CFA Level 1 - Investment Tools & Ethics

To guide members and candidates in their professional conduct, ensuring integrity, competence, and ethical behavior in the investment profession, ultimately protecting the integrity of capital markets.

Members and candidates must understand and comply with all applicable laws, rules, and regulations (including the CFA Institute Code and Standards) of any government, regulatory organization, licensing agency, or professional association governing their professional activities. In case of conflict, the stricter law/standard applies.

GIPS (Global Investment Performance Standards) are a set of ethical standards for investment firms to ensure fair representation and full disclosure of their investment performance. The main objective is to allow for comparability of investment performance among firms globally.

$FV=PV\times (1+r{)}^n$, where $PV$ is Present Value, $r$ is the interest rate per period, and $n$ is the number of periods.

The expected value $E(X)$ is the weighted average of all possible outcomes, where the weights are the probabilities of each outcome: $E(X)={\sum }_{i=1}^{n}P(x_i)\times x_i$.

The coefficient of variation (CV) is a measure of relative dispersion, calculated as the standard deviation divided by the mean: $CV=\frac{\sigma }{\mu }$. It measures the amount of risk per unit of return, useful for comparing investments with different expected returns.

The law of demand states that, all else being equal (ceteris paribus), as the price of a good or service increases, the quantity demanded decreases, and vice-versa.

Monetary policy refers to actions taken by a central bank (e.g., changing interest rates, quantitative easing) to influence the money supply and credit conditions. Fiscal policy refers to government decisions regarding spending and taxation to influence the economy.