BOOK 1 — ETHICAL AND PROFESSIONAL STANDARDS AND QUANTITATIVE METHODS Readings and Learning Outcome Statements Study Session 1 — Ethical and Professional Standards Self-Test ~ Ethical and Professional Standards Study Session 2 — Ethical and Professional Standards: Application Study Session 3 - Quantitative Methods Self-Test ~ Quantitative Methods Formulas Appendices Index 138 255 259 261this book does noc havea front and back cover, it was distributed withour permission of Schweser, a Division of Kaplan, Tne, apd is in direc violation of global copyright laws. Your assiseance in pursuing potential violaors of this law is greatly appreciated. Requied CFA Inssiute®dicaimer “CFA® and Charered Financial Anais? ae wademals owned by CFA Tntete. CFA Insta (lonely the Associaton for Invesment Management and Research) doc nx endorse, promote, review, or warant the accuracy ofthe products oF services cffeed by SchweserStady Progran®. CCerein materials contained within this tex are che copyrighted propery of CFA Insiute. The flowing isthe copyright dicosure for these materials: "Copyright, 2007, CEA Institute. Reproduced and republished fiom 2007 Learning Outcome Statements, Level 3 question fom CFA® Program Materials, CFA Institute Stndards of Profesional Conduct, and CFA Instivae’s Global mestment Performance Standard wich permision from CFA Inscue, All Rights Reserved” These materials may not be copied without writen permission fiom dhe author. The unauthorized duplication of these nates isa violation of global ‘copyright aw and the CFA lnstinte Code of Ethics, Your asistance in pursing potential violators ofthis aw is greatly appreciated. Disclaimer! The Schweter Nores shouldbe used in conjunction with the original readings as ser forth by CFA Institute in their 2007 CFA Level 2 Study Guide. The information contained in these Now covers copics contained in the readings teferenced by CFA lnstiute ands belived wo be accurate. However, thei accuracy cannot be guaranteed nor is any warrenty conveyed a to your ukimate exam suces. The authors of the referenced readings have not endorsed or sponsored these Now, noc are chey affiliated with Schwese Study Program. Page 2‘WELCOME TO THE 2008 SCHWESER STUDY NOTES . ‘Thank you for crusting Schweser to help you reach your goals, We are all very pleased to be able to help you prepare for che Level 2 CFA Exam. In this introduction, I want to explain the resources included with the Study Notes, suggest how you can best use Schweser materials to prepare for che exam, and direct you toward other educational resources you will find helpful as you study for the exam. Besides the Study Notes themselves, there are many educational resources available at Schweser.com. Just log in using the individual username and password that you received when you purchased the Schweser Study Notes, and go to Online Access. All purchasers of our 2008 Level 2 Schweser Study Notes pack receive: Study Notes ~ Five volumes that include complete coverage of all 18 Study Sessions and al} Learning Outcome Statements (LOS) with examples, Concept Checkers (multiple-choice questions for every reading), and Challenge Problems for many readings to help you master the material and check your progress. At the end of each topic area, we include a Self-test. Self-test questions are created to be exam-like in format and difficulty in order for you to evaluate how well your study of each copic has prepared you for the actual exam. Practice Exams Volume 1 ~ Three full (240-question, 6-hour) Level 2 practice exams to help you prepare for the exam itself as well as co better target your final review efforts. Schweser Library ~ I have created five videos that are available co all Schweser Study Nores purchasers. Each Schweser Library volume is approximately 30 to 60 minutes length. Topics include: “Introduction co Item Sets,” “Hypothesis Testing,” “Foreign Exchange Basics,” “Ratio Analysis,” and “Forward Contracts.” Schweser Study Planner ~ Use your Online Access co tell us when you will start and what days of the week you can study. Study Planner will create a study plan just for you, breaking each study session into daily and weekly tasks t0 keep you on track and help you monitor your progress through the curriculum. IF you purchased the Schweser Study Notes as part of che Essential or Premium Package, you will also receive access to Faculty Office Hours. Office Hours allow you to get your questions about the curriculum answered in real time and see others’ questions (and faculty answers). Office hours is a text-based live interactive online chat with me and other Level 2 experts. Archives of previous Office Hours sessions are sorted by topic and are posted shortly after each session ‘The Level 2 CFA exam is a formidable challenge (72 Readings and 480+ Learning Outcome Statements), and you must devote considerable time and effore to be properly prepared. There is no shortcut; you must lear the material, know the terminology and techniques, understand the concepts, and be able ¢o answer (70% of) 120 questions quickly and correctly. Fifteen to 20 hours per week for 20 weeks is probably a good estimate of the study time required on average, but some candidates will need more time or less depending on their individual backgrounds and experience. ‘To help you master this material and be well prepared for the CFA Exam, we offer several other educational resources, including: Live Weekly Classroom Programs — We offer weekly classcoom programs in several large cities. Please check at Schweser.com for locations, dates, and availability,