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Learning Outcome Statements PDF Download
|1. Framework for the Economic Analysis of Financial Markets|
a. explain the notion that to affect market values, economic factors must affect one or more of the following: (1) default-free interest rates across maturities, (2) the timing and/or magnitude of expected cash flows, and (3) risk premiums;
b. explain the role of expectations and changes in expectations in market valuation;
|2. Default-Free Interest Rates and Economic Growth|
c. explain the relationship between the long-term growth rate of the economy, the volatility of the growth rate, and the average level of real short-term interest rates;
|3. The Yield Curve and the Business Cycle|
d. explain how the phase of the business cycle affects policy and short-term interest rates, the slope of the term structure of interest rates, and the relative performance of bonds of differing maturities;
e. describe the factors that affect yield spreads between non-inflation-adjusted and inflation-indexed bonds;
|4. Credit Premiums and the Business Cycle|
f. explain how the phase of the business cycle affects credit spreads and the performance of credit-sensitive fixed-income instruments;
g. explain how the characteristics of the markets for a company's products affect the company's credit quality;
|5. Equities and the Equity Risk Premium|
h. explain how the phase of the business cycle affects short-term and long-term earnings growth expectations;
i. explain the relationship between the consumption-hedging properties of equity and the equity risk premium;
j. describe cyclical effects on valuation multiples;
k. describe the implications of the business cycle for a given style strategy (value, growth, small capitalization, large capitalization);
l. describe how economic analysis is used in sector rotation strategies;
|6. Commercial Real Estate|
m. describe the economic factors affecting investment in commercial real estate.