LIFA exam curriculum - Welcome CFA and FRM exam candidates

LIFA Exam Program
Level I Curriculum & Guide

Table of Contents

Level I LIFA Exam Learning Modules


Welcome to the Licensed International Financial Analyst (LIFA™) Program and the pursuit of what will become the premier designation for investment professionals. The International Research Association is committed to helping you attain the highest levels of professionalism and ethical standards in the global investment industry, through mastering its challenging curriculum in three levels of examinations.

The LIFA designation was created with its candidates and members principally in mind. Its main focus is on the accomplishment of earning the designation and maintaining a level of ethical commitment unparalleled in the world of financial analysis. The LIFA exam is designed to measure professional excellence in a broad curriculum of investment-related subjects. Obtaining the designation will require an in-depth knowledge of fundamental investment principles, as well as a thorough understanding of current capital markets in the burgeoning global marketplace.

About the International Research Association

The International Research Association was formed with the express purpose of creating a standardized designation for investment professionals worldwide that is equitable, challenging, and accurately reflects the knowledge necessary to be considered an expert in the industry. The Licensed International Financial Analyst Program and the series of examinations serve as the backbone of obtaining the LIFA charter.

The goal of the International Research Association is to facilitate the evolution of the LIFA Program in order to create the premier designation for investment professionals. The International Research Association is committed to a candidate-oriented program of professional excellence, and will make every effort to consider the needs and reflect the input of all LIFA candidates and members.

The mission of the International Research Association is to provide investment professionals a standard of recognition that fairly and accurately reflects the complex knowledge required to compete in today’s global marketplace.

The International Research Association Web Site

LIFA candidates are encouraged to regularly check the LIFA exam homepage for updates on the LIFA Program and examinations. This web site serves as a primary information source for all LIFA candidates and members, and will include new and developing information pertaining to the LIFA Program such as the LIFA Exam and Curriculum Guide revisions, errata, and LIFA Program policies.

LIFA Program History

The LIFA Program has been under development since 1999 and was designed to address the needs of a growing global marketplace and the desire of many investment professionals worldwide to be recognized by the highest professional and ethical standards.

As the LIFA Program grows, it will continue to emphasize and expand its curriculum, address the needs of the candidate, and will redefine the standards that financial analysts are held to on a global level. The LIFA Program continues to welcome CFA exam and FRM exam candidates/charterholders, GMAT candidates and MBAs. A comparison of the LIFA exam and CFA exam is available.

The Licensed International Financial Analyst designation will be awarded after the examination requirements are met, and will include numerous benefits including significant input into the development of the LIFA Program.

About the LIFA Program Curriculum Guide

The LIFA Program Curriculum Guide is intended to help the candidate understand the LIFA Program and curriculum, as well as provide suggestions for studying for the Level I exam. Please read the LIFA Program Curriculum Guide closely, as it contains critical information for the LIFA examinations, and is the definitive source of information with regards to the International Research Association’s Topics to Master.

There are many ways to prepare for the LIFA exam and master the curriculum. The decision of which materials to prepare with will be different for each candidate based on background, education, and professional work experience. The International Research Association recognizes this range of needs and offers the Topics to Master as a specific, topical outline of the curriculum.

The following information is contained in the LIFA Exam Curriculum Guide:

The LIFA Program Curriculum Guide will serve as the primary source of information and guidance for the LIFA exam.

LIFA Exam Registration

The LIFA examination is available for candidates attempting the Level I, Level II and Level III exams. Upon successful completion of the Level I exam, candidates may advance to Level II. Level I candidates who fail may take the Level I exam again after a 60-day waiting period, and may attempt the exam a total of four times.

The International Research Association utilizes industry-standard technology to make online enrollment to the LIFA program efficient and virtually cost-free. We believe there is no reasonable justification to levy enrollment fees on candidates, simply to enroll (in minutes, online) into a program.

Candidates are not required to pay an upfront exam registration fee. Payment of the exam fee is required only if you pass. LIFA exam registration is available on our secure LIFA exam registration page.

LIFA Exam Scholarships

The International Research Association offers a number of scholarships making the LIFA program available to more candidates. Eligible individuals will have their Level I exam fee reduced to USD350. Available scholarships are as follows:

Scholarship options are available on the LIFA exam registration page.

LIFA Program Curriculum Content and Structure

One of the integral parts of obtaining the LIFA designation is a mastery of its rigorous curriculum, which is outlined in the eleven Learning Modules and their corresponding Topics to Master. This body of knowledge reflects the most current and important topics and standards for the investment professional in today’s global marketplace. The Level I LIFA exam evaluates the candidate’s basic knowledge in the subject areas covered in the LIFA Program. It is primarily concerned with the areas of:

Level I candidates will be required to demonstrate a thorough comprehension of the terms and concepts associated with these subjects, and have a basic understanding of how each of the functional areas relate to the global investment professional.

The ideal Level I candidate will have a background or education that has provided significant exposure to these subjects. The degree of difficulty for the Level I exam will be consistent with a typical MBA level curriculum. The LIFA designation should be considered an excellent complement to a degree or diploma. The International Research Association therefore does not prescribe one specific set of readings, preliminary or fundamental, in preparation for the LIFA exam. Candidates have the opportunity to choose from a variety of sources that suit their particular needs, and should use the section in this Curriculum Guide entitled “Suggested Study Sources” as a guideline for preparation.

LIFA Exam Weightings

The Level I LIFA exam weightings by subject area are as follows:

LIFA exam subject weightings are re-evaluated by the International Research Association annually.

Study Materials for the LIFA Exam

As previously noted, the International Research Association recognizes that there are as many ways to prepare for the LIFA exams as there are different levels of capability and experience among its candidates. Therefore, the International Research Association does not provide or promote any one source of study materials for the LIFA exams.

The International Research Association sees no purpose in limiting the candidate’s sources of continuing education by prescribing a definitive set of learning materials. Each candidate will have different educational and professional experience from which to draw. Moreover, candidates have different learning styles, lifestyles, and financial means to consider when preparing for the LIFA examinations, and only the candidate can decide what is right for his or her particular needs. When choosing how to prepare for the LIFA exams, it is suggested that candidates weigh their options based on time, background, and personal needs.

A mastery of the LIFA exam curriculum exhibited in this Curriculum Guide can be achieved through any number of means:

Study Strategies for the LIFA Exam

Entry into the LIFA Program is primarily a self-study endeavor. Successful self-directed preparation requires good personal organizational skills and a commitment to the process. Therefore, a well-planned study strategy that allows the LIFA candidate to methodically progress through the subject matter is strongly recommended.

The Learning Modules in the LIFA Curriculum Guide organize the subject matter into broad categories. Two important factors should be used as a guideline for all LIFA candidates:

Recognition of personal strengths and weaknesses with regard to the subject matter
Awareness of current LIFA exam weightings by subject

Candidates should carefully review the Learning Modules to initially determine their strengths and weaknesses. Naturally, this will vary from candidate to candidate, as the scope of knowledge for the LIFA Program is quite extensive, and the background of each candidate is different. Next, candidates must be conscious of what subjects will be covered more frequently on the LIFA exam, based on the LIFA exam weightings. At this point, the LIFA candidate can choose what order of subjects to study, and how much time and attention needs to be allotted to develop a proficiency level with which they are confident.

For example, a candidate who is a CPA will have a strong background in accounting, which is critical to mastering the Financial Statement Analysis portion of the LIFA curriculum, considering the 20% weighting. The International Research Association suggests that this candidate focus first on other areas that he or she may not be as strong in, or has little current exposure to. For a CPA, this may include areas dealing with investment principles as established in the fixed-income or equity Learning Modules. Considering the higher weightings for these areas, this would be a recommended starting point for this particular candidate.

Time management and self-discipline are essential ingredients to successfully mastering the curriculum. Starting your studies well in advance of the exam date is strongly encouraged, as is setting up a study schedule that suits your lifestyle. Candidates are encouraged to study two to three nights each week for three to five hours, covering the readings and taking practice questions. When you feel confident in your knowledge in that subject, move on to the next subject and repeat this process. Candidates should then “loop back” each weekend and revisit the Learning Modules and readings which were covered in the previous weeks to maintain their strengths and knowledge of each subject.

Rules and Regulations for the LIFA Exam

The LIFA exam is offered 365 days a year. It is an online exam which can be accessed from any computer with an internet connection (home, office, etc.). All levels of LIFA examinations will consist of multiple-choice questions and will cover all subjects.

Each LIFA exam will be administered in a single 2-hour session. Questions must be answered in the order they are presented. Questions may not be skipped. You will be awarded one point for each correct answer. For each incorrect answer, one point will be deducted. The LIFA exam is administered under standardized conditions throughout the world. Failure to comply with the exam procedures and regulations or with the exam administrator's directions can result in the International Research Association taking actions that include, but are not limited to, canceling your exam scores and potentially barring you from future LIFA exams.

Grading the LIFA Exam and Obtaining Exam Results

As the LIFA exam is multiple choice at all three levels, grading will be conducted quickly and efficiently, with random samplings taken for hand grading by International Research Association staff members to assure consistency and accuracy. LIFA exam results are available to candidates within seven days of the exam date. Results will be on a pass/fail basis, and LIFA candidates will be notified by email when their results are ready. The International Research Association determines pass rates for the LIFA exam. Precise scores are not revealed. The overall accomplishment of passing the LIFA exam is considered to be a major milestone, and demonstrates an in-depth grasp of the demanding curriculum.

Level I LIFA Exam Learning Modules

The following Learning Modules are provided by the International Research Association to be used by the candidate as the foundation of the LIFA curriculum. The terms and concepts included in each Learning Module must be understood completely. That is, the successful LIFA candidate must be able to determine which of the Topics to Master are more elemental in nature, and be able to differentiate between the functional aspects that could be associated with each one. As previously stated, the LIFA exam will assess the candidate on much more than a cursory understanding of the subject matter. The Level I LIFA Program is designed to be consistent with a rigorous self study program at a Master’s level of comprehension.

The Topics to Master are both key words and concepts that outline the curriculum of the LIFA Program. Some of these are quite basic in nature, while others involve a deeper understanding and a synthesis of more than one idea. The Level I LIFA exam will test candidates on a sampling of the Topics to Master, as it would be impossible to cover the entire body of knowledge in one exam. Therefore, it is important that LIFA candidates approach their studying as a general learning process, and focus their time and energy on a thorough knowledge of the subjects. Candidates should use the suggested study materials in whatever combination they deem appropriate as a means of mastering the curriculum.

Learning Module 1: Ethics

Successful Level I LIFA candidates will be able to identify, describe, evaluate, and analyze the broad spectrum of business ethics issues in the context of the current global investment profession. Economic, legal and ethical responsibilities are more complex than ever, and LIFA candidates must determine the individual and managerial rationales behind investment decision making. Candidates must have a thorough command of the following terms and concepts, and be well versed in the current standards set forth by the SEC and NASD.

Topics to Master for Ethics

Absence of Compliance Procedures
Access Persons
Accounting Differences
Accuracy of Research Reports
Acts without Consent or Approval of a Co-Fiduciary
Additional Compensation
Additional Compensation for Employer
Adequacy of Compliance Procedures
Adequate Basis for Recommendations
Advice Counsel
Affiliated Persons
Agency Trade
Agreements with Clients
Allocation of Trades
Allocation Procedures
Allowable Research
Appearance of Conflict of Interest
Application of U.S. Law
Assisting Violations
Basic Characteristics for Recommendations
Beneficial Ownership
Best Execution
Blackout Periods
Block Trades
Blue Sky Laws
Board Participation
Business Judgement Rule
Calculation of Returns
Capital Structure
Characteristics of Investments
Chiarella V. United States
Chinese Wall Doctrine
Client Lists
Client-Directed Brokerage
Code of Procedure
Company Analysis
Compensation Arrangements
Competition with Employer
Competitive Advantage
Compliance Procedures
Compliance with Applicable Laws
Composite Portfolios
Composite Returns
Conduct Rules
Confidential Information
Confidentiality of Electronic Communications
Confidentiality Regarding Client Information
Confidentiality within Firms
Conflict of Interest Regarding Directors
Conflicts of Interest
Conformations of Trades
Consent for Independent Practice
Consent of Employer
Contingent Liabilities
Contravention of Terms of the Governing Instrument
Convictions Equivalent to a Felony
Corporate Directorships
Corporate Pension Plans
Covered Plans
Creation of Policy
Cross Trades
Custody of Assets
Defined Contribution Plan
Fair Dealing
Delegation of Duties
Derivative Products
Director Compensation
Dirks V. SEC
Disclosure of Additional Arrangements
Disclosure of Compliance Procedures
Disclosure of Conflicts
Disclosure of Employer
Disclosure of Independent Practice
Disclosure of Investment Performance
Disclosure of Investment Process
Disclosure of Procedures
Disclosure of Referral Fees
Disclosure of Soft Dollar Practices
Disclosure to Clients
Disclosure to Employer
Discretionary Voting of Own-Institution Securities
Documents Rule
Duty to Employer
Electronic Communications
Employee Pension Plans
Employer Identity
Employer Restrictions
Enforcement of Compliance Procedures
Exclusive Purpose
Factual Information
Failure to Invest
Fair Dealing
Fair Dealing Governing Documents
Fiduciary Duty
Financial Condition of Disclosure
Financial Disclosure Standards
Fire Walls
Forms of Compensation
Front Running
Fundamental Analysis
Fundamental Responsibilities
Glass-Steagall Act of 1939
Guarantee of Investments
Guide to Broker-Dealer Compliance
Harvard V. Amory
Identification of Clients
Improper Investments
Independence and Objectivity
Independent Contractor
Independent Practice
Indicia of Ownership
Information Sources
Initial Public Offerings
Insider Information
Insider Trading
Insider Trading and Securities Fraud Enforcement Act
Inter-Account Transactions
International Accounting
International Practice
Investigation of Misconduct
Investing Experience of Clients
Investment Advice
Investment Advisers Act of 1940
Investment Company Act of 1940
Investment in Own-Bank/Own-Holding Company Securities
Investment in Proprietary Mutual Funds
Investment in Securities Underwritten by Own-Bank or Affiliates
Investment Performance
Investment Policies
Investment Policy Statement
Investment Process
Knowledge of Applicable Laws
Legal List
Maloney Act of 1938
Market-Making Activities
Material Nonpublic Information
Misappropriation of Business Opportunities
Misappropriation of Clients
Misrepresentation of Credentials
Misrepresentation through Electronic Communications
Misappropriation Theory
Mosaic Theory
Multi-Account Transactions
New Regulation Analyst Certification
Non-Public Information
NYSE and NASDAQ Revised Listing Standards for Director Independence
Oral Communications
Ordinary Business Care
Party In Interest
Paying Up for Research Services
Performance Presentation
Personal Investing
Personal Investing Task Force
Policy Training
Policy-Making Body
Pooled Funds
Preclearance Procedures
Preparation for Independent Practice
Presentation of Results
Principle Trade
Priority of Transactions
Private Placements
Professional Designation
Professional Misconduct
Prohibited Transactions
Prospective Clients
Proxy Policy
Proxy Voting
Prudent Expert Rule
Prudent Investor Rule
Prudent Man Rule
Public Pension Plans
Public Utility Holding Company Act of 1935
Pump and Dump
Reasonable Care
Receipt of 12b-1 Fees
Receipt of Sub-Accounting Fees
Recognized Sources
Record Keeping
Referral Fees
Regulation A Offerings
Regulation D
Regulation M
Regulation S
Regulation T
Regulation T: Part 220
Regulation U
Regulatory Requirements
Relationship Investing
Relationships with Brokers or Other Agents
Reported Requirements
Reporting Misconduct of Others
Reporting Requirements
Reputational Capital
Research Reports
Research Sources
Restricted Lists
Restricted Periods
Restrictions of Employer
Risk Tolerance
Role of Investors
Rule 134 Communications
Rule 144
Rule 144 A
Rule 147
Rules of Fair Practice
Sarbanes-Oxley Act of 2002
SEC V. Capital Gains Research Bureau
SEC V. Materia
SEC V. Musella
SEC V. Taylor
SEC V. Willis
Securities Act of 1933
Securities Exchange Act of 1934
Securities Trading Practices
Selective Disclosure
Shingle Theory
Short-Term Trading
Simplified Industry Arbitration
Social Investing
Soft Dollars
Solicitation of Clients
Solicitation of Employees
Standard of Practice Casebook
Suitability of Clients
Summary Suspension
Supervisor’s Responsibility
Takeover Defenses
Tax Considerations
Tax-Exempt Investing
Temporary Insiders
Trade Secrets
Trading Ahead of Research Reports
Trading Restrictions
Traditional Theory
Trust Indenture Act of 1939
Unauthorized Commingling of Assets
Uniform Gift to Minors Act
Uniform Management of Institutional Funds Act
Uniform Practice Code
Uniform Securities Act
United States V. Carpenter
United States V. Chestman
United States V. Newman
Use of Own-Bank or Affiliate Bank Deposits
Use of Own-Bank or Affiliated Brokerage Service
Violations of Law
Wall Street Rule
Wall Street Walk
Watch List
Whisper Numbers

Learning Module 2: Economics

Successful Level I LIFA candidates will be able to define, describe, evaluate, and analyze the essentials of economics, i.e. microeconomics, macroeconomics, and the global economy. Candidates must have a thorough command of the following terms and concepts.

Topics to Master for Economics

Absolute Advantage
Accounting Profits
Accounting Unit
Administrative Lag
Aggregate Expenditure
Allocative Efficiency
American Terms
Anticipated Change
Anticipated Inflation
Automatic Stabilizers
Average Fixed Cost
Average Product
Average Total Cost
Average Variable Cost
Balance of Payments Account
Balance on Current Account
Balanced Budget
Barriers to Entry
Bid-Ask Spread
Black Market
Board of Governors
Budget Constraint
Budget Deficit
Budget Surplus
Business Cycle
Capital Account
Civilian Labor Force
Clearing House Interbank Payments System
Commercial Banks
Comparative Advantage
Competitive Price-Searcher Market
Constant Cost Industry
Constant Money Growth Rule
Constant Returns to Scale
Consumer Price Index
Consumer Surplus
Consumers of Loanable Funds
Consumption Function
Consumption Opportunity Constraint
Countercyclical Budget Policy
Covered Interest Arbitrage
Covered Interest Differential
Credit Unions
Crowding-In Effect
Crowding-Out Effect
Cross-Price Elasticity of Demand
Currency Arbitrage Transactions
Current Account
Cyclical Budget Deficits
Cyclical Unemployment
Data Mining
Decreasing Cost Industries
Demand Curve
Demand Deposits
Demand for Money
Demand Schedule
Derived Demand
Differentiated Products
Direct Quotation
Discount Rate
Discounted Cash Flow Models
Discretionary Monetary Policy
Diseconomies of Scale
Disposable Income
District Federal Reserve Banks
Dividend Growth Model
Dynamic Competition
Econometric Models
Economic Profit
Economic Shocks
Economic Value Added (EVA)
Economies of Scale
Elasticity Coefficient
Employment/Population Ratio
Endogenous Variables
Eurodollar Deposits
European Terms
Excess Reserves
Exchange Rate
Exogenous Events
Exogenous Variables
Expansionary Fiscal Policy
Expansionary Monetary Policy
Expenditure Approach
Expenditure Multiplier
Expenditures and Investments
Explicit Costs
Federal Open Market Operations Committee
Federal Reserve System
First Law of Demand
Fiscal Policy
Fixed Exchange Rates
Flexible Exchange Rates or Floating Foreign Exchange Market
Forward Contract
Forward Discount
Forward Market
Forward Premium
Forward Premium Annualized
Fractional Reserve Banking System
Frictional Unemployment
Full Employment
GDP Deflator
General Agreement on Tariffs and Trade
Government Consumption
Gross Domestic Product (GDP)
Gross National Product (GNP)
Gross Private Domestic Investment
Historical Methods
Impact Lag
Implicit Costs
Import Quota
Income Effect
Income Elasticity
Increasing Cost Industries
Index of Leading Economic Indicators
Indifference Curve
Indirect Quotation
Inferior Goods
Interbank Market
Interest Rate Parity
International Monetary Fund
Invisible Hand Principle
J-Curve Effect
Labor Force Participation Rate
Law of Demand
Law of Diminishing Marginal Utility
Law of Diminishing Returns
Law of Supply
Leading Indicator Approaches
Linear Perception
Long-Run Average Total Cost Curve
Macro Economic Index (MEI)
Marginal Cost
Marginal Product
Marginal Propensity to Consume
Marginal Rate of Substitution
Marginal Revenue
Marginal Revenue Product
Marginal Utility
Market Demand Schedule
Market Equilibrium
Market Power
Medium of Exchange
Monetary Policy
Money Market Deposit Accounts
Money Market Mutual Funds
Monopolistic Competition
National Debt
National Income
Natural Monopoly
Natural Rate of Unemployment
Net Domestic Product
Net Exports of Goods and Services
New Money
Nominal Values
Normal Goods
North American Free Trade Agreement (NAFTA)
Nostro Account
Opportunity Cost of Equity Capital
Opportunity Costs
Outright Rate
Overshooting Model
Pegged Exchange-Rate System
Perfectly Elastic
Perfectly Inelastic
Personal Consumption Expenditures
Personal Income
Phillips Curve
Planning Curve
Potential Deposit Expansion Multiplier
Potential GDP
Price Control
Price Discrimination
Price Elasticity of Demand
Price Equalization Principle
Price Level Rule
Price Takers
Price Searchers
Principal-Agent Problem
Production Mix
Quantity Theory of Money
Rational Expectations Hypothesis
Real GDP
Real Values
Recognition Lag
Relatively Elastic
Relatively Inelastic
Repurchase Agreements
Required Reserve Ratio
Residual Claimants
Residual Loss
Restrictive Fiscal Policy
Savings and Loan Associations
Say’s Law
Second Law of Demand
Settlement (Herstatt) Risk
Short Run
Special Drawing Rights
Spot Market
Statutory Incidence
Store of Value
Structural Budget Deficits
Structural Unemployment
Substitution Bias
Substitution Effect
Sunk Costs
Suppliers of Loanable Funds
Supply-Side Theory
Swap Rate
Tax Incidence
Total Costs
Total Fixed Cost
Total Product
Total Variable Cost
Triangular Currency Arbitrage
Unanticipated Change
Unanticipated Inflation
Underground Economy
Unitary Elasticity
Value Date
Velocity of Money
Voluntary Export Restraints

Learning Module 3: Corporate Finance

Successful Level I LIFA candidates will be able to define, describe, evaluate, and analyze the essentials of corporate finance. Candidates must have a thorough command of the following terms and concepts.

Topics to Master for Corporate Finance

Accounting Beta Method
Agency Relationship
Base-Case Scenario
Best-Case Scenario
Bird-in-the-Hand Theory
Breakeven Point
Business Risk
Capital Budgeting
Capital Components
Capital Rationing
Clientele Effect
Constant Growth Stock Valuation Model
Corporate Governance
Corporate Risk
Cost of Retained Earnings Financing
Declaration Date
Degree of Financial Leverage
Degree of Operating Leverage
Depreciable Basis under MACRS
Discounted Payback Period
Dividend Irrelevance Theory
Environmental, Social, and Governance (ESG)
Ex-Dividend Date
Expansion Project
Financial Flexibility
Financial Leverage
Financial Risk
High Operating Leverage
Holder-of-Record Date
Incremental Analysis
Incremental Cash Flows
Initial Investment Outlay
MACRS Half-Year Convention
Market Risk
Modified Accelerated Cost Recovery System
Monte Carlo Simulation
Net Present Value Profile
Operating Cash Flows
Opportunity Cost Principle
Opportunity Costs
Optimal Capital Structure
Optimal Dividend Policy
Payback Period
Payment Date
Pure Play Method
Relevant Cash Flows
Replacement Analysis
Reserve Borrowing Capacity
Residual Dividend Model
Scenario Analysis
Security Market Line
Sensitivity Analysis
Signaling Hypothesis
Stakeholder Management
Stock Dividends
Stock Repurchase
Stock Split
Sunk Costs
Target Capital Structure
Target Payout Ratio
Tax Preference Theory
Terminal Cash Flows
Worst-Case Scenario

Learning Module 4: International Markets

Successful Level I LIFA candidates will be able to define, describe, evaluate, and analyze the essentials of international markets. Candidates must have a thorough command of the following terms and concepts.

Topics to Master for International Markets

American Depository Receipts
American Shares
American Stock Exchange
Balanced Funds
Block Trades
Bond Funds
Book/Market Value Effect
Call Markets
Call Option
Call Provisions
Capital Market Securities
Commission Brokers
Common Stock
Continuous Markets
Convertible Bonds
Corporate Bonds
Dow Jones World Index
Earnings Surprises
Efficient Capital Market
Efficient Market Hypothesis
Equally-Weighted Index
Eurodollar Bond
Excess Market Value
Fixed-Income Investments
Floor Brokers
Foreign Shares
Fundamental Analysis
Futures Contracts
General Obligation Bonds
Informationally Efficient
International Mutual Funds
Intraday Effect
Investment Company
Limit Order
Maintenance Margin
Margin Call
Margin Requirements
Market Order
Money Market Funds
Morgan Stanley Capital Int’l Indexes
Mortgage Bonds
Municipal Bonds
Mutual Fund
Neglected Firm Effect
P/E Effect
Price Formation Equations
Price-Weighted Scheme
Primary Markets
Put Option
Real Estate Investment Trust
Registered Traders
Revenue Bonds
Secondary Markets
Security-Market Indexes
Senior Secured Bonds
Short Sale
Sinking Fund
Size Effect
Stock Funds
Stop Buy Order
Stop Loss Order
Strong-Form EMH
Subordinated Bonds
Tax Selling
Technical Analysis
U.S. Government Agency Securities
U.S. Treasury Securities
Value-Weighted Index
Value-Weighted Stock Series
Weak-Form EMH
Weekend Effect
Window Dressing Effect
Yankee Bonds

Learning Module 5: Quantitative Analysis

Successful Level I LIFA candidates will be able to define, describe, evaluate, and analyze the essentials of quantitative analysis. Candidates must have a thorough command of the following terms and concepts.

Topics to Master for Quantitative Analysis

A Priori Probability
Adjusted Beta
Adjusted R-Squared
Alternate Hypothesis
Altman's Z-Score
Amortization Schedule
Amortized (or Amortizing) Loan
Annual Compounding
Annual Percentage Rate
Annuity Due
Arbitrage Portfolio
Arbitrage Pricing Theory (APT)
Arithmetic Mean
Autoregressive Moving Average Model
Back Simulation
Bernoulli Trial
Binomial Distribution
Capital Allocation Line (CAL)
Capital Asset Pricing Model (CAPM)
Central Limit Theorem
Chi-Square Test Statistic
Coefficient of Determination
Coefficient of Variation
Collectively Exhaustive
Complement Rule
Conditional Heteroskedasticity
Conditional Probability
Constant Annual Payment
Continuous Random Variable
Continuous Uniform Distribution
Continuously Compounded
Critical Value (or Rejection Point)
Cross-Sectional Data
Cumulative Distribution Function
Data Charts
Data Types
Decision Rule
Degree of Confidence
Descriptive Statistics
Discrete Random Variable
Discrete Uniform Random Variable
Discriminant Analysis
Durbin-Watson Statistic
Effective (or Equivalent) Annual Rate
Efficient Frontier
Expected Return of the Portfolio
Expected Value
Factor Portfolio
Factor Risk Premium (or Factor Price)
Factor Sensitivities
Fair (Equilibrium) Value
First Test Statistic
Frequency Distribution
Frequency Polygon
Future Value
General Permutation
General Rule of Addition
General Rule of Multiplication
Generalized Least Squares
Geometric Mean
Global Minimum-Variance Portfolio
Hansen’s Method
Heteroskedastic Regression
Historic Simulation
Hypothesis Testing
Imperfect Correlation
Inferential Statistics
Interest Rates
Instability in the Minimum-Variance Frontier
Interval Level
Joint Probability Function
Level of Confidence
Level of Significance
Linear Regression
Logit Models
Log-Linear Model
Lognormally Distributed
Machine Learning
Market Model
Market Risk Premium
Markowitz Decision Rule
Mean Absolute Deviation
Mean Reversion
Mean-Variance Analysis
Minimum Variance Frontier
Monte Carlo Simulation
Multifactor Models
Multinomial Formula
Multiple R-Squared
Multivariate Distribution
Mutually Exclusive
Negative Covariance
Negatively Skewed Distribution
Nominal Level
Nominal or Quoted Interest Rates
Nonparametric Tests
Null Hypothesis
One-Tailed Test
Opportunity Cost Rate
Ordinal Level
Ordinary Annuity or Deferred Annuity
Out-of-Sample Forecast
Out-of-Sample Forecast Errors
Parametric Tests
Periodic Rate
Point Estimate
Population Standard Deviation
Population Variance
Portfolio Variance
Positive Covariance
Positive Skewness
Positively Skewed Distribution
Posterior Probability
Power of a Test
Present Value
Priced Risks
Prior Probability
Probability Density Function
Probability Distribution
Probit models
Pure Factor Portfolio
Random Variable
Random Walk
Ratio Level
Regression Parameters
Relative Frequencies
Robust Standard Errors
Root Mean Squared Error
Roy’s Safety-First Criterion
Safety-First Ratio
Sample Forecast
Sample Forecast Error
Sample Mean
Sample Mean Difference
Sample Standard Deviation
Sample Variance
Sampling Distribution of a Statistic
Sampling Error
Second Test Statistic
Semiannual Compounding
Serial Correlation
Shortfall Risk
Simple Random Sampling
Special Rule of Addition
Special Rule of Multiplication
Spurious Correlation
Standard Deviation
Standard Error of Estimate
Standard Error of the Mean Difference
Standard Error of the Sample Means
Standard Normal Distribution
Stratified Random Sampling
Survivorship Bias
Systematic Factors
Systematic Random Sampling
Test Statistic
Test Statistic for Test of Mean Differences
Time Series
Time Value of Money
Time-Period Bias
Total Probability Rule for Expected Values
Tracking Portfolio
Two-Tailed Test
Type I Error
Type II Error
Unconditional Heteroskedasticity
Unit Root
Univariate Distribution

Learning Module 6: Financial Statement Analysis

Successful Level I LIFA candidates will be able to define, describe, evaluate, and analyze the essentials of financial statement analysis. Candidates must have a thorough command of the following terms and concepts.

Topics to Master for Financial Statement Analysis

Accounting Periods
Accounts Receivable Ledger
Accrued Expenses
Accrued Revenues
Activity Ratios
Adjusting Entry
Annual Interest Payment
Average Cost Method
Average Inventory Processing Period
Bad Debts
Basic Earnings per Share
Book Value
Business Risk
Capital Expenditure
Capital Lease
Cash Basis Accounting
Cash Conversion Cycle
Cash Equivalents
Cash Flow Coverage Ratio
Cash Flow from Financing Activities
Cash Flow from Investing Activities
Cash Flow from Operating Activities
Cash Flow from Operations
Cash Flow/Long Term Debt Ratio
Cash Flow/Total Debt Ratio
Cash Ratio
Common Size Statements
Common Stock
Completed Contract
Complex Capital Structure
Comprehensive Income
Consistency Principle
Contingent Liabilities
Contributed Capital
Cost Recovery Method
Coupon Bonds
Cross Sectional Analysis
Current Assets
Current Liabilities
Current Ratio
Debt/Equity Ratio
Declining Balance
Deferred Income Tax Expense
Deferred Tax Asset
Deferred Tax Expense
Deferred Tax Liability
Depreciable Cost
Diluted Earnings per Share
Direct Method
Direct-Financing Lease
Discount Rate
Dividend in Arrears
Dupont Analysis
Earnings Coverage Ratios
Equity Turnover Ratio
Estimated Liability
Extended Dupont System
Extraordinary Items
Face Interest Rate
Face Value
Financial Flexibility
Financial Risk
Financing Activities
Fiscal Year
Free Cash Flow
General Ledger
Gross Profit Margin
Historical Cost
Income Tax Expense
Income Tax Paid
Indirect Method
Infrequent Gain or Loss
Installment Sales Method
Intangible Assets
Interest Coverage Ratio
Interim Financial Reports
Internal Liquidity Ratios
International Financial Reporting Standards (IFRS)
Inventory Turnover
Investing Activities
Issued Stock
Large Stock Dividend
Liability Method
LIFO Conformity Rule
LIFO Reserve
Liquidity Ratios
Long-Term Debt/Total Capital Ratio
Long-Term Investments
Long-Term Liabilities
Market Interest Rate
Market Liquidity
Matching Principle
Natural Resources
Net Fixed Asset Turnover
Net Income
Net Profit Margin
Operating Activities
Operating Efficiency Ratios (Activity Ratios)
Operating Lease
Operating Leverage
Operating Profit Margin
Operating Profitability Ratios
Ordinary Shares
Outstanding Stock
Owners' Equity
Pension Fund
Pension Plan
Plant Assets
Plant, Property, and Equipment
Preferred Stock
Prepaid Expense
Pretax Income
Price Earnings Ratio
Principal Payment
Prior Period Adjustments
Product Warranties
Profit and Loss
Profitability Ratios
Quality of Earnings
Quick Ratio
Receivables Collection Period Ratio
Receivables Turnover Ratio
Registered Bonds
Residual Value
Retained Earnings
Return on Owner’s Equity
Return on Total Capital
Revenue Expenditures
Revenue Recognition Principle
Reverse Stock Split
Risk Analysis
Sales Variability
Sales-Type Lease
Secured Bonds
Serial Bonds
Short-Term Investments
Short-Term Liquid Assets
Simple Capital Structure
Small Stock Dividend
Stock Dividend
Stock Split
Stockholders’ Equity
Straight-Line Method
Sum of the Years’ Digits
Sustainable Growth Potential
Sustainable/Potential Growth Rate
Tax Loss Carryforward
Taxable Income
Taxes Payable
Temporary Difference
Term Bonds
Time Period Principle
Time-Series Analysis
Timing Difference
Total Asset Turnover
Total Fixed Charge Coverage Ratio
Trading Turnover
Treasury Stock
Treasury Stock Methodology
Unearned Revenue
Unsecured Bonds
Unusual Gain or Loss
Useful Life
Valuation Allowance
Valuation Ratios
Weighted Average Cost Method
Zero Coupon Bond

Learning Module 7: Fixed-Income Investments

Successful Level I LIFA candidates will be able to identify define, describe, evaluate, and analyze the essentials of fixed-income investments. Candidates must have a thorough command of the following terms and concepts.

Topics to Master for Fixed-Income Investments

Absolute Yield Spread
Accelerated Sinking Fund Provision
Accrual Bonds
Accrued Interest
Affirmative Covenants
Amortizing Securities
Arbitrage-Free Valuation Approach
Asset-Backed Securities
Bond-Equivalent Yield
Bullet Maturity Structure
Call Risk
Callable Bonds
Callable Feature
Cap on Floating-Rate Bond
Cap Risk
Cash Flow Yield
Cash Management Bills
Changing Reserve Requirements
Clean Price
Collateral Trust Bonds
Collateralized Mortgage Obligations
Commercial Paper
Conversion Privilege
Convertible Bonds
Coupon Formula
Coupon Rate
Coupon Strips
Credit Analysis
Credit Enhancement
Credit Spread
Credit Spread Risk
Currently Callable Bonds
Dealer Paper
Default Loss Rate
Default Risk
Deferred Call
Deferred Coupon Bonds
Deleveraged Floater
Direct Paper
Dirty Price
Discount Rate
Dollar Default Rate
Dollar Denominated
Double-Barreled Security
Downgrade Risk
Dual-Currency Issues
Dual-Indexed Floaters
Effective Convexity
Effective Duration
Escrowed-to-Maturity Bonds
Exchange Rate Risk
Exchangeable Bond
Expectations Hypothesis
Face Value
First Call Date
Floor on a Floater
Foreign Bond
Forward Rate
Full Price
Full Valuation Approach
Fundamental Principle of Valuation
General Obligation Debt
General Redemption Prices
Global Bonds
Government Securities Dealers
Government Sponsored Enterprises
Hot Collateral
Index Amortizing Notes
Inflation Risk
Insured Bonds
Interdealer Brokers
Interest Rate Risk
Intermarket Sector Spread
Intramarket Spreads
Inverse Floaters
Issuer Default Rate
Issuer’s On-the-Run Yield Curve
Key Rate Duration Measure
Liquidity Preference Hypothesis
Liquidity Risk
Margin Buying
Market Bid-Ask Spread
Market Segmentation Hypothesis
Maturity Date
Maturity Value
Medium-Term Notes
Modified Convexity
Modified Duration
Money Market
Moral Obligation Bonds
Mortgage Bonds
Mortgage Passthrough Security
Mortgage-Backed Securities
Multiple Step-Up Notes
Municipal Securities
Municipal Strips
Negative Convexity
Negative Covenants
Negative Pledge Clause
Nominal Spread
Nonrefundable Bonds
Normal Yield Curve
Off-the-Run Issue
On-the-Run Issue
Open Market Operations
Option-Adjusted Duration
Option-Adjusted Yield Spread
Overnight Repos
Par Call Problem
Par Date
Par Value
Par Yield Curve
Prepayment Option
Prepayment Risk
Present Value
Price Compression
Price Value of a Basis Point
Principal Strips
Purchasing Power Risk
Put Option
Put Provision
Quality Spread
Quoted Margin
Ratchet Bonds
Rate Duration
Redemption Value
Regular Redemption Prices
Regulatory Risk
Reinvestment Risk
Relative Yield Spread
Repo Rate
Repurchase Agreement
Required Yield to Maturity Valuation Approach
Revenue Bonds
Reverse Floaters
Reverse Repo
Scenario Analysis
Securitizing the Mortgage
Serial Bonds
Sinking Fund Provision
Sovereign Debt
Special Collateral
Special Redemption Prices
Spot Interest Rate
Spot Yield Curve
Spread Products
Spread Sector
Static Spread
Stepped-Spread Floaters
Step-Up Notes
Stop Yield
Stress Testing
Structured Notes
Tax-Backed Debt
Tax-Exempt Securities
Technical Factors
Term Structure of Interest Rates
Term to Maturity
Treasury Bills
Treasury Bonds
Treasury Coupon Securities
Treasury Coupon Strips
Treasury Inflation Protection Securities
Treasury Notes
Treasury Principal Strips
Treasury Spot Rates
Treasury Strips
U.S. Treasury Bills
Unsecured Debt
Variable-Rate Securities
Voluntary Bankruptcy
Yield Curve
Yield Curve Risk
Yield Ratio
Yield Spread
Yield to First Call
Yield to First Par Call
Yield to Put
Yield to Worst
Zero Coupon Bonds
Zero-Volatility Spread

Learning Module 8: Equity Investments

Successful Level I LIFA candidates will be able to define, describe, evaluate, and analyze the essentials of equity investments. Candidates must have a thorough command of the following terms and concepts.

Topics to Master for Equity Investments

Bar Charts
Behavioral Biases
Breadth of Market
Company Analysis
Comparison of Estimated Values and Market Prices
Constant Growth Dividend Discount Model
Cyclical Changes
Differentiation Strategy
Dividend Discount Model
Earnings Multiplier Model
EBIT Estimate
Equity Indexes
Equity Securities
Estimate EBT
Exchange Rate Volatility
Expected Rate of Inflation
Financial Intermediaries
Fixed-Income Indexes
Fixed-Income Securities
Growth Company
Growth Rate
Growth Stock
Industry Analysis
Infinite Period Dividend Valuation Model
Long, Short, and Leveraged Positions
Low-Cost Strategy
Market Efficiency
Market Pricing Anomalies
Market Regulations
Multiple Indicator Charts
Point-and-Figure Charts
Pooled Investment Vehicles
Price/Book Value Ratio
Price/Cash Flow Ratio
Price/Sales Ratio
Primary and Secondary Markets
Real Assets
Real Risk-Free Rate
Rebalancing an Index
Required Return
Resistance Level
Risk Premium
Sector Rotation
Security Market Indexes
Short Interest
Specific Estimate Approach
Stock Selection
Stream of Expected Cash Flows
Structural Changes
Support Level
Top-Down Approach
Valuation Models
Weighting Methods Used in Index Construction

Learning Module 9: Derivative Instruments

Successful Level I LIFA candidates will be able to define, describe, evaluate, and analyze the essentials of derivatives. Candidates must have a thorough command of the following terms and concepts.

Topics to Master for Derivative Instruments

American Option
Anticipatory Hedging
Arbitrage Opportunity
Call Option
Complete Market
Contingent Claims
Covered Call
Credit Derivatives
Currency Swaps
Daily Settlement or Marking-to-Market
Deep in the Money
Deep out of the Money
Derivative Instrument
European Option
Exchange of Borrowings
Exercise Price
Exercise Value
Final Cash Flow
Financial Derivative
Fixed-for-Fixed Currency Swap
Forward Contracts
In the Money Options
In-Advance Swaps
Initial Margin
Initial Swap Cash Flow
Interest Rate Swaps
Intrinsic Value
Limit Order
Long Position
Maintenance Margin
Market Order
Net Interest Payments
No-Arbitrage Principle
Notional Principal
Offsetting Order
Open Interest
Option Premium
Option Writer
Options Clearing Corporation
Out of the Money Options
Over-the-Counter D
Paid in Arrears
Periodic Cash Flows
Portfolio Insurance
Price Discovery
Put Option
Short Position
Strike Price
Swap Buyer
Swap Facilitators
Swap Seller
Variation Margin
Zero-Sum Game

Learning Module 10: Alternative Investments

Successful Level I LIFA candidates will be able to define, describe, evaluate, and analyze the essentials of alternative investments. Candidates must have a thorough command of the following terms and concepts.

Topics to Master for Alternative Investments

12b-1 Plan
Capitalization Rate
Closed-End Investment Company
Commercial Properties
Common Stock Funds
Comparative Sales Approach
Contingent, Deferred Sales Loads
Cost Approach
Direct Capitalization
Equity REITs
Foreign Funds
Global Funds
Hedge Funds
Hybrid REITs
Income Approach
Income Property
International Funds
Investment Analysis
Investment Methods
Low-Load Funds
Management Fees
Market Value
Mortgage REITs
Natural Resources
Negative Leverage
Net Asset Value
Net Operating Income
No-Load Fund
Open-End Investment Companies
Performance Appraisal
Positive Leverage
Principle of Substitution
Private Capital
Property Management
Real Estate Appraisals
Real Estate Investment Trust
Residential Property
Speculative Property
Supply Analysis

Learning Module 11: Portfolio Management

Successful Level I LIFA candidates will be able to define, describe, evaluate, and analyze the essentials of portfolio management. Candidates must have a thorough command of the following terms and concepts.

Topics to Master for Portfolio Management

Arbitrage Pricing Theory
Artificial Intelligence
Asset Allocation
Behavioral Biases
Big Data
Business Risk
Capital Allocation Line (CAL)
Capital Appreciation
Capital Asset Pricing Model (CAPM)
Capital Market Line
Capital Market Theory
Capital Preservation
Characteristic Line
Correlation Coefficient
Country/Political Risk
Current Income
Defined Benefit Pension Plans
Defined Contribution Pension Plans
Distributed Ledger Technology
Efficient Frontier
Environmental, Social and Governance (ESG) Investing
Estimated Returns
Exchange Rate Risk
Expected Rate of Return
Financial Risk
Hedge Funds
Investment Constraints
Investment Policy Statement
Jensen's Alpha
Liquidity Risk
Machine Learning
Market Portfolio
Market Risk Premium
Money-Weighted Return
Mutual Funds
Nominal Risk-Free Rate
Nonsystematic Risk
Optimal Portfolio
Principles of Portfolio Construction
Real Risk-Free Rate
Required Rate of Return
Return Generating Models
Risk Analysis
Risk Aversion
Risk-Free Rate
Risk Modification
Security Market Line (SML)
Sharpe Ratio
Standard Deviation
Systematic Risk
Technical Analysis
Technical Analysis Charts and Patterns
Technical Indicators
Time-Weighted Rate of Return
Total Return
Treynor Ratio
Unrealized Capital Gains
Unsystematic Risk