Curriculum Errata Notice

2024 Level I CFA Program

UPDATED 14 JUNE 2024

This document outlines the errors submitted to CFA Institute that have been corrected.

Due to the nature of our publishing process, we may not be able to correct errors submitted after
1 September 2024 in time for the publication of the following year's print materials. However, we
update all errors in the Learning Ecosystem (LES) and in this document at the end of each
month.

We recommend checking either the LES or this document regularly for the most current
information. Depending on when you purchase the print materials, they may or may not have the
errors corrected.

All errors can be submitted via http://cfa.is/Errata

 2024 LEVEL I

Table of Contents
Contents
Quantitative Methods ...................................................................................................................................................................................................................................................................................4
Rates and Returns ........................................................................................................................................................................................................................................................................................................ 4
The Time Value of Money in Finance ........................................................................................................................................................................................................................................................................... 6
Statistical Measures of Asset Returns .......................................................................................................................................................................................................................................................................... 7
Portfolio Mathematics ................................................................................................................................................................................................................................................................................................. 8
Hypothesis Testing ....................................................................................................................................................................................................................................................................................................... 9
Parametric and Non-Parametric Tests of Independence .............................................................................................................................................................................................................................................. 9
Simple Linear Regression ........................................................................................................................................................................................................................................................................................... 10
Financial Statement Analysis........................................................................................................................................................................................................................................................................... 11
Analyzing Income Statements .................................................................................................................................................................................................................................................................................... 11
Economics ...................................................................................................................................................................................................................................................................................................... 12
Monetary Policy ......................................................................................................................................................................................................................................................................................................... 12
Economics ...................................................................................................................................................................................................................................................................................................... 12
Introduction to Geopolitics ........................................................................................................................................................................................................................................................................................ 12
Portfolio Management .................................................................................................................................................................................................................................................................................... 13
Portfolio Risk and Return: Part I ................................................................................................................................................................................................................................................................................. 13
Portfolio Risk and Return: Part II ................................................................................................................................................................................................................................................................................ 14
Working Capital and Liquidity .................................................................................................................................................................................................................................................................................... 14
Analyzing Balance Sheets........................................................................................................................................................................................................................................................................................... 15
Corporate Issuers ............................................................................................................................................................................................................................................................................................ 15
Capital Structure ........................................................................................................................................................................................................................................................................................................ 15
Working Capital and Liquidity .................................................................................................................................................................................................................................................................................... 16
Financial Statement Analysis........................................................................................................................................................................................................................................................................... 16
Analysis of Income Tax ............................................................................................................................................................................................................................................................................................... 16
Analyzing Statements of Cash Flows I ........................................................................................................................................................................................................................................................................ 16

2
 2024 LEVEL I

Analyzing Statements of Cash Flows II ....................................................................................................................................................................................................................................................................... 17

Analysis of Inventories ............................................................................................................................................................................................................................................................................................... 17
Financial Statement Modeling ................................................................................................................................................................................................................................................................................... 19
Equity Investments ......................................................................................................................................................................................................................................................................................... 19
Company Analysis: Past and Present ......................................................................................................................................................................................................................................................................... 20
Equity Valuation: Concepts and Basic Tools ............................................................................................................................................................................................................................................................... 21
Fixed Income .................................................................................................................................................................................................................................................................................................. 21
Yield and Yield Spread Measures for Fixed-Rate Bonds ............................................................................................................................................................................................................................................. 21
Yield and Yield Spread Measures for.......................................................................................................................................................................................................................................................................... 22
Floating-Rate Instruments ......................................................................................................................................................................................................................................................................................... 22
The Term Structure of Interest Rates: Spot, Par, and Forward Curves ....................................................................................................................................................................................................................... 24
Interest Rate Risk and Return .................................................................................................................................................................................................................................................................................... 25
Yield-Based Bond Duration Measures and Properties ............................................................................................................................................................................................................................................... 26
Yield-Based Bond Convexity and Portfolio Properties ................................................................................................................................................................................................................................................ 27
Curve-Based and Empirical Fixed-Income Risk Measures .......................................................................................................................................................................................................................................... 28
Credit Risk .................................................................................................................................................................................................................................................................................................................. 31
Mortgage-Backed Security (MBS) Instrument and Market Features.......................................................................................................................................................................................................................... 33
Derivatives ..................................................................................................................................................................................................................................................................................................... 33
Arbitrage, Replication, and the Cost of Carry in Pricing Derivatives........................................................................................................................................................................................................................... 33
Pricing and Valuation of Futures Contracts ................................................................................................................................................................................................................................................................ 34
Option Replication Using Put–Call Parity ................................................................................................................................................................................................................................................................... 35
Alternative Investments .................................................................................................................................................................................................................................................................................. 36
Alternative Investment Features, Methods, Structures ............................................................................................................................................................................................................................................. 36
Alternative Investment Performance and Returns ..................................................................................................................................................................................................................................................... 37
Ethical and Professional Standards ........................................................................................................................................................................................................................................................ 40
Guidance for Standards I-VII ...................................................................................................................................................................................................................................................................................... 40
Ethics Application ...................................................................................................................................................................................................................................................................................................... 40

3
 2024 LEVEL I

Quantitative Methods
Rates and Returns
Lesson Location PDF Pg Revised Correction
Rates Of Return Holding 9 31 Jan 2024 Replace: With:
Period For example, an analyst may need to compute a one-year holding For example, an analyst may need to compute a three-year
Return period return from three annual returns. In that case, the one- holding period return from three annual returns. In that case, the
year holding period return is computed by compounding the three-year holding period return is computed by compounding
three annual returns… the three annual returns…

Rates Of Return Equation 8 March Replace: With:

14 2024 (1+real return) = (1+real return) =
(1+ real risk-free rate)(1+ risk premium) / (1+ inflation premium) (1+real risk-free rate)(1+risk premium)

Rates Of Return Example 16 31 Jan 2024 The following paragraph should appear before the example: The harmonic mean only works for non-negative numbers, so
7 when working with returns that are expressed as positive or
negative percentages, we first convert the returns into a
compounding format, assuming a reinvestment, as (1 + R), as was
done in the geometric mean return calculation, and then
calculate (1 + harmonic mean), and subtract 1 to arrive at the
harmonic mean return.

Money- Example 23 8 March Replace the sum in the second calculation: With:
Weighted and 8, 2024 1.1471 1.1476
Time-Weighted Question
Return 4

Annualized 29 8 March Starting on page 29, the equation numbers do not match up with
Return 2024 the equation numbers referenced in the text. For example, on
page 29, the equation is labeled as equation “7” but the text
below it refers to it as “Equation 8.” Each subsequent reference
to an equation in the text should be one number less than written
for the rest of the learning module. For example, “Equation 9”
should be “Equation 8” and “Equation 10” should be “Equation
9.”

4
 2024 LEVEL I

Lesson Location PDF Pg Revised Correction

Other Major 33 31 Jan 2024 The first paragraph under Gross and Net Return should read: A gross return is the return on assets managed less any trading
Returns and expenses and commissions. Gross return is intended to reflect the
Their investment skill of the manager. Expenses including management
Applications fees, custody fees, and taxes are not included in the gross return
because they may be different for different investors. For
example, most asset managers provide lower management fee
rates to larger accounts. Excluding these expenses in gross
returns provides a basis for evaluation and comparison of
investment management skill.

Other Major Equation 34 8 March Fix the equation by removing the denominator: (1+inflation New equation should read:
Returns and 14 2024 premium)
Their
Applications

Practice Problem Problem 38 31 Jan 2024 The full question prompt for Practice Problem 1 should read as “The nominal risk-free rate is best described as the sum of the
1 follows: real risk-free rate and a premium for:”

5
 2024 LEVEL I

Quantitative Methods
The Time Value of Money in Finance
Lesson Location PDF Pg Revised Correction

Time Example 2, 51 8 March Replace: With:

Value of Question 1 2024
Money in PV = EUR100 PV = EUR100
Fixed = 2 + 2 + 2 + 2 + 2 + 2 + 2 = 2 + 2 + 2 + 2 + 2 + 2 + 102
Income 1.20 1.02 2 1.023 1.024 1.025 1.026 1.027. 1.20 1.02 2 1.023 1.024 1.025 1.026 1.027.
and Equity

Time Example 2, 51 31 Jan Question 2 should begin: Next, let’s assume that, exactly two years later, a sharp rise….
Value of Question 2 2024
Money in and _______________________________________ _______________________________________
Fixed Solution 2
Income The solution to Question 2 should read: 3.2876 percent
and Equity In this case, we must solve for r using Equation 6, with PV equal
to 93.09, as follows:

PV = 93.091 = 2/(1+r) + 2/(1+r)2 + 2/(1+r)3 + 2/(1+r)4 + 2/(1+r)5 +

102/(1+r)6.

Here we may use the Microsoft Excel or Google Sheets RATE

function (RATE (6,2,93.091,100,0,0.1)) to solve for r of 3.2876
percent. Investors in fixed coupon bonds face a capital loss when
investors expect a higher YTM.

Time Exhibit 6 58 31 Jan Within the exhibit, the bar representing the fifth year is incorrectly With:
Value of 2024 labeled. The exponent 4 should be 3, so replace this expression on top D(1+gs)3 (1+gl)2
Money in of the bar: D(1+gs)4 (1+gl)2
Fixed
Income
and Equity

6
 2024 LEVEL I

Lesson Location PDF Pg Revised Correction

Time Example 7, 59 31 Jan Replace: With:

Value of Question 2 2024 We may solve for D4 as GBP1.894 (=1.787 × 1.02 = D3(1 + gl)) and the We may solve for D4 as GBP1.823 (=1.787 × 1.02 = D3(1 + gl))
Money in second expression to be GBP9.22 as follows: and the second expression to be GBP9.22 as follows:
Fixed
Income
and Equity

Quantitative Methods
Statistical Measures of Asset Returns
Lesson Location PDF Pg Revised Correction

Measures Paragraph 91 31 Jan 2024 Replace: With:

of Central following The modal interval always has the highest bar in the histogram; in The modal interval always has the highest bar in the histogram; in
Tendency Exhibit 2 this case, the modal interval is 0.0 to 0.9 percent, and this interval this case, the modal interval is 0.0 to 1.0 percent, and this interval
and has 493 observations out of a total of 1,258 observations. has 555 observations out of a total of 1,258 observations.
Location

7
 2024 LEVEL I

Quantitative Methods
Portfolio Mathematics
Lesson Location PDF Pg Revised Correction

Measures Question 109 29 May Replace: Replace:

of Set – 2024 2. The fund with the mean absolute deviation (MAD) is Fund: 2. The fund with the highest mean absolute deviation (MAD) is
Dispersion Question 2 Fund:

Measures Interpreting 115 29 May Replace: Replace:

of Shape of Skewness 2024 2. Does the distribution displays kurtosis? Explain. 2. Does the distribution display kurtosis? Explain.
a and
Distribution Kurtosis –
Question 2

Portfolio Equation 2 153 31 Jan 2024 Replace: With:

Expected
Return and
Variance of
Return

Portfolio Equation 4 154 31 Jan 2024 Replace: With:

Expected
Return and
Variance of
Return

Portfolio Calculation 154 31 Jan 2024 Replace: With:

Expected under
Return and Equation 5
Variance of
Return

Portfolio Example 1, 157 31 Jan 2024 Replace: With:

Expected Solution 3 σ(Rp)= 99.721/2 σ(Rp)= 99.721/2 = 9.99%
Return and last line
Variance of
Return

8
 2024 LEVEL I

Quantitative Methods
Hypothesis Testing
Lesson Location PDF Pg Revised Correction
Tests of Exhibit 6 222 31 Jan 2024 Replace the text in “Step 4: State the decision rule.”: With:
Return and We reject the null hypothesis if the calculated χ2 statistic is We reject the null hypothesis if the calculated χ2 statistic is
Risk in less than 13.09051. greater than 13.09051.
Finance _______________________________________ _______________________________________

Replace the text in “Step 6: Make a decision.”: With:

Fail to reject the null hypothesis because the calculated χ 2 “Reject the null hypothesis because the calculated χ 2 statistic is
statistic is greater than the critical value. There is insufficient greater than the critical value. There is sufficient evidence to
evidence to indicate that the variance is less than 16% (or, indicate that the variance is less than 16% (or, equivalently, that
equivalently, that the standard deviation is less than 4%). the standard deviation is less than 4%).”

Tests of Example 230 30 May 2024 Replace: With:

Return and 3– Because 5.06 is not less than 3.325, we do not reject the null Because 5.06 is greater than 3.325, we reject the null hypothesis;
Risk in Solution 4 hypothesis; the calculated test statistic falls to the right of the the calculated test statistic falls to the right of the critical
Finance critical value, where the critical value separates the left-side value, where the critical value separates the left-side region from
rejection region from the region where we fail to reject. the region where we reject the null.

Parametric and Non-Parametric Tests of Independence

Lesson Location PDF Pg Revised Correction

Tests Question 251 31 Jan 2024 Replace: With:

Concerning Set, r s = 1 − 6(91(4840.)5 ) r s = 1 − 6(91(4840.)5 )
Correlation Practice = − 0.20416. = –0.20417.
Problem
2

9
 2024 LEVEL I

Lesson Location PDF Pg Revised Correction

Tests Question 251 31 Jan 2024 Replace: With:

Concerning Set,
Correlation Practice
Problem
3

Quantitative Methods
Simple Linear Regression
Lesson Location PDF Pg Revised Correction

Estimation of Exhibit 5 268 4 June Replace: With:

the Simple image 2024 Company C residual (error term) given in Exhibit 5 as e3 = Y3 - (b0 - Company C residual (error term) given in Exhibit 5 as e3 = Y3 - (b0
Linear b1 X3 ) + b 1 X3 )
Regression
Model Company E residual given as e5 = Y5 - (b0 - b1X5) Company E residual given as e5 = Y5 - (b0 + b1X5)

10
 2024 LEVEL I

Lesson Location PDF Pg Revised Correction

Hypothesis Equation 20 286 31 Jan 2024 Replace: With:

Tests in the
Simple Linear
Regression
Model

Hypothesis Exhibit 24 286 31 Jan 2024 Replace equation in Step 5: With:

Tests in the
Simple Linear
Regression
Model

Hypothesis Exhibit 24 286 31 Jan 2024 Replace text in Step 6: With:

Tests in the Reject the null hypothesis. There is sufficient evidence to indicate that Do not reject the null hypothesis. There is not sufficient
Simple Linear the intercept is greater than 3%. evidence to indicate that the intercept is greater than 3%.
Regression
Model

Hypothesis Test of 289 31 Jan 2024 Replace second sentence in third paragraph under the section: With:
Tests in the Hypotheses: The p-value corresponding to this test statistic is 0.016, which means The p-value corresponding to this test statistic is 0.016, which
Simple Linear Level of there is just a 0.16 percent chance of rejecting the null hypotheses means that, assuming the null hypothesis is true, there is a
Regression Significance when it is true. 1.6% chance of observing a test statistic as extreme as the one
Model and p- observed, or more extreme.
Values

Financial Statement Analysis

Analyzing Income Statements

11
 2024 LEVEL I

Lesson Location PDF Pg Revised Correction

Earnings per Example 10 433 30 May 2024 Replace: With:

Share – first 1. Assume the same facts as Example 7 except that on 1 1. Assume the same facts as Example 9 except that on 1
sentence December 2018, a previously declared 2-for-1 stock split took December 2018, a previously declared 2-for-1 stock split took
effect. effect.

Economics
Monetary Policy
Lesson Location PDF Pg Revised Correction

Interaction of Practice 485 31 Jan 2024 Replace answer options: With:

Monetary and Problem 7 accurately determine the neutral rate of interest. A. accurately determine the neutral rate of interest.
Fiscal Policy A. regulate the willingness of financial institutions to lend. B. regulate the willingness of financial institutions to lend.
B. control amounts that economic agents deposit into banks. C. control amounts that economic agents deposit into banks.

Economics
Introduction to Geopolitics

12
 2024 LEVEL I

PDF
Lesson Location Revised Correction
Pg
Geopolitical Exhibit 530 30 May Replace: With:
Risk and 14: Risk 2024 Pipeline Disruption Takes Several Quarters to Fix, Impacting the Pipeline Disruption Takes Several Quarters to Fix, Impacting the Energy Sector of Impacted
the Velocity Energy Sector of Impacting Countries Countries
Investment Low Velocity/Short-Term Impacts Low Velocity/Long-Term Impacts
Process

Portfolio Management
Portfolio Risk and Return: Part I
Lesson Location PDF Pg Revised Correction
Portfolio Example 28 8 March Replace formula under “The expected return of this portfolio is”: With:
Risk & 5 2024 Rp = w1 × R1 + (1 – w1) × R2 Rp = w1 × R1 + (1 – w1) × R2
Portfolio of = 0.6 × 0.055 + 0.4 × 0.07 = 0.6 × 0.055 + 0.4 × 0.007
Two Risky = 0.0358 ≈ 3.6%. = 0.0358 ≈ 3.6%.
Assets

13
 2024 LEVEL I

Portfolio Risk and Return: Part II

Lesson Location PDF Pg Revised Correction
Capital Example 89 31 Jan 2024 Replace the second calculation under Solution: With:
Asset Pricing 8 E(Ri) = Rf + βi[E(Rm) – Rf] E(Rp) = Rf + βp[E(Rm) – Rf]
Model: = 0.04 + 1.30 × (0.16 – 0.04) = 0.04 + 1.30 × (0.16 – 0.04)
Assumptions = 0.196 = 0.196
and the = 19.6% = 19.6%
Security
Market Line

Portfolio Management
Working Capital and Liquidity
Lesson Location PDF Pg Revised Correction
Cash Question 229 31 Jan 2024 Replace: With:
Conversion Set B is correct. The issuer that uses the vendor financing by delaying A is correct. The issuer that uses the vendor financing by delaying
Cycle payments is increasing its days payable outstanding and thus payments is increasing its days payable outstanding and thus
lengthening its cash conversion cycle. shortening its cash conversion cycle.

14
 2024 LEVEL I

Analyzing Balance Sheets

Lesson Location PDF Pg Revised Correction
Ratios Ratio 447 31 Jan 2024 Replace Solution to question 2: With:
and Analysis A, B, and C are correct. The cash ratio, quick ratio, and current ratio B and C are correct. The ratios are shown in the table below. The quick
Common- practice are lower in 2017 than in 2016. ratio and current ratio are lower in 2017 than in 2016. The cash ratio is
Size questions slightly higher in 2017 than in 2016.
Analysis ______________________ _____________________

Replace the Cash row in the solution table: With:

Corporate Issuers
Capital Structure
Lesson Location PDF Pg Revised Correction
Optimal Paragraph 323 4 March Replace: With:
Capital following 2024 However, as debt increases, the possible financial distress costs However, as debt increases, the present value of expected
Structure Exhibit 7 rise substantially and equal the tax benefit of debt at D*. Beyond financial distress costs begins to rise and offset the tax benefit
this point, greater leverage reduces firm value, the present value of debt, with the optimal amount of debt D* at the point at
of financial distress costs outweigh the tax benefit. which the marginal benefit of the tax shield equals the marginal
cost of expected financial distress. Beyond this point, greater
leverage reduces firm value, as the increased present value of
expected financial distress costs outweighs the marginal tax
benefit.

15
 2024 LEVEL I

Working Capital and Liquidity

Lesson Location PDF Pg Revised Correction
Cash Question 229 4 March Replace: With:
Conversion Set, 2024 B is correct. The issuer that uses the vendor financing by delaying A is correct. The issuer that uses the vendor financing by delaying
Cycle Solution 3 payments is increasing its days payable outstanding and thus payments is increasing its days payable outstanding and
lengthening its cash conversion cycle. The issuer is reducing its thus shortening its cash conversion cycle. The issuer is reducing
need for liquidity by taking advantage of the vendor financing at its need for liquidity by taking advantage of the vendor financing
the cost of the forgone discount. at the cost of the forgone discount.

Financial Statement Analysis

Analysis of Income Tax
Lesson Location PDF Pg Revised Correction

Deferred Tax First 10 12 June Replace: With:

Assets and paragraph 2024 Assume Pinto Construction (a hypothetical company) depreciates Pinto Construction receives advance payments from customers
Liabilities under equipment on a straight-line basis of 10 percent per year. The tax that are immediately taxable but these payments are not
Realizability authorities allow depreciation of 15 percent per year. At the end recognized as accounting income until Pinto Construction fulfills
of Deferred of the fiscal year, the carrying amount of the equipment for its obligations in later reporting periods.
Tax Assets accounting purposes would be greater than the tax base of the
equipment thus resulting in a temporary difference.

Analyzing Statements of Cash Flows I

16
 2024 LEVEL I

Lesson Location PDF Pg Revised Correction

Linkages Exhibit 4 490 8 March Replace table header: With:

between the 2024 Income Statement for year ended 31 December 20X1 Income Statement for year ended 31 December 20X2
Financial ______________________ ______________________
Statements
Replace table header: With:
Statement of Cash Flows for year ended 31 December 20X1 Statement of Cash Flows for year ended 31 December 20X2

Financial Statement Analysis

Analyzing Statements of Cash Flows II
Lesson Location PDF Pg Revised Correction

Ratios and Paragraph 525 8 March Replace: With:

Common-Size under 2024 The common-size statement in Exhibit 5 has been developed The common-size statement in Exhibit 5 has been developed
Analysis Exhibit 5 based on Acme’s cash flow statement using the indirect based on Acme’s cash flow statement using the indirect
method for operating cash flows and using net revenue (cash method for operating cash flows and using net revenue (cash
received from customers) for the company in 2018 of USD23,598 received from customers) for the company in 2018 of USD23,598
from Exhibit 3. from Exhibit 3.

Analysis of Inventories
Lesson Location PDF Pg Revised Correction

Practice Question 570 8 March Replace solution: With:

Problems 34 2024 B is correct. C is correct.
______________________ ______________________

Explanatory text should read: In a period of rising inventory costs, inventory valued using FIFO
would have relatively higher values compared to inventory valued
using LIFO. Thus, any mark downs of inventory values to NRV

17
 2024 LEVEL I

Lesson Location PDF Pg Revised Correction

would have the least impact on inventories valued using the LIFO
method as they are already conservatively valued.

18
 2024 LEVEL I

Financial Statement Analysis

Financial Statement Modeling
Lesson Location PDF Pg Revised Correction

Intro- Example 221 31 Jan 2024 Replace Solution to question 3: With:

duction to 8 The highest gross profit is projected by Analyst D. The highest gross profit is projected by Analyst C.
Financial
Statement
Modeling

19
 2024 LEVEL I

Equity Investments
Company Analysis: Past and Present
Lesson Location PDF Pg Revised Correction

Operating Example 3 – 460 4 June 2024 Replace: With:

Profitability Solution 4 C is correct. C is correct.
and Working Last 12 months’ sales: $7,688 Last 12 months’ sales: $7,688
Capital Last 12 months’ operating profit: $1,244 Last 12 months’ operating profit: $3,594
Analysis Low end of guidance Low end of guidance
Next 12 months’ sales: 156.360 × $62.50 = $9,773 Next 12 months’ sales: 156.360 × $62.50 = $9,773
Next 12 months’ operating profit: $9,773 – (156.360 × 17.34) – Next 12 months’ operating profit: $9,773 – (156.360 × 17.34) –
1,565 = 5,496 1,565 = 5,496
Degree of operating leverage: (5,496/1,244 – 1)/(9,773/7,688 – 1) Degree of operating leverage: (5,496/3,594 – 1)/(9,773/7,688 – 1)
= 1.95 = 1.95
High end of guidance High end of guidance
Next 12 months’ sales: 167.197 × $62.50 = $10,450 Next 12 months’ sales: 167.197 × $62.50 = $10,450
Next 12 months’ operating profit: $10,450 – (167.197 × 17.34) – Next 12 months’ operating profit: $10,450 – (167.197 × 17.34) –
1,565 = 5,986 1,565 = 5,986
Degree of operating leverage: (5,986/1,244 – 1)/(10,450/7,688 – Degree of operating leverage: (5,986/3,594 – 1)/(10,450/7,688 –
1) = 1.85 1) = 1.85

Practice Paragraph 474 31 Jan 2024 Replace the sentence before Practice Problem 1: With:
Problems intro text On average, NewShips’ commission, which it receives as a broker On average, NewShips’ commission, which it receives as a broker
from the customer, was 6% of the freight rate. from the customer, was 5% of the freight rate.

Practice Question 4 475 and 31 Jan 2024 Question should be disregarded as there is not sufficient
Problems 476 information about Net Profit to provide a complete answer.

20
 2024 LEVEL I

Equity Investments
Equity Valuation: Concepts and Basic Tools
Lesson Location PDF Pg Revised Correction

Method of Example 14 596 31 Jan 2024 Replace: With:

Comparables Thus, total revenues for Boeing are expected to be about a fifth Thus, total revenues for Boeing are expected to be about a fifth
and higher than those for Boeing. higher than those for Airbus.
Valuation
Based on
Price
Multiples

Fixed Income
Yield and Yield Spread Measures for Fixed-Rate Bonds
Lesson Location PDF Pg Revised Correction

Other Yield Question 171 31 Jan 2024 Replace the solution to question 4: With:
Measures, Set r = 0.0762 × 2 = 0.1512. r = 0.0762 × 2 = 0.1525.
Conventions, The yield-to-first call for the bond is 15.12%. The yield-to-first call for the bond is 15.25%.
and Accounting
for Embedded
Options

Yield Spread Example 177 8 March Replace the G-spread of: With:
Measures for 9, 2024 R = 0.0018662 x 2 = 0.00373. R = 0.002618 x 2 = 0.005235.
Fixed-Rate Solution
Bonds and 1 0.01271 – 0.00373 = 89 bps. Therefore, the G-spread is 0.01271 – 0.005235 = 75 bps.
Matrix Pricing

21
 2024 LEVEL I

Fixed Income
Yield and Yield Spread Measures for
Floating-Rate Instruments
Lesson Location PDF Pg Revised Correction

Yield Example 196 29 May 2024 Replace: With:

Measures 2 PV = 20,004,918 / (1 + 45/365 × 0.0006) . PV = 20,005,918 / (1 + 45/365 × 0.0006) .
for Money
Market
Instruments

Yield Example 197-198 31 Jan 2024 Replace the first equation and preceding text: With:
Measures 3 The price of the commercial paper is 98.560 per 100 of face value, The price of the commercial paper is 99.975 per 100 of face
for Money calculated using Equation 2 and entering FV = 100, Days = 90, Year = value, calculated using Equation 2 and entering FV = 100, Days =
Market 360, and DR = 0.0012. 90, Year = 360, and DR = 0.0010.
Instruments

Next, use Equation 5 to solve for AOR for a 365-day year, where Year = Next, use Equation 5 to solve for AOR for a 365-day year, where
365, Days = 90, FV = 100, and PV = 99.970. Year = 365, Days = 90, FV = 100, and PV = 99.975.

The 90-day commercial paper discount rate of 0.120% converts to an The 90-day commercial paper discount rate of 0.10% converts to
add-on rate for a 365-day year of 0.122%. an add-on rate for a 365-day year of 0.1014%.

22
 2024 LEVEL I

Lesson Location PDF Pg Revised Correction

Yield Practice 205 31 Jan 2024 Delete the first sentence:

Measures Problems, The estimated discount margin is 195 bps. The estimated discount margin is 195 bps.
for Money solution 1
Market Replace the calculation: With:
Instruments (MRR + QM ) × FV (− 0.0055 + 0.016 ) × 100 (MRR + QM ) × FV (−0.055+ 0.016 ) × 100
m = 4 = 0.275. m = 4 = 0.2625.

Yield Practice 204, 205- 31 Jan 2024 Replace the answer C: With:
Measures Problems, 206 0.28%. 0.56%.
for Money question
Market and Replace the solution: With:
Instruments solution 5 C is correct. The bond equivalent yield is closest to 0.28%. C is correct. The bond equivalent yield is closest to 0.56%.
The present value of the banker’s certificate of deposit is calculated The present value of the banker’s certificate of deposit is calculated
as follows: as follows:

23
 2024 LEVEL I

Fixed Income
The Term Structure of Interest Rates: Spot, Par, and
Forward Curves
Lesson Location PDF Pg Revised Correction

Maturity Example 1, 215 31 Jan 2024 Replace solution of: With:

Structure question 2 PV = 100.01 PV = 99.99
of
Interest
Rates and
Spot
Rates

Par and Example 2, 218 8 March Replace: With:

Forward Solution to 2024 100 = PMT + PMT + ⋯ + PMT + 100 . 100 = PMT + PMT + ⋯ + PMT + 100 .
Rates question 1 (1 + z 1 )1 (1 + z 2)2 (1 + z N)N (1 + z 1 )1 (1 + z 2)2 (1 + z N)N
100 = PMT + PMT + PMT + 100 .
100 = PMT + PMT + PMT + 100 .
(1 + 0.003117)1 (1 + 0.00568)2 (1 + 0.007977)3
(1 + 0.003117)1 (1 + 0.568)2 (1 + 0.7977)3
We can factor out PMT and then solve for it:
We can factor out PMT and then solve for it:
100 = PMT x ( 1 + 1 + 1 )+ 100 .
100 = PMT x ( 1 + 1 + 1 )+ 100 .
(1 + 0.003117)1 (1 + 0.00568)2 (1 + 0.007977)3 (1 + 0.007977)3
(1 + 0.003117)1 (1 + 0.568)2 (1 + 0.7977)3 (1 + 0.7977)3
PMT = 0.7952.
PMT = 0.7952.

Par and Example 3, 220 31 Jan 2024 Replace: With:

Forward Solution Therefore, A = 1, B = 3, ZA is the two-year spot rate, and ZB is the Therefore, A = 2, B = 3, ZA is the two-year spot rate, and ZB is the three-
Rates three-year spot rate: year spot rate:

24
 2024 LEVEL I

Lesson Location PDF Pg Revised Correction

Par and Example 3. 220 31 Jan 2024 Replace second from last equation: With:
Forward Solution (1 + 0.00568)2 × (1 + IFR2,1)1 = (1 + 0.007977)3 (1+0.0188) x (1+0.0277)=(1+Z2)2
Rates

Fixed Income
Interest Rate Risk and Return
Lesson Location PDF Pg Revised Correction

Macaulay Equation 254 8 March There is a missing bracket in the denominator of the second term, With:
Duration 3 2024 after subtracting 1. Replace:

Practice Solutions, 258 31 Jan 2024 Replace: With:

Problems solution 2 A is correct. The future value of reinvested coupon interest is A is correct. The future value of reinvested coupon interest is
= FV(0.054,6,6.4,0,0) = 46.245. = FV(0.074,6,6.4,0,0) = 46.245.

25
 2024 LEVEL I

Fixed Income
Yield-Based Bond Duration Measures and Properties
Lesson Location PDF Pg Revised Correction
Introduction Learning 265 8 March Replace two instances in calculation that says “308” with “380”: With:
Module Self 2024 C is correct. The money duration is 380: C is correct. The money duration is 380:
Assessment, MoneyDur = 308. MoneyDur = 380.
Solution to ΔPVFull ≈ −308 × 0.005. ΔPVFull ≈ −380 × 0.005.
3

Modified Example 1 269 31 Jan 2024 Replace row in first table: With:
Duration Maturity 15 Oct. 2035 Maturity 15 Oct. 2030
_____________________________ _____________________________

Replace row in third table: With:

Settlement date 15 Oct. 2025 Settlement date 11 Dec. 2025
Maturity 15 Oct. 2035 Maturity 15 Oct. 2030

Properties Following 284 8 March There is a missing bracket in the denominator of the second term, With:
of Duration first 2024 after subtracting 1. Replace:
paragraph

Properties Question 287 31 Jan 2024 Replace last cell in “Second bond” column: With:
of Duration Set,
solution to 4% coupon, paid semiannually, and five years to maturity, priced 4% coupon, paid semiannually, and five years to maturity, priced
1 to yield 4% to yield 8%

26
 2024 LEVEL I

Fixed Income
Yield-Based Bond Convexity and Portfolio Properties
Lesson Location PDF Pg Revised Correction

Bond Risk Question 306-307 31 Jan 2024 Replace Question Set introductory text: With:
and Set An investor purchases a €10 million semi-annual 3.75% coupon bond An investor purchases a €10 million semi-annual 2.95% coupon bond
Return with a yield-to-maturity of 2.95%, settling 30 June 2025 and with a yield-to-maturity of 2.95%, settling 30 June 2025 and
Using maturing 30 June 2032. maturing 30 June 2032.
Duration _____________________________ _____________________________
and
Convexity Replace Solution to 4: With:
PVFull = PRICE(DATE(2025,6,30),DATE(2032,6,30),0.0295,0.0345,100,2,0) PVFull = PRICE(DATE(2025,6,30),DATE(2032,6,30),0.0246,0.0345,100,2,0)
= 103.198. = 103.1333.
The actual increase in the bond price is 3.1984%: The actual increase in the bond price is 3.1333%:
ΔPVFull = 3.1984% × $10,000,000 = EUR319,840. ΔPVFull = 3.1333% × $10,000,000 = EUR313,330.
The difference between the actual and the estimated price change is The difference between the actual and the estimated price change is
EUR73 (= 319,840 – 319,767). EUR6,437 (= 313,330 – 319,767).

Practice Question 312 31 Jan 2024 Replace text in question: With:

Problems 2
A bond pays a semiannual fixed coupon of 4.75%. A bond pays a semiannual fixed coupon of 4.70%.

Practice Solution 315 31 Jan 2024 Replace last sentence of solution text: With:
Problems to 8 All else equal, the portfolio should outperform the lower-duration All else equal, the portfolio should outperform the lower-convexity
benchmark portfolio in both rising and falling interest rate benchmark portfolio in both rising and falling interest rate
environments. environments.

27
 2024 LEVEL I

Fixed Income
Curve-Based and Empirical Fixed-Income Risk Measures
Lesson Location PDF Pg Revised Correction
Curve- Example 1 324 5 June 2024 Replace: With:
Based
Interest
Rate Risk
Measures

Curve- Question 325 5 June 2024 Replace: With:

Based Set –
Interest Solution 2
Rate Risk
Measures

28
 2024 LEVEL I

Lesson Location PDF Pg Revised Correction

Curve- Question 326 5 June 2024 Replace: With:
Based Set –
Interest Solution 4
Rate Risk
Measures

Key Rate Exhibit 5 331 8 March Replace: With:

Duration 2024 Assume the portfolio is weighted by the prices of the respective 2-, Assume the portfolio is weighted by the prices of the respective 2-,
as a 5-, and 10-year bonds for a total portfolio value of $293 million, or $1 5-, and 10-year bonds for a total portfolio value of $277 million, or $1
Measure million × (99.50 + 98.31 + 95.43). The portfolio’s modified duration is million × (99.006 + 93.96 + 81.01). The portfolio’s modified duration is
of Yield calculated as calculated as
Curve
Risk 5.345 = [1.991 × (99.5/293.2)] + [4.869 × (98.3/293.2)] + [9.333 × 5.368 = [1.990 x (99.006/277)] + [4.938 x 93.96/277)] + [9.828 x
(95.4/293.2)]. (84.01/277)]

Alternatively, we could calculate each key rate duration by maturity. Alternatively, we could calculate each key rate duration by maturity.
For example, the two-year key rate duration (KeyRateDur2) is For example, the two-year key rate duration (KeyRateDur2) is

0.676 = 1.991 × (99.5/293.2). 0.711 = 1.990 x (99.006/277).

Note that the three key rate duration values sum to the portfolio Note that the three key rate duration values sum to the portfolio
duration value of 5.345. duration value of 5.368.

29
 2024 LEVEL I

Lesson Location PDF Pg Revised Correction

Curve- Example 1 324 8 March Replace: With:
Based 2024 EffDur = (P V− ) − (P V + ) . EffDur = (P V− ) − (P V + ) .
Interest 2 × (ΔCurve) × (P V 0) 2 × (ΔCurve) × (P V 0)
Rate Risk
Measures EffDur = (102.891) − (99.050) . EffDur = (102.891) − (99.050) .
2 × (0.00025) × (101.060) 2 × (0.0025) × (101.060)

EffDur = 7.601. EffDur = 7.601.

EffCon = [(P V− ) + (P V+) – 2 x (PV0)] . EffCon = [(P V− ) + (P V+) – 2 x (PV0)] .

(ΔCurve)2 × (P V 0) (ΔCurve)2 × (P V 0)

EffCon = [(102.891) + (99.050) – [2 x (101.060)] . EffCon = [(102.891) + (99.050) – [2 x (101.060)] .

(0.00025)2 × (101.060) (0.0025)2 × (101.060)

Curve- Example 1, 325 8 March Replace: With:

Based Solution to 2024 EffDur = (P V − ) − (P V + ) . EffDur = (P V − ) − (P V + ) .
Interest question 2 2 × (ΔCurve) × (P V 0 ) 2 × (ΔCurve) × (P V 0 )
Rate Risk
Measures EffDur = (103.891) − (100.004) . EffDur = (103.891) − (100.004) .
2 × (0.00025) × (102.208) 2 × (0.0025) × (102.208)
EffDur = 76.061. EffDur = 7.6061.

Curve- Example 1, 326 8 March Replace: With:

Based Solution to 2024 EffDur = (P V − ) + (P V + ) – [2x (PV0)] . EffDur = (P V − ) + (P V + ) – [2x (PV0)] .
Interest question 4 (ΔCurve)2 × (PV0 ) (ΔCurve)2 × (PV0 )
Rate Risk
Measures EffDur = [(103.891) + (98.504)] – [2 x (102.208)]. EffDur = [(103.891) + (98.504)] – [2 x (102.208)].
(0.00025)2 × (102.208) (0.0025)2 × (102.208)
EffDur = –3,164. EffDur = –3,164.

30
 2024 LEVEL I

Fixed Income
Credit Risk
Lesson Location PDF Pg Revised Correction

Introduction Learning 342 8 March Replace question: With:

Module Self 2024 A EUR500,000 loan has the following characteristics: A EUR500,000 loan has the following characteristics:
Assessment,
Question • Probability of default 5% • Probability of default 5%
and • Collateral EUR100,000 • Collateral EUR100,000
Solution2 • Recovery rate 90% • Recovery rate 90%
• Expected exposure EUR400,000 • Expected exposure EUR400,000

The expected loss for this loan in event of default is: The expected loss for this loan in event of default is:
A. EUR1,500 A. EUR1,500
B. EUR2,000 B. EUR2,000
_____________________________ _____________________________

Replace solution: With:

The correct answer is A. We solve for expected loss (EL) as The correct answer is B. We solve for expected loss (EL) as
follows: follows:
EL = POD × (EE – Collateral) × (1 – RR).
EL= POD × LGD = POD × EE × (1 – RR).
Since probability of default (POD) is 5%, expected exposure (EE)
is EUR400,000, collateral is EUR100,000, and the recovery rate
Since probability of default (POD) is 5%, expected exposure (EE) is
(RR) is 90%:
EUR400,000, collateral is EUR100,000, and the recovery rate (RR)
EL = EUR1,500 = 0.05 × (400,000 – 100,000) × (1 – 0.9). is 90%:
B is incorrect as it fails to reduce the expected exposure by the
collateral, while C is incorrect as it simply multiplies EE and POD. EL = EUR2,000 = 0.05 × (400,000-100,000 ) × (1 – 0.9)

31
 2024 LEVEL I

Lesson Location PDF Pg Revised Correction

Factors Question 373 31 Jan 2024 Replace option C in question: With:

Impacting Set, C. 54 bps. C. 0.54 bps
Yield question _____________________________ _____________________________
Spreads and solution
2 Replace solution: With:
Bid yield: 93.75 = 100 / (1 + r) 5 Bid yield: 93.75 = 100 / (1 + r) 5
rbid = 1.2937% rbid = 1.2991%
Offer yield: 93.75 = 100 / (1 + r) 5 Offer yield: 93.7755 = 100 / (1 + r) 5
roffer = 1.2991% roffer = 1.2937%

The liquidity spread of 54 bps (0.0054%) is equal to the difference The liquidity spread of 0.54 bps (0.0054%) is equal to the
in the bid yield and the offer yield (= 1.2991% − 1.2937%). difference in the bid yield and the offer yield (= 1.2991% −
1.2937%).

Practice Solutions, 375 31 Jan 2024 Replace: With:

Problems solution to ΔSpread =-0.015 = -1.5%. ΔSpread = -0.0135 = -1.35%
6
Lower spreads make the first expression in the equation positive, Lower spreads make the first expression in the equation positive,
along with the equation’s second convexity-based term. The along with the equation’s second convexity-based term. The
answer must therefore involve a decline in spreads as in answers A answer must therefore involve a decline in spreads as in answers
and B. However, B is incorrect since it fails to rescale convexity. A. and B. However, B is incorrect since it fails to rescale convexity.

32
 2024 LEVEL I

Fixed Income
Mortgage-Backed Security (MBS) Instrument and
Market Features

Lesson Location PDF Pg Revised Correction

Practice Practice 524 31 Jan 2024 Practice Problems 7 and 8 should be together one question.
Problems Problem The solution to this Practice Problem appears as the solution to 7,
7–8 and the subsequent solutions are all off one number: (Solution to 8
in print is actually the solution to Practice Problem 9, solution to 9 is
actually the solution to Practice Problem 10, etc.)

Derivatives
Arbitrage, Replication, and the Cost of Carry in Pricing
Derivatives
Lesson Location PDF Pg Revised Correction

Costs and Example 90 31 Jan 2024 Replace the formula: With:

Benefits 6
Associated
with
Owning the
Underlying

33
 2024 LEVEL I

Lesson Location PDF Pg Revised Correction

Costs and Question 93 8 March Replace: With:

Benefits Set, 2024 B is correct. The FX forward rate is greater than the spot rate if the B is correct. The FX forward rate is greater than the spot rate if the
Associated Question domestic risk-free rate is greater than the foreign risk-free rate. foreign risk-free rate is greater than the domestic risk-free rate.
with #2
Owning the
Underlying

Derivatives
Pricing and Valuation of Futures Contracts
Lesson Location PDF Pg Revised Correction

Pricing Solution 110-111 8 March Replace all references to “gain” in the answer with “loss” An immediate appreciation in the ZAR/EUR spot price after contract
and 5 2024 inception will result in an MTM loss from Rook Point’s perspective as
Valuation the forward seller of ZAR/EUR.
of The FX forward MTM from Rook Point’s perspective equals the
Interest present value of the forward price discounted at the interest rate
Rate differential between the foreign currency and the domestic currency
Forward minus the spot price:
Contracts V0(T) = F0,f/d (T) e-(r f –r d )T − S0,f/d
Note that ZAR is the price, or foreign, currency and EUR is the base,
or domestic, currency, so we can rewrite the equation as:
V0(T) = F0,ZAR/EUR (T) e-(r ZAR–r EUR)T − S0,ZAR/EUR
If the ZAR price (S0,ZAR/EUR) appreciates from 16.909 to 16.5, we
can show that Rook Point would have a 0.4090 loss, as follows:
Vt (T) = 17.2506e-(0.035 – -0.005)×(0.5) − 16.5
= 16.909 − 16.5
= 0.4090

34
 2024 LEVEL I

Lesson Location PDF Pg Revised Correction

Pricing Example 131 31 Jan 2024 In the last two calculations, remove the negative sign from the With:
Futures 2 exponent to replace: PV0(C) = $1.99 = [$2(1.02)0.24982].
of and
Contracts f0(T) = ($1,770.00 + $1.99)(1.02)0.24982
at and = $1,780.78 per ounce.
Inception

Derivatives
Option Replication Using Put–Call Parity
Lesson Location PDF Pg Revised Correction

Put-Call Exhibit 3 199 8 March Replace: With:

Parity 2024

35
 2024 LEVEL I

Derivatives
Valuing a Derivative Using a One-Period Binomial Model
Lesson Location PDF Pg Revised Correction

Pricing a Equation 224 31 Jan 2024 Replace: With:

European 8 V1 = €12 = €11.43 V1 = €12 = €11.43 (1 + 0.5)
Call
Option

Alternative Investments
Alternative Investment Features, Methods, Structures
Lesson Location PDF Pg Revised Correction

Practice Solution 268 Jan 2024 Replace: With:

Problems to 6 A. 2 is correct. In alternative fund investing, the fund manager A. 3 is correct. The returns generated by fund investments
pays the net return (gross return less management fees) to are gross returns. From these, management deducts its
investors. fees, paying the remainder (net fees) to fund investors.
B. 3 is correct. The returns generated by fund investments are B. 2 is correct. In alternative fund investing, the fund
gross returns. From these, management deducts its fees, manager pays the net return (gross return less
paying the remainder (net fees) to fund investors. management fees) to investors.
C. 1 is correct. Management fees and performance fees are C. 1 is correct. Management fees and performance fees are
how alternative fund managers are compensated for how alternative fund managers are compensated for
managing the fund and its investments. managing the fund and its investments.

36
 2024 LEVEL I

Alternative Investments
Alternative Investment Performance and Returns
Lesson Location PDF Pg Revised Correction

Alternative Example 283 31 Jan 2024 Replace: With:

Investment 4, In the second year, Kettleside fund value declines to $110 million. In the second year, Kettleside fund value declines to $110 million.
Returns Question The fee structure is as specified in Question 1 but also includes the The fee structure is as specified in Question 1 of Example 3 but also
2 use of a high-water mark (PHWM) computed net of fees. includes the use of a high-water mark (PHWM) computed net of
fees.

Alternative Example 283-284 8 March Replace solution: With:

Investment 4, 2024 We must again alter Equation 4 to include the high-water mark We must again alter Equation 4 to include the high-water mark
Returns Question (PHWM) provision, as follows: (PHWM) provision, as follows:
2
RGP(Net with High-Water Mark) = (P2 x rm) + max[0, (P2– PHWM] x p} RGP(Net with High-Water Mark) = (P2 x rm) + max {0,P2(1-rm) – PHWM] x p]

where PHWM is defined as the maximum fund value at the end of any
where PHWM is defined as the maximum fund value at the end of any
previous period net of fees. We may solve for investor return ri in
previous period net of fees. We may solve for investor return ri in Period 2 as follows:
Period 2 as follows:

ri = (P2 – P1 – RGP)/P1, ri = (P2 – P1 – RGP)/P1,

RGP(Net with High-Water Mark) RGP(Net with High-Water Mark)

= $110 million × 1% + max[0, ($110 million – $122.7 million) × 20%] = $110 million x 1% + max[0,[$110 x 0.99 - $124.16] x 20%]

= $1.1 million. = $1.1 million.

ri = ($110 million – $122.7 million – $1.1 million)/$122.7 million ri = ($110 million - $124.16 million - $1.1 million)/$124.16 million

= –11.247%. = –12.291%

The beginning capital position in the second year for the investors is The beginning capital position in the second year for the investors
$130 million − $7.3 million = $122.7 million. The ending capital is $130 million − $5.84 million = $124.16 million. The ending capital
position at the end of the second year is $110 million − $1.1 million = position at the end of the second year is $110 million − $1.1 million =
$108.9 million. $108.9 million.

37
 2024 LEVEL I

Lesson Location PDF Pg Revised Correction

Alternative Example 284 8 March Replace the Solution: With:

Investment 4, 2024 We amend Equations 8 and 9 to reflect returns for the third period We amend Equations 8 and 9 to reflect returns for the third period
Returns Question and calculate as follows: and calculate as follows:
3
RGP(High-Water Mark) = (P3 × rm) + max[0, (P3 – PHWM) × p]. RGP(Net with High-Water Mark) = (P3 x rm) + max [0,P3(1-rm) – PHWM) x p]

ri = (P3 – P2 – RGP)/P2. ri = (P3 – P2 – RGP)/P2.

Note that the high-water mark, PHWM, is the highest value of the Note that the high-water mark, PHWM, is the highest value of the
fund after fees in all previous years. In Kettleside’s case, it was fund after fees in all previous years. In Kettleside’s case, it was
$122.7 million, the ending value in the first year, P1. $122.7 million, the ending value in the first year, P1.

RGP(High-Water Mark) RGP(High-Water Mark)

= $128 million × 1% + max[0, ($128 million – $122.7 million) × 20%] = $128 million × 1% + max[0, ($128 x 0.99 – $124.16) × 20%]

= $2.34 million. = $1.792 million.

ri = ($128 million – $108.9 million – $2.34 million)/$108.9 million ri = ($128 million – $108.9 million – $1.792 million)/$108.9 million

= 15.39%. = 15.89%.

The beginning capital position in the third year for the investors is The beginning capital position in the third year for the investors is
$110 million − $1.1 million = $108.9 million. The ending capital $110 million − $1.1 million = $108.9 million. The ending capital
position for the third year is $128 million – $2.34 million = $125.66 position for the third year is $128 million – $1.792 million =
million, which represents a new high-water mark to be applied the $126.208 million, which represents a new high-water mark to be
following year for this investor. applied the following year for this investor.

38
 2024 LEVEL I

Alternative Investments
Investments in Private Capital: Equity and Debt
Lesson Location PDF Pg Revised Correction

Diversification Solution 324 8 March The Solution to Practice Problem 7 on page 324 should be changed C is correct. Private capital can have overall positive contributions
Benefits of 7 2024 to: to diversification. Note, however, that direct lending can involve a
Private large capital commitment to a single borrower, with increased
Capital concentration risk and reduced diversification.

Real Estate and Infrastructure

Lesson Location PDF Pg Revised Correction

Infrastructure Practice 351 31 Jan 2024 Replace: With:

Investment Problems Akasaka Investment Company established a portfolio of Akasaka Investment Company established a portfolio of warehouse
Characteristics warehouse properties with a total market value of THB3.60 billion. properties with a total market value of THB3.60 billion. It secured
It secured mortgage financing of THB2.61 billion. The terms of the mortgage financing of THB2.61 billion. The terms of the mortgage
mortgage required Akasaka to maintain a loan-to-value ratio of required Akasaka to maintain a loan-to-value ratio of 0.725.
0.725.

After 18 months, the portfolio value had dropped to THB2.23 After 18 months, the portfolio value had dropped to THB3.23 billion
billion and the mortgage liability was THB2.35 billion. and the mortgage liability was THB2.35 billion.

39
 2024 LEVEL I

Ethical and Professional Standards

Guidance for Standards I-VII
Lesson Location PDF Pg Revised Correction

Standard Text under 323 31 Jan 2024 Part of the print page is not appearing. The full paragraph is as Members and candidates should be aware of their firm’s policies
IV(A): Incident- follows: related to whistleblowing and encourage their firm to adopt
Recommended Reporting industry best practices in this area. Many firms are required by
Procedures Procedures regulatory mandates to establish confidential and anonymous
reporting procedures that allow employees to report potentially
unethical and illegal activities in the firm.

Ethics Application
Lesson Location PDF Pg Revised Correction

Responsibilities Conduct as 460 31 Jan 2024 Replace under Analysis: With:

as a CFA Participants B is correct. C is correct.
Institute in CFA
Member or Institute
CFA Candidate Programs

40