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Cheat Sheets

Richard Flynn A00081839


Pre Mid-Term
Ethics – Codes of Conduct
1. Professionalism
2. Integrity of Capital Markets
3. Duties to Clients
4. Duties to Employers
5. Investment Analysis, Recommendations &
Actions
6. Conflicts of Interest
7. Responsibilities as a CFA Institute Member or
CFA Candidate
Stats – Measurement Scales
1. Nominal scales
 Contains the least information
 Observations are classified or counted with no particular order
 Eg. assigning the number 1 to a municipal bond fund, the to a corporate bond fund, and so on for each fund style

2. Ordinal scales
 Every observation is assigned to one of several categories
 Categories are ordered with respect to a specified characteristic.
 Eg. the ranking of 1,000 small cap growth stocks by performance may be done by assigning the number 1 to the 100 best
performing stocks, the number 2 to the next 1 00 best performing stocks, and so on, assigning the number 1 0 to the 100 worst
performing stocks. Based on this type of measurement, it can be concluded that a stock ranked 3 is better than a stock ranked 4,
but the scale reveals nothing about performance differences or whether the difference between a 3 and a 4 is the same as the
difference between a 4 and a 5.

3. Interval scale
 Measurements provide relative ranking, like ordinal scales, plus the assurance that differences between scale values are equal.
 Eg. temperature measurement in degrees is a prime example. Certainly, 49°C is hotter than 32°C, and the temperature
difference between 49°C and 32°C is he same as the difference between 67°C and 50°C. The weakness of the interval scale is
that a measurement of zero does not necessarily indicate the total absence of what we are measuring. This means that interval-
scale-based ratios are meaningless. For example, 30°F is not three times as hot as 1 0°F.

4. Ratio scales
 Most refined level of measurement. Ratio scales provide ranking and equal differences between scale values, and they also have
a true zero point as the origin. Order, intervals, and ratios all make sense with a ratio scale. Eg. you have zero dollars, you have
no purchasing power, but if you have $4.00, you have twice as much purchasing power as a person with $2.00.
Financial Accounting Ratios
Accounting – Inventory Techniques
Method Assumption COGS Ending Inv Consists of
FIFO First Purcahsed are First Purchased
First to be sold
Most Recent Purchases
US & IFRS

Items Last purcased Last Purchased Earliest Purchases


are first to be sold
LIFO

US Only
Items Sold are a Average Cost of Avg. Cost of All Items
mix of Purchases All Items
Weighted Avg

US & IFRS
Accounting – Effects on Statements of
Capitalizing vs. Expensing
Capitalizing Expensing
Total Assets H L
Shareholder's Equity H L
Income Variability L H
Net Income (first year) H L
Net Income (subsequent yr) L H
Cash flow from Ops H L
Cash flow from Investing L H
Debt ratio and D/E L H
Interest Coveragae (first yr) H L
Interest Coverage (subsqnt yr) L H