Schweser Notes CFA Level I Book 1 Quantitative Methods and Economics

Book 1: Quantitative Methods and Economics
Learning Outcome Statements (LOS)
Reading 1 The Time Value of Money
	Exam Focus
	Module 1.1: EAY and Compounding Frequency
		Using a Financial Calculator
		Time Lines
	Module 1.2: Calculating PV and FV
		Future Value of a Single Sum
		Present Value of a Single Sum
		Annuities
		Future Value of an Annuity Due
		Present Value of an Annuity Due
		Present Value of a Perpetuity
	Module 1.3: Uneven Cash Flows
		Funding a Future Obligation
		The Connection Between Present Values, Future Values, and Series of Cash Flows
	Module 1.4: Compounding Frequencies
	Key Concepts
		LOS 1.a
		LOS 1.b
		LOS 1.c
		LOS 1.d
		LOS 1.e
		LOS 1.f
	Answer Key for Module Quizzes
Reading 2 Organizing, Visualizing, and Describing Data
	Exam Focus
	Module 2.1: Organizing Data
		Numerical and Categorical Data
		Time Series and Cross-Sectional Data
		Structured and Unstructured Data
	Module 2.2: Visualizing Data
	Module 2.3: Measures of Central Tendency
	Module 2.4: Measures of Location and Dispersion
	Module 2.5: Skewness, Kurtosis, and Correlation
	Key Concepts
		LOS 2.a
		LOS 2.b
		LOS 2.c
		LOS 2.d
		LOS 2.e
		LOS 2.f
		LOS 2.g
		LOS 2.h
		LOS 2.i
		LOS 2.j
		LOS 2.k
		LOS 2.l
		LOS 2.m
		LOS 2.n
	Answer Key for Module Quizzes
Reading 3 Probability Concepts
	Exam Focus
	Module 3.1: Conditional and Joint Probabilities
		Calculating the Probability That at Least One of Two Events Will Occur
		Calculating a Joint Probability of Any Number of Independent Events
	Module 3.2: Conditional Expectations and Expected Value
	Module 3.3: Portfolio Variance, Bayes, and Counting Problems
		Correlation
	Key Concepts
		LOS 3.a
		LOS 3.b
		LOS 3.c
		LOS 3.d
		LOS 3.e
		LOS 3.f
		LOS 3.g
		LOS 3.h
		LOS 3.i
		LOS 3.j
		LOS 3.k
		LOS 3.l
		LOS 3.m
		LOS 3.n
	Answers to Module Quiz Questions
Reading 4 Common Probability Distributions
	Exam Focus
	Module 4.1: Uniform and Binomial Distributions
		Expected Value and Variance of a Binomial Random Variable
	Module 4.2: Normal Distributions
		The Role of Correlation in the Multivariate Normal Distribution
	Module 4.3: Lognormal, T, Chi-Square, and F Distributions
	Key Concepts
		LOS 4.a
		LOS 4.b
		LOS 4.c
		LOS 4.d
		LOS 4.e
		LOS 4.f
		LOS 4.g
		LOS 4.h
		LOS 4.i
		LOS 4.j
		LOS 4.k
		LOS 4.l
		LOS 4.m
		LOS 4.n
		LOS 4.o
		LOS 4.p
	Answer Key for Module Quizzes
Reading 5 Sampling and Estimation
	Exam Focus
	Module 5.1: Sampling Methods, Central Limit Theorem, and Standard Error
		Probability Sampling Methods
		Non-Probability Sampling Methods
	Module 5.2: Confidence Intervals, Resampling, and Sampling Biases
		Confidence Intervals for the Population Mean: Normal With Unknown Variance
		Confidence Interval for a Population Mean When the Population Variance Is Unknown, Given a Large Sample From Any Type of Distribution
	Key Concepts
		LOS 5.a
		LOS 5.b
		LOS 5.c
		LOS 5.d
		LOS 5.e
		LOS 5.f
		LOS 5.g
		LOS 5.h
		LOS 5.i
		LOS 5.j
	Answer Key for Module Quizzes
Reading 6 Hypothesis Testing
	Exam Focus
	Module 6.1: Hypothesis Tests and Types of Errors
		The Null Hypothesis and Alternative Hypothesis
		The Choice of the Null and Alternative Hypotheses
		Type I and Type II Errors
		The Power of a Test
		The Relation Between Confidence Intervals and Hypothesis Tests
		Whether a Statistically Significant Result is Also Economically Meaningful
	Module 6.2: p-Values and Tests of Means
		The t-Test
		The z-Test
	Module 6.3: Mean Differences and Difference in Means
	Module 6.4: Tests of Variance, Correlation, and Independence
		Testing the Equality of the Variances of Two Normally Distributed Populations, Based on Two Independent Random Samples
	Key Concepts
		LOS 6.a
		LOS 6.b
		LOS 6.c
		LOS 6.d
		LOS 6.e
		LOS 6.f
		LOS 6.g
		LOS 6.h
		LOS 6.i
		LOS 6.j
		LOS 6.k
		LOS 6.l
		LOS 6.m
	Answer Key for Module Quizzes
Reading 7 Introduction to Linear Regression
	Exam Focus
	Module 7.1: Linear Regression: Introduction
		Simple Linear Regression Model
		Interpreting a Regression Coefficient
			Linear Relationship
			Homoskedasticity
			Independence
			Normality
	Module 7.2: Goodness of Fit and Hypothesis Tests
		Standard Error of Estimate (SEE)
		Coefficient of Determination (R2)
		The F-Statistic
	Module 7.3: Predicting Dependent Variables and Functional Forms
		Confidence Intervals for Predicted Values
		Log-Lin Model
		Lin-Log Model
		Log-Log Model
		Selection of Functional Form
	Key Concepts
		LOS 7.a
		LOS 7.b
		LOS 7.c
		LOS 7.d, e
		LOS 7.f
		LOS 7.g
		LOS 7.h
	Answer Key for Module Quizzes
	Topic Quiz: Quantitative Methods
Reading 8 Topics in Demand and Supply Analysis
	Exam Focus
	Module 8.1: Elasticity
		Own-Price Elasticity of Demand
		Income Elasticity of Demand
		Cross-Price Elasticity of Demand
		Calculating Elasticities
	Module 8.2: Demand and Supply
		Shutdown and Breakeven Under Perfect Competition
		Shutdown and Breakeven Under Imperfect Competition
	Key Concepts
		LOS 8.a
		LOS 8.b
		LOS 8.c
		LOS 8.d
		LOS 8.e
		LOS 8.f
	Answer Key for Module Quizzes
Reading 9 The Firm and Market Structures
	Exam Focus
	Module 9.1: Perfect Competition
		Changes in Demand, Entry and Exit, and Changes in Plant Size
	Module 9.2: Monopolistic Competition
	Module 9.3: Oligopoly
	Module 9.4: Monopoly and Concentration
		Natural Monopoly
	Key Concepts
		LOS 9.a
		LOS 9.b
		LOS 9.c
		LOS 9.d
		LOS 9.e
		LOS 9.f
		LOS 9.g
		LOS 9.h
	Answer Key for Module Quizzes
Reading 10 Aggregate Output, Prices, and Economic Growth
	Exam Focus
	Module 10.1: GDP, Income, and Expenditures
	Module 10.2: Aggregate Demand and Supply
		The Aggregate Supply Curve
		Shifts in the Aggregate Demand Curve
		Shifts in the Short-Run Aggregate Supply Curve
		Shifts in the Long-Run Aggregate Supply Curve
		Movement Along Aggregate Demand and Supply Curves
	Module 10.3: Macroeconomic Equilibrium and Growth
		Sustainability of Economic Growth
	Key Concepts
		LOS 10.a
		LOS 10.b
		LOS 10.c
		LOS 10.d
		LOS 10.e
		LOS 10.f
		LOS 10.g
		LOS 10.h
		LOS 10.i
		LOS 10.j
		LOS 10.k
		LOS 10.l
		LOS 10.m
		LOS 10.n
		LOS 10.o
	Answer Key for Module Quizzes
Reading 11 Understanding Business Cycles
	Exam Focus
	Module 11.1: Business Cycle Phases
		Business Activity and Resource Use Fluctuation
		Consumer Sector Activity
		Housing Sector Activity
		External Trade Sector Activity
	Module 11.2: Inflation and Indicators
		Cost-Push Inflation
		Demand-Pull Inflation
	Key Concepts
		LOS 11.a
		LOS 11.b
		LOS 11.c
		LOS 11.d
		LOS 11.e
		LOS 11.f
		LOS 11.g
		LOS 11.h
		LOS 11.i
		LOS 11.j
	Answer Key for Module Quizzes
Reading 12 Monetary and Fiscal Policy
	Exam Focus
	Module 12.1: Money and Inflation
		Relationship of Money and the Price Level
	Module 12.2: Monetary Policy
		Monetary Policy in Developing Economies
	Module 12.3: Fiscal Policy
		Spending Tools
		Revenue Tools
		Fiscal Multiplier
		Balanced Budget Multiplier
		Ricardian Equivalence
	Key Concepts
		LOS 12.a
		LOS 12.b
		LOS 12.c
		LOS 12.d
		LOS 12.e
		LOS 12.f
		LOS 12.g
		LOS 12.h
		LOS 12.i
		LOS 12.j
		LOS 12.k
		LOS 12.l
		LOS 12.m
		LOS 12.n
		LOS 12.o
		LOS 12.p
		LOS 12.q
		LOS 12.r
		LOS 12.s
		LOS 12.t
	Answer Key for Module Quizzes
Reading 13 Introduction to Geopolitics
	Exam Focus
	Module 13.1: Geopolitics and Geopolitical Risk
	Key Concepts
		LOS 13.a
		LOS 13.b
		LOS 13.c
		LOS 13.d
	Answer Key for Module Quizzes
Reading 14 International Trade and Capital Flows
	Exam Focus
	Module 14.1: International Trade Benefits
	Module 14.2: Trade Restrictions
		Economic Implications of Trade Restrictions
		Capital Restrictions
			Current Account
			Capital Account
			Financial Account
	Key Concepts
		LOS 14.a
		LOS 14.b
		LOS 14.c
		LOS 14.d
		LOS 14.e
		LOS 14.f
		LOS 14.g
		LOS 14.h
		LOS 14.i
		LOS 14.j
	Answer Key for Module Quizzes
Reading 15 Currency Exchange Rates
	Exam Focus
	Module 15.1: Foreign Exchange Rates
	Module 15.2: Forward Exchange Rates
	Module 15.3: Managing Exchange Rates
		Countries That Do Not Have Their Own Currency
		Countries That Have Their Own Currency
		Elasticities Approach
		The J-Curve
		The Absorption Approach
	Key Concepts
		LOS 15.a
		LOS 15.b
		LOS 15.c
		LOS 15.d
		LOS 15.e
		LOS 15.f
		LOS 15.g
		LOS 15.h
		LOS 15.i
		LOS 15.j
	Answer Key for Module Quizzes
	Topic Quiz: Economics
Formulas
Appendices
	Appendix A: Areas Under The Normal Curve
		Probability Example
		Solving Using The Cumulative Z-Table
		Hypothesis Testing—One-Tailed Test Example
		Using the Cumulative Z-Table
		Hypothesis Testing—Two-Tailed Test Example
		Using the Cumulative Z-Table
	Cumulative Z-Table
	Appendix B: Student’s t-Distribution
	Appendix C: F-Table at 5% (Upper Tail)
	Appendix D: F-Table at 2.5% (Upper Tail)
	Appendix E: Chi-Squared table
Index