Maggie incident with Nestle because ultimately it brings a lot of reputational challenges so we need to make sure that your customers are happy your suppliers are happy so corporate governance companies governance because the owner is not the one who's running the company the management is running the company on behalf of the shareholder so corporate governance becomes extremely important this is Corporate Finance relatively easy subject not difficult very interesting level two will have a little bit of corporate finance also companies restructuring mergers acquisition and those kind of things level three we don't have Corporate Finance level three is not going to having ra corporate finance and quants and economics per se economics is still there in terms of application level three is more focused on the portfolio so I'll come to it but you've understood Corporate Finance broadly next we're looking at fixed income so now when we are talking about investment so let me just ask you a simple question when I'm looking at investment so what would you be investing what will be the assets that you want so one people own houses in the house they live in ETC they own gold jewelry and all of that right second would be you do a lot of fixed deposits and all that those ppf account Provident fund account because you get some tax benefit so you do those fds in the bank and bank account and all of that and then you do Equity Investments so you might be buying shares or you might be buying mutual funds mutual funds right so basically when you're looking at Investments normally we divide it into three categories so one is your Equity you can either analyze the companies buy ITC shares and whatever yourself I'm very happy here about my itc's investment anyways so that is one our second is you can buy through mutual funds and all next when you're looking at fds generally through fixed deposits and all companies also issue bonds so that Bond related calculation and fds so when companies taking loan we can invest in the company's bonds debentures you might have about in class 11 12 maybe so that is all your fixed deposits and all those calculation and the third could be your house that is real estate it could be gold that is like a commodity then it could be private Equity startups people have started investing in startups also so all that is categorized under alternate Investments so these are your three subjects which we'll discuss now fixed income is obviously numerical in terms of the subject it's obviously very very numerical so first we understand terms what are bonds government Bond corporate bond and all of those basic terms and all this is very interesting evaluation so value of anything is the present value of future cash flows this is what I'll teach you in the first class when we do time value of money so when I'm looking at the valuation part so if I have invested say suppose I've done NFD of 100 rupees for 5 years at eight percent all right let's say so basically what will happen is that you will get eight eight eight and eight in the next one two three four five years and in the fifth year you'll also get your 100 principal back so you'll get a total of 108 now let's assume you cannot break the safety you have to wait for five years let's see now what happens what is the interest rate in the market changes and drops to six percent are you happy or sad about it you're happy about it because I invested in vmd when the market rate was eight percent the FD will give me eight eight eight eight had I not invested at eight percent for five years today I can invest the money only at six percent rate but if the rate increases you don't feel happy because you are not going to get nine percent you have in fact blocked your money at eight percent rate for the next five years so how do we do these calculations when the interest rate changes how do we calculate this fixed deposit or Bond or whatever you want to call it and how does the interest rate fluctuate in all those calculations and everything is going to be a part of valuation right and how does that calculation fluctuate and how the interest rates are fluctuating and all of that so the risk that is interest rate risk now when I'm putting the money in a Government Bond I know that the government is not going to default the government has to pay any money even if the government does not have money they're going to print the currency they have the central bank so the government is not going to default obviously there'll be a problem because the government is printing too much money there will be inflation we'll discuss how it works because if the government is printing money Distributing money for free obviously things are going to get more expensive there's more money in the market now there's so much money people will buy more Stuff Etc we'll get into all that when we study economics not of interrelationship between subjects will be there it'll be very interesting to see but when I'm giving a loan to a company when I'm investing in a company's Bond debenture when I'm giving loan to the company banks give a loan give a very bulky loan to the company but at times company issue Bonds in the market so normally in India we'll find ten thousand fifty thousand or one lakh rupees Bond so there are lacks and lacks of people who might have you know purchased 10 000 rupees worth of one and company gets 200 crore or 500 crore adani's got huge loans and all that is credit risk whether this person will be able to repay back the loan or not with the government I'm not scared because they can bring the money and give you back but with the companies I'm going to have a challenge that is credit risk whether Malya will be able to repay the loan or not right so that is credit risk and there's something called mortgage-backed Securities it is a very interesting topic but I'm not sure if I'll be able to explain to you in a very short manner but I can tell you 2008 recession the U.S recession the global recession that we saw in 2008 experienced in 2008 one of the major reasons was around the mortgage-backed securities so in short when you take a home loan if you're not able to repay your home loan interest principal Etc ultimately the bank can take away the house from you that is why these loans are known as mortgage loans because the houses mod gauged right the houses mortgaged over here so mortgage-backed Securities is something around that and how it led to the U.S crisis and all there is a lecture on asset securitizations well posted on YouTube you can check that if you want to it's a very interesting lecture but I'll not be able to explain in more detail right now because I'm just giving you an overview of extincture but this is more around those fixed income securities home loan related home loan backed Securities in short and it's very interesting concept so this is your fixed income level two level three also fixed income will be there again the volume of level 2 fixed income will go down level three will be there as much as level one maybe but in level three we are going to talk about fixed income portfolio for example an insurance company now how will they manage their fixed income portfolio see understanding insurance company has to manage its investments in such a way that they are able to pay off the policyholders for example if somebody had an accident or something if they have a claim insurance company has to make sure they are able to pay for that claim right pension fund so a pension fund has to make sure that whoever has retired I'm able to make the pension payments to them so if I am making fixed income Investments how do I make that how do I manage so level three is going to be fixed income from portfolio perspective level two we will still study fixed income option embedded bonds as quite a few things we'll be taking this forward in level one basically what happens is in a new terms new subjects so you're building your base level two takes it forward and level three kinds of would sit together in the form of application in the form of you know looking at a portfolio at large so fixed income is going to be there in all the three levels and this is a slightly difficult topic students find it more confusing and all if you're comfortable with time value of money and money calculation fixed income will be easy for you but it's a very interesting subject of course a bit numerical and all very interesting next is equity this is one of the favorite subjects as well so Basics you know what is equity what is preference shares the basic terms and everything so a lot of Basics and all we do then we talk about index so how is the Nifty calculated So when you say Market is going up Market is going down so Nifty is basically the sum total of top 50 companies of India so Nifty is trading at eighteen thousand nineteen thousand whatever be the value so how is it went down to almost 8 000 levels in covid Nifty is representing the average of 50 stocks of the country there are a lot of different indices Bank Nifty so Bank Nifty represents the banking stocks on an average so how do you calculate those indices what are the different kinds of indices all those things market efficiency you know how can you make everybody's trying to make money in the markets so is there a mispricing in the market do I think that the company is trading at let's say 200 rupees a share it should be priced at 300. how do I trade on that how do I make money should I look at those charts prices patterns and trade on the stock or do I look at let's say analyze annual reports balance sheets PL and then figure out no this company is going to do very well look at the economics of the company demand of the company look at the product look at the Monopoly that they might be able to create Etc so I'll analyze the industry economy okay if I use scheme is coming out in the in India let's say free healthcare by the government will Apollo Healthcare stock price go up so I'll analyze all those things so whether I'm looking at that kind of analysis whether that will work whether I can make money out of it there are people who work on inside information so how efficient is the market whether the share prices in the market are correct or not Etc so all that we are going to study in the efficiency part industry company analysis very practical very interesting demographics politics so because there are more people moving to online shopping and ready-made garments which companies will do well for example in India we have Aditya Builder fashion that's come that that's that company holds Van Heusen Alan Sully Louis Philip Etc all these brands are owned by this company are the table of fashion in fact Van Heusen in order to compete with jockey and Lux and Rupa these people started with the innerware brand also what is the industry like how do you analyze the company how is it increasing its presence they've got their lifestyle pant looms also and all that so what is their presence in the market so you analyze the industry analyze the company you evaluate whether to not to invest in the company and all there's a couple of additional chapters also over here it's very interesting to be able to make a forecast based on because you have to understand the business and the industry in order to forecast how the industry or how the company is going to do right and then the valuation so how do I evaluate how do I look at the valuation of a share so maybe based on dividends okay this company is giving so and so dividends so what should be the value of the share based on that or this company is generating so much of profit so much of cash so how do you look at the valuation of the company so if I'm looking at the valuation of a company like let's say coal India so if I can value that how much coal reserves the company has and what is the price of coal So based on that I can do the valuation of the company coal India asset based valuation so please don't get worried that I'm going a little fast over here I'm trying to explain like 90 learning modules or something like that in an R right so the idea is not to understand everything the idea is to look at the syllabus and understand the relationships between the subjects to just get a glimpse of what the syllabus is like whatever I'm going to study so when I'm studying fixed income I know there are fixed income is there Equity is there alternate Investments so all the Investments that we people do these are the subjects we are looking at right now I'm starting the fixed income part of all the Investments we do so that perspective you should have that you know that macro view overview you should be having so valuation is very interesting Equity is there in level two level two May the valuation over here you'll have let's say one chapter evaluation in and which has like four methods of valuation level two these will become in one chapter each so level two we have Equity decent amount of equity and level three again Equity will be from a portfolio perspective how to create an equity portfolio right so it's going to be more portfolio perspective will get to it but that will be level three so Equity is there in level three also it's fairly simple less numerical and it's a very interesting chapter and it's not very difficult normal now when we're looking at the third category of investment fixed income equity and Alternate Investments so we've discussed commodity gold how do you invest say for example I think that oil prices will go up how do I bet on that commodity so there are ways in which you can do that obviously I'm not going to fill up bottles and bring it to my house so there are ways there are something called derivatives that we use in order to do that so that is a real estate investment in fact along with real estate you have Farmland where people you know grow crops Etc tax advantage might be their land depreciation might be there Timberland there are people who invest in Timberland because they will be you know they will cut trees and use that Timber to sell and then they'll again reforest it of course but that is also their private Equity is like startups and all there's more but just giving you a basic idea so people can invest into startups I can buy zomato shares because zomato is listed the share price is available but I cannot buy swigish shares swiggy becomes private Equity it's not public Equity so matters public Equity I can buy the shares of zomatoan on the website on on zeroth whatever remat accountant whatever platform you're using right so hedge fund is like Amir loka mutual fund rich people's mutual fund have a lot of restrictions because see a common public can invest something as low as 500 rupees on a mutual fund also government cannot allow our money common publics money to get invested into a fraudulent scheme to be a fraud or something like that so that is a challenge hedge funds what happens is there are people who can take a lot of risk not the common public high net worth individuals rich people these people want to take a lot of risk they do not want that much restriction with mutual fund and all because mutual funds May the common public is investing so the government cannot mess up common public are PESA you can't touch right like that a lot of restrictions are there they cannot take a lot of risk and all that but hedge funds can take a lot of risk so only rich people with a certain level of network and all can invest in hedge funds and hedge funds will have very less restrictions so they can trade invest Etc because they can make that kind of money they're looking at that and now obviously we're looking at nfts and cryptocurrency and all that so we'll have a glimpse of digital assets over here earlier for example alternate investment used to be one big chapter now they've broken it into very small small five six chapters level two also has alternate investment we have a chapter on commodity a chapter on real estate of course more detailed hedge fund Etc and level two level three we have one chapter on Alternate Investments but that is from the perspective of our portfolio that out of your entire portfolio all the assets you're holding I'm sorry I'm coming to portfolio next I'll explain what a portfolio is but when I'm looking at all the assets held together so how do I look at this how alternate investment fits into my portfolio so if I have 100 rupees of investment how much out of 100 should be Equity fixed income alternate investment out of alternate investment should I invest in commodity or not if inflation will be high gold will increase right real estate should I invest or not because real estate you can't just sell it whenever you feel like it's illiquid we'll learn terms like what is liquid what is the liquid what is liquidity risk so don't worry about it I know a lot of there would be a lot of terms which you may not be familiar with right now we'll discuss all that so don't worry that way right so how to form my portfolio how to form my assets so for example a 60 year old individual may not want to hold real estate may actually be owning existing real estate because he might have paid off his home loans and all so how do we structure the alternate Investments as a part of the portfolio that is in level three level three alternate investment is low in a fixed income Equity alternate investment everything is from a portfolio perspective in level three anyways let's stick to level one now when I combine all of this fixed income equity and Alternate Investments how does my total entire portfolio look like that is what your subject portfolio is about now I could be constructing a portfolio let's say for I'll just come to it so overview we'll talk about what is portfolio and all that a portfolio I might need a portfolio to be made a 20 year old individual's portfolio he can take a lot of risk because he's going to be earning for the next 40 years but a 60 year old individual cannot take a lot of risk because a 60 year old individual is now retiring now he has to take out money from his portfolio to manage his expenses so portfolio is your entire net worth all the assets the house you live in the gold you own the fixed income fds that you have the equity shares mutual funds if you have a business that value that asset everything is a part of your portfolio how much risk can I take for example somebody who's a stock Trader in his personal portfolio he may not be able to take a lot of risk because his business is risky or somebody doing a risky business he should invest more into fds because what happens is what if the business is doing badly right now so at that point of time my fds might take care of it so normally when I look at portfolio I don't want to invest in assets which where both will increase or both will decrease at the same time because what happens is both are increasing or decreasing so my movement is very very extreme the standard deviation will be high we'll do that in quants you will find relationship between the subjects right now what happens is in order to reduce risk I want to invest in Assets in such a way that when one goes down the other probably goes up and they balance out each other like normally when there is a market crisis Equity is going down markets are doing badly at that point of time normally generally gold is going to go up because people are scared people go gold right so they will balance out each other so instead of two assets moving in the same direction this way they balance out each other and they will move in a narrow Direction so this is more risky or this movement is more risky the first one right so therefore what happens is we understand risk so that is why you know you would have heard you not put all your eggs in one basket we want to diversify our investments and all we want to so that if there is a loss from one asset there is a profit from the other asset and we are able to manage that so this is your IPS investment policy statement so how does a 20 year old individual invest how should his portfolio look like what amount of so if I'm a salaried individual I might be able to take a lot of risk because I know it's sum of money every month but if I'm a business guy whose cash flows are very volatile I mean my business might do well this month I might have more profit less profit in any month so in that case I want to take less risk with my investments so that if there is a problem with my current income my business income I can fall back on my portfolio so planning that for a 20 or 60 year old individual Banks also do not keep the money at home the banks also invest how do they manage so overview understanding that and understanding biases like for example if you have a 200 rupees share and suppose the price goes down to 180. you might Panic or you might say that no it has gone down I'll buy again even more and then if it goes down to 160 you want to buy it even more and you want to hold the stock till it comes back to 200 because you want to recover your loss from that stock only there are a lot of biases because ultimately we are all human beings in the market so there is a lot of emotion that plays so what are the biases that we people have right so we study that because it's very important to understand the bias psychology of money for example is an amazing book to read around this so biases I could give you another example so say suppose uh I like a stock now there are 10 research reports on that stock I like ITC I'll read 10 reports out of that the six reports which say ITC is good I will say how this report is good the four that say that ITC is not good I will not believe those reports and I'll find excuses to discard those so I'm biased towards my previous judgment if I'm not biased if I'm very rational I will look at all the points okay why is he saying good why is he saying bad and I will take a very balanced decision but you always have emotions at play so understanding that in order to take decisions business decisions and all it becomes important capm is an exceptionally interesting chapter so it is a Formula basically RF plus RM minus RF beta if I'm investing in a bank and let's say demanding a seven percent rate if I'm investing in a Tata Motors let's say I'm in demanding a 12 rate if I am going to invest in give me a very risk let's say I'm investing in D Mart Avenue Supermart is a company I think it's less risky than Tata Motors because if the market is good or bad people might buy less cars Etc but uh people have to go for grocery shopping and all so let's say I will Demand only 10 rate more risk I will demand more money less risk I will demand less return this is comfortable so how do you calculate these rates is what we discussed in cap it's a very long class it's a very interesting class where we derive the formula and we move you know the calculation of this how to calculate the risk of the company how to calculate what amount of return do I need because if I don't calculate this how do I do the equity valuation you know bombarding you with a lot of information but for example when I'm looking at a stock I have to say Okay this stock can generate this much money in the next 10 years this much profit in the next 10 years as much cash flow in the next 10 years I have to Discount those cash flows today right 100 rupee today is not 100 rupees after five years so at what rate should I discount so understanding the riskiness of the stock understanding the returns I need from a stock from a market from my portfolio Etc all that is capm that formula it's a very interesting portfolio right and constructing portfolios I've already told you risk management is a relatively easy theoretical chapter so in order to manage risk you can take insurance let's say right one thing I forgot portfolio is going to be there decently well in level two also level three is going to be all about portfolio mostly about portfolio you'll have Equity fixed income alternate Investments Etc but from a portfolio con point of view you are going to apply Equity fixed income subjects and all from a portfolio perspective in level three but portfolios are in level two also so I'll not get into more of risk management here let me introduce the next subject and talk about the risk management part when I'm looking at derivatives now let me give you an example because it's very difficult to explain these four I'll take maybe a few hours just to explain these four uh terms superb I mean I think this is one of my most favorite subjects it's very interesting so suppose I'm scared who's going to take care of my family after I'm dead so what do I do I buy a life insurance I'm scared hospital bills are gonna go up if I follow what do I do I buy a health insurance similarly there is a lot of risk in the business also suppose of the rubber prices are going to go up mrf tire is going to get affected Madras Rubber Factory that's mrf so mrf is going to get their profit margins will go down because their raw material is rubber so how do I look at how do I manage that risk Infosys TCS we had discussed these guys are scared about the rupee dollar prices fluctuating so how do I manage the risk of that Ruby dollar fluctuation so we can buy insurances and all when we are looking at life insurance health insurance property fire Insurance Etc but how do we manage these kind of risks in business you use something called derivatives so for example suppose I have imported some Goods okay I have imported some Machinery from China now I have to make the payment after three months today the rupee dollar exchange rate is let's say for example it I am scared what if this becomes 82 because I have to make one lakh dollars payment so if today I make the payment I have to pay 80 lakh rupees but if after three months whatever the exchange rate is 82 I'll have to use 82 lakh Rupees to buy one lakh dollar and make the payment what I'll do is I'll do a contract with the bank today then I will take one lakh dollar from you after three months at this so and so rate that is a forward contract right so I will fix the rate today so that there is no risk in future there is no fluctuation in future so all the risk management that we do is primarily by using something called derivatives extremely interesting forwards Futures option swaps I'm scared of interest rate going up suppose I've taken a five-year floating rate loan but whatever is the rate interest rate in the market I have to pay interest based on that what if the interest rate increases next year and I have to pay a huge amount of interest rate how do I manage those things so we use these kind of derivative products extremely interesting to manage those risks and all even if somebody wants to take a bet you know speculate suppose I'm expecting that honestly share price is going to go up how do I without buying Nestle how can I take a bet on that so all those things you'll be able to do with derivatives it's a little it's a very good subject but it takes time for you to you have to understand the terms so it's very new basically so that's why I cannot get into more details about it but that is derivatives it's there in level two also it's there in level three all as well because risk management how do you manage and use derivatives in level three again how do you use derivatives to manage your portfolio risk and all that that way we are going to be studying more but derivatives is going to be fairly numerical actually and the last subject for you is going to be ethics so ethics basically when I'm looking at level one standards is going to be there in all the three levels so same seven standards are there in level one level two level three extremely important subject it is subjective it is not numerical and it's not that the entire curriculum all the ten subjects is very numerical because there are a lot of questions where they'll be asking you conceptual questions which is not number crunching but you have to know the concept if you're mugging up CFA is not going to work you have to understand very well very thoroughly now when I'm looking at standards there are seven standards any professional exam or any professional body you see doctors also take a pledge lawyers take a pledge they have to be ethical towards you know the patients and the clients and all that similarly Finance people also need to be very very ethical now satyam scam or yes bank and all of that we see there are so many scams that are happening that is very unethical now suppose you're working in an XYZ company you called me up and you told me that you know my company this is this this much sales we have done this much we have done and that data is not available in public I use that information and buy the shares of the company because I got inside information from you that is unethical and it's also illegal so how do we go about it so all those standards are there two you know train you or to teach you as to what is good or bad if I were to say so and the questions in the exam are like you know they'll give you a situation that you know this person was there he heard a CEO talking in the lift that his company was doing very badly then this guy came out of the lift and sold the shares of the company for his clients now whether is he is he violating or not violating because he did not ask anything but if you've heard an information the CEOs talking and the CEO was telling you something about you know that company is going to go down or whatever obviously that is a private information and you came at came across it so you can't act on it and also users came out of it if you just heard somebody talking in the lift and you'll sell your clients shares what if that guy was talking about something else don't you think you should do your homework and then take trades on your clients behalf so all these things happen in fact there was something with access bank also where the fund managers did something so this ethics becomes extremely important so the questions will be like this a situation is given and then we are going to be asking you whether he violated not violated Etc a standard so that is your ethics seven standards that is going to be the same and 90 of Ethics in all the three levels is the same that is the seven standards so extremely well we have to do we do like around 700 800 plus examples in the class it's very interesting so we'll be you know for every standard we'll be giving you a situation and we'll be discussing whether this is a violation not violation Etc very interesting subject but confusing I'm telling you it is going to be a little confusing because it's ethics now so you can't exactly say it's a two plus two equal to four kind of a thing trust is a very easy chapter two page kind of a chapter that what is ethics everybody should be ethical profession what is profession Etc very easy nothing much Gibbs so just the way you have something called the ISO standards you know when you're selling a product you do those isi Mark ISO Market ISO standards are there in isi Market all is there it's basically like a tapai of stamping in that you know this is all validated and this is correct and accurate information and all that so now say for example a fund manager comes and tells you I generated 20 return another fund manager comes and tells you I donated 40 return now if my last year was very good I'll tell you my one year return if my one year was very bad my last five years was very good I will not tell you one year return I'll tell you my five year average return so do you see how people can manipulate that you know my return is this much my return is this much how they can manipulate and how they can try to Market in a very bad way so this Gibbs is basically Global investment performance standards so we are going to have certain rules which you follow when you are presenting your performance and this is a return you generated Etc you can you may or you may not follow the standards that's up to you if you follow the standard then you can write I have followed games otherwise you can't write that it's like that isi Mark your understandings that is there in your ethics so standards and application examples and all that we've discussed the seven standards that same in level one and two and three so be very careful the subject is extremely extremely important and gives you have in more detail Gibbs is a very small chapter in level one in level two it's not that level three you have a big Gibbs chapter so this is your level one syllabus outline level one two three I told you ethics is more or less it's 90 of Ethics is just standards only level two three I don't think we have much right so this is your syllabus so quants economics financial reporting analysis Equity fiction alternate Investments you put those together into a portfolio corporate finance and ethics right just a few more points so how to study there's another lecture how do you go about with the starting you do the lecture you study and then you practice but details how to study and how to practice all that is covered interrelationships between the subjects you will have to understand and any which ways you will follow the order of study that I'll give you in which order Which chapter you have to study in which order so the indoor relationship will not be a problem for you because I'll sequence it in such a way if I need chapter 20 to understand chapter five I'll put 20 before five I'll have to do 20 so that I can understand chapter five so that order will be given in that manner so you don't have to worry and practical skills module obviously the financial modeling or python or whatever you choose the details are provided separately that is not testable in your exam so we eat Financial modeling or python or whatever you're studying in the practical skills module that is not a part of your syllabus that will not be tested in the exam just repeating this and the uh demand Supply or those extra reading from economics quants and accounts financial reporting analysis some extra reading which is a prerequisite you need to understand the concepts to understand this syllabus but questions in the exam will not come of that right so this is your level one curriculum and it's a really interesting one so understand figure out what your profile is what you want to do and this basically broadly what is finance all about so these are all the subjects in finance we have discussed this is a curriculum for your CFA level one

Channel: Aswini Bajaj

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Id: hFdMNYsXuVM

Length: 69min 39sec (4179 seconds)

Published: Fri May 19 2023