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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 &
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

Items Last purcased Last Purchased Earliest Purchases

are first to be sold

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

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