Equity Investments and Fixed Income (eBook)

CFA Level 1 Guide

Azhar Ul Haque Sario (Autor)

eBook Download: EPUB

2025
232 Seiten
Azhar Sario Hungary (Verlag)
978-3-384-66952-0 (ISBN)

Infos

Ready to master Equity and Fixed Income for your CFA Level 1 exam?

 

This guide is your complete resource, structured for clear and efficient learning. We begin with Equity Investments. You will learn about market organization and structure. We explain how security market indexes are built and used. We explore the crucial theory of market efficiency. You get a full overview of different equity securities. We teach you how to perform company analysis, looking at both past and present performance. Then we move to industry and competitive analysis. You'll learn the vital skill of forecasting for company analysis. Finally, we cover the essential equity valuation concepts and basic tools. Next, we dive deep into the world of Fixed Income. You'll understand core fixed-income instrument features. We break down complex cash flows and security types. We cover how bonds are issued and traded in primary and secondary markets. You'll learn about specific markets for corporate and government issuers. We make fixed-income bond valuation simple, focusing on prices and yields. We explain various yield and yield spread measures for both fixed-rate and floating-rate bonds. We demystify the term structure of interest rates, including spot, par, and forward curves. We thoroughly cover interest rate risk and return, including key concepts like duration and convexity. We also look at curve-based risk measures. Then, we shift focus to credit risk, teaching you credit analysis for both government and corporate issuers. Lastly, we explore the important topic of fixed-income securitization, including Asset-Backed Securities (ABS) and Mortgage-Backed Securities (MBS).

 

What makes this book different from the rest? We know you're juggling a busy life with your studies. That's why we threw out the dense, academic language that makes other guides a chore to read. This book speaks to you in a clear, conversational tone, as if you have a personal tutor guiding you. We focus on building your intuition-the 'why' behind the concepts-not just having you memorize formulas. Instead of presenting topics in a vacuum, we constantly show you how they connect. You'll see the bigger picture and understand how industry analysis feeds into valuation, or how interest rate risk and credit risk interact. This integrated approach is our secret weapon to help you tackle the complex, multi-step questions the CFA exam is known for. We get straight to the core concepts you absolutely need to know, cutting out the fluff to save you precious study time. It's a smarter, more efficient way to prepare and build the confidence you need for exam day.

 

Disclaimer: This book is an independent publication and has not been authorized, sponsored, or otherwise approved by the CFA Institute. It is intended for educational purposes and is independently produced under the principle of nominative fair use. CFA® and Chartered Financial Analyst® are registered trademarks owned by the CFA Institute.

Textauszug

Industry and Competitive Analysis

 

1. The Art of the Map: Charting Your Business Territory

 

Think of your business as an expedition setting out into a vast, uncharted world. To succeed, you wouldn’t just start walking and hope for the best; you'd need a map. Industry and competitive analysis is the art and science of creating that map. It’s a living document that helps you understand the terrain, spot hidden treasures (opportunities), avoid treacherous pitfalls (threats), and ultimately, find your own corner of the world to build a kingdom. Sailing without this map is sailing blind, guided by nothing but guesses and gut feelings in a world that demands sharp-eyed navigation.

 

The first goal of this expedition is to find a good place to land. You’re looking for a vibrant, thriving ecosystem, not a barren wasteland where everyone is fighting over a few scraps. This analysis helps you decide where to point your ship. Just as crucial, it forces you to look at your own crew and vessel. What are you uniquely good at? Is your ship the fastest? The strongest? Or perhaps just small and nimble enough to navigate rivers others can't? Knowing this helps you play to your strengths and patch your leaks. This process is also your weather forecast, helping you see the storm of disruption on the horizon long before it hits—think of the merchants who saw the coming age of steam and switched from sail. Ultimately, your map informs your grand strategy, whether it’s to be the most powerful navy (cost leadership), the most exotic and desirable destination (differentiation), or the ruler of a small, forgotten island no one else noticed.

 

 

Crafting this strategic map is a journey in itself, with clear steps along the path.

 

First, you must define the borders of your map. This sounds simple, but it’s vital. Are you charting the entire continent of “automobiles,” or are you focused on the newly discovered volcanic island of “electric vehicles”? The scope of your map determines everything that follows.

 

Next, you analyze the lay of the land. The classic explorer's guide for this is Porter's Five Forces. Think of it as your survival checklist for a new territory:

 

Power of the Natives (Buyers): Can the locals easily demand lower prices for your goods, or are they grateful for what you bring?

 

Power of the Gatekeepers (Suppliers): Do you have many options for supplies, or does a single tribe control the only source of fresh water?

 

The Threat of New Explorers (New Entrants): How easy is it for another expedition to land on your shores and set up camp?

 

The Threat of Strange New Fruits (Substitutes): Could the natives suddenly decide they prefer coconuts to the bread you’re offering?

 

Rival Expeditions (Rivalry): How many other explorers are in this area, and how fiercely are they competing for the same resources?

 

With the terrain understood, you identify the secrets to survival. What does it take to truly thrive here? In the jungle of smartphones, it might be relentless innovation and a near-magical supply chain. Knowing these “key success factors” tells you whether you need to be a better hunter, a better farmer, or a better diplomat to win.

 

Then, you begin to sketch the other players. Who are your direct rivals—the other explorers flying similar flags? And who are the indirect ones—perhaps a peaceful farming tribe that could make your trading post obsolete? You create detailed portraits of each, noting their strategies, their strengths, their Achilles' heels, and even the spirit of their crew.

 

You then dig deeper, deciphering their ambitions. Is that rival expedition trying to conquer the whole continent, or are they just looking for a quick profit before sailing home? Understanding their goals helps you predict their next move.

 

Finally, this all leads to predicting the future. If you build a new fort, how will they react? Will they build a bigger one next to it, try to cut off your supply lines, or simply sail to a different island? This foresight allows you to plan your moves and counter-moves, turning a simple map into a dynamic, strategic game board. This isn't a one-time map-making project; it’s a constant process of surveying and updating, ensuring you can adapt, innovate, and flourish in a world that is always changing.

 

2. The Map’s Legend: How We Name and Group the World

 

Once an explorer has sketched a territory, they need a legend—a key to make sense of the symbols. Industry classification systems are the standardized legends that allow all explorers, economists, and entrepreneurs to speak the same language. Without them, one person’s “dense jungle” is another’s “fertile woodland,” and chaos reigns.

 

One of the most respected map-making guides is the North American Industry Classification System (NAICS). Think of it as the official atlas of the economic world, created by the governments of the U.S., Canada, and Mexico. It assigns a precise, six-digit coordinate to every type of economic activity. The first two digits show you the continent (e.g., 51 for the “Information” landmass), while the following digits zoom you into a specific country, region, and finally, a single town (e.g., 511110 for Newspaper Publishers). NAICS's power is its comprehensive, hierarchical structure and its commitment to staying current, adding new territories as they're discovered. It’s the gold standard for government data, allowing for reliable comparisons across the map and through time.

 

Before NAICS, there was the Standard Industrial Classification (SIC) system. It was the old-world map, using a four-digit code. While it's less detailed and not updated anymore, you’ll still find these old maps in historical archives, so knowing how to read them is a valuable skill for any seasoned explorer.

 

But not everyone uses the official government atlas. The financial world, a realm of high-stakes treasure hunters, often prefers the Global Industry Classification Standard (GICS). Created by MSCI and Standard & Poor's, GICS is a map designed for investors. It groups companies based on how they make their money, which is incredibly useful for comparing the performance of similar ventures. It’s a more specialized map, focusing on publicly traded companies and often quicker to recognize newly formed industry islands than the slower-moving government cartographers.

 

Comparing these maps reveals their true purpose. NAICS is the grand, encyclopedic atlas for understanding the entire economy. GICS is the investor's treasure map, focused on profit and opportunity.

 

Beyond these formal legends, however, the most insightful explorers create their own custom maps. They group the world not just by official labels, but by what matters for their specific quest.

 

Grouping by a Shared Look: The most intuitive way is to group together companies that make the same things. All makers of telescopes belong together, as they are direct rivals in helping people see the stars.

 

Grouping by a Shared Customer: You might group a luxury yacht builder with a private jet manufacturer. Their products are different, but they are both trying to win the hearts (and wallets) of the world’s wealthiest adventurers.

 

Grouping by a Shared Secret: Companies can be grouped by the secret technology or process they use. Think of all the alchemists working to turn sunlight into power, whether they use glass panels, giant windmills, or rushing water.

 

Grouping by a Shared Territory: Businesses that operate only in the jungles of South America face different challenges and rules than those sailing the European seas. Geography is a powerful way to frame the competitive landscape.

 

Grouping by a Shared Philosophy: You can group companies by how they do business. All the subscription-box merchants, for example, share a similar model, even if one sells coffee and another sells socks. Their underlying machinery is the same.

 

In the end, standardized maps like NAICS and GICS give you the common language to discuss the world. But it’s the custom maps—drawn from the perspective of products, customers, technology, or business models—that provide the unique insights needed to out-navigate your rivals and find your own path to glory.

 

3. Surveying the Land: Measuring a Market's Vitals

 

A map is just a drawing until you add scale and data. To truly understand a territory, you must measure it—take its vital signs to assess its health, its potential, and the intensity of the struggle for control. This quantitative survey is the heartbeat of your strategic plan.

 

How Big is This World? (Industry Size)

First, you measure the sheer size of the territory. This is usually expressed in the total gold pieces (revenue) exchanged or the total number of goods (units) traded within its borders in a year. Is this a tiny island or a vast continent? To find out, you must become a data detective, piecing together clues from government surveys (pegged to those NAICS codes), reports from the explorers’ guild (industry associations), charts from professional map-makers (market research firms), and the public ledgers of major expeditions (financial reports). Knowing the size gives you a sense of...

Produkt-Details

• Erscheint lt. Verlag: 30.7.2025
• Sprache: englisch
• Themenwelt: Sachbuch/Ratgeber ► Beruf / Finanzen / Recht / Wirtschaft ► Geld / Bank / Börse
• Themenwelt: Wirtschaft ► Betriebswirtschaft / Management
• Schlagworte: bond pricing and yields • CFA Level 1 Study Guide • Chartered Financial Analyst • Equity Investments and Fixed Income • Equity Valuation • Fixed income analysis • investment management prep
• ISBN-10: 3-384-66952-5 / 3384669525
• ISBN-13: 978-3-384-66952-0 / 9783384669520