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Courses

UpperMark courses are known to enhance individual study efforts significantly. Taught by award-winning educators and content experts, our web-based courses provide clear instruction to boost comprehension and speed up the learning process. Instructors also provide valuable exam-taking tips to give candidates a competitive advantage.

Select from two popular options -

  • Complete Course - Structured coverage of all Topics in the curriculum and essential faculty access.
  • Course by Topic - Select courses on specific CAIA exam Topics.

Complete Course # of Lectures Length
  • All lectures for Topic 1 to Topic 8
  • On-demand course recordings
  • Weekly faculty workshops: Wednesdays, 12 Dec to 6 March
23 40 hours $499

Course by Topic - Select courses based on individual Topics listed below.
Topic 1:  Professional Standards and Ethics moremore less 1 2 hours $49
Standards  I-VI
  • Demonstrate knowledge of Standard I: Professionalism.
  • Knowledge of the Law
  • Loyalty, Prudence, and Care
  • Material Nonpublic Information
  • Loyalty
  • Disclosure of Conflicts
  • Diligence and Reasonable Basis
  • Communication with Clients and Prospective Clients
  • Priority of Transactions
  • Additional Compensation Arrangements
  • Market Manipulation
  • Fair Dealing
  • Independence and Objectivity
  • Demonstrate knowledge of Standard II: Integrity of Capital Markets.
  • Demonstrate knowledge of Standard III: Duties to Clients.
  • Misrepresentation
  • Suitability
  • Responsibilities of Supervisors
  • Referral Fees
  • Record Retention
  • Performance Presentation
  • Misconduct
  • Demonstrate knowledge of Standard IV: Duties to Employers.
  • Demonstrate knowledge of Standard V: Investment Analysis, Recommendations, and Actions.
  • Preservation of Confidentiality
  • Demonstrate knowledge of Standard VI: Conflicts of Interest.
Topic 2:  Current and Integrated Topics moremore less 4 4 hours $79
Chapter 1 -  A Guide to Hedge Fund Business & Operational Due Diligence
  • Demonstrate knowledge of the role played by non-investment related risks in the due diligence process
  • Identify the importance of both business risk and operational risk in generating potential losses
  • Summarize the process of due diligence from the perspective of the hedge fund itself
  • Summarize the process of due diligence from the perspective of the hedge fund manager
  • Summarize the process of due diligence with respect to obtaining information necessary to make assessments
  • Describe, through four case studies, the potential impact business and operational risk can present to a hedge fund investment
  • Demonstrate knowledge of the scope and process of due diligence from the perspective of the hedge fund itself
  • Demonstrate knowledge of the scope and process of due diligence from the perspective of the hedge fund manager
  • Demonstrate knowledge of the scope and process of due diligence with respect to obtaining information necessary to make assessments
Chapter 2 -  Understanding the Cost of Investment Management
  • Define and describe the structure, components, and determinants of the total cost of investment management
  • Demonstrate knowledge of investment costs.
  • Differentiate between fees and costs and explain the degree to which each are disclosed
  • List and explain the reasons why investors need to better understand investment costs
  • Demonstrate knowledge of the importance of investment costs.
  • Explain the structure and cost implications of investment management models using traditional consultants, funds of funds, and internal or outsourced CIOs
Chapter 3 -  Dynamic Strategies for Asset Allocation
  • Demonstrate knowledge of dynamic trading strategies.
  • Describe the expected performance and cost of implementing strategies with concave payoff curves relative to those with convex payoff curves under various market situations (i.e., trending markets and flat markets)
  • Discuss the motivations for, and impact of, resetting the parameters of dynamic strategies
  • Recognize and apply the portfolio’s asset values after a given change in the equity value, using dynamic trading strategies (i.e., buy-and-hold, constant mix, and constant-proportion portfolio insurance)
  • Compare the payoff, exposure diagrams, and risk tolerance of the buy-and-hold, constant mix, constant-proportion portfolio insurance, and option-based portfolio insurance strategies
  • Demonstrate knowledge of the payoff curves related to dynamic trading strategies.
  • Demonstrate knowledge of resetting in dynamic strategies.
Chapter 4 -  Developing an Asset Owner Climate Change Strategy
  • Demonstrate knowledge of the six Principles for Responsible Investment.
  • Discuss how to engage companies and public policy makers
  • List the six Principles for Responsible Investment
  • Discuss the measurement of climate risks in a portfolio and strategies for reducing portfolio emissions and portfolio risks
  • Discuss case studies of institutional investors’ climate change decisions, discussions, and investment processes
  • Discuss areas to invest, engage, and avoid within equities, fixed income, private equity/venture capital, property/real estate, and green infrastructure
  • Discuss steps for acting on the climate change strategy, including engaging specific groups of people in discussions, planning, and implementation
  • Discuss the process and impact of including low-carbon investments in a portfolio
  • Demonstrate knowledge of the three steps for developing a climate change strategy.
  • Demonstrate knowledge of the three key strategies for managing the climate impact of portfolio investments.
  • Discuss the process and impact of avoiding high-carbon investments in a portfolio
  • Discuss the process of reviewing and monitoring climate change risks in a portfolio
  • Demonstrate knowledge of case studies of institutional investors implementing climate change strategies.
  • Demonstrate knowledge of climate change risks and opportunities within asset classes.
Chapter 5 -  Private Equity Secondaries
  • Demonstrate knowledge of the mechanics of the private equity secondary market.
  • Describe the relationship between transactions in the secondary market and primary fundraising
  • Compare and contrast the advantages and challenges of in-house versus outsource solutions
  • Identify the three parties involved and their roles in secondary market transactions
  • Explain the qualitative benefits of secondary investments, such as improved visibility, shallower J-curve, access to funds, and lower loss rate
  • In a portfolio context, explain the qualitative benefits of secondary investments such as accelerated build up, smoother cash flows, and increased diversification
  • Describe the importance of the valuation (reference) date
  • Identify the effect of recent regulatory changes on the potential growth of secondary market
  • Demonstrate knowledge of the history, growth, and pricing evolution of the secondary markets.
  • Demonstrate knowledge of the benefits of investing in secondary transactions.
  • Identify the typical historical conversion rate between primary fundraising and secondary transactions
  • Explain the effects of distributions, capital calls, and changes in the NAV on the final payment
  • Explain the reasons for quantitative differences between characteristics of primary and secondary investments such as higher IRR, lower TPVI, lower return volatility, lower loss rate, accelerated cash back, and narrower return dispersion for secondary investments
  • Describe the two methods of debt financing in secondary market
  • Demonstrate knowledge of the development of a secondaries program.
  • Explain the implications of the observation that the bulk of secondary market translations are conducted by large funds
  • Explain the preference of general partners for integrated versus pure play platforms in the secondary market
  • Explain fund restructuring
Chapter 6 -  Making Waves: Cresting Co-Investment Opportunity
  • Demonstrate knowledge of co-investment strategy.
  • Describe four ways that co-investment can be made
  • Identify the risk-return profiles of the four methods by which co-investments can be made
  • Describe the benefits of co-investment in terms of risk-return, J-curve mitigation, higher efficiency, tailored portfolios, and becoming a skilled limited partner
  • Describe the challenges of co-investment in having the right skillset, finding coinvestment opportunities, timing, decision making process, adverse selection. and benchmarking
  • Identify the key factors that can improve co-investment’s outcome in terms of its unique risks, resource requirements, and avoiding adverse selection
Chapter 7 -  Longevity Risk Transfer Markets: Market Structure, Growth Drivers and Impediments, and Potential Risks
  • Demonstrate knowledge of longevity risk transfer instruments.
  • Describe buy-in and buy-out transactions in terms of structure and cost
  • Identify the drivers of the longevity risk transfer market in terms of funding status of pension funds, regulation and other potential benefits to buyers of longevity risk
  • Describe the role of counterparty risk in various types of longevity risk transfer transactions
  • Explain the presence of systemic risk in longevity risk transfer markets in terms of concentration and liquidity
  • Describe reverse mortgages and the role of regulatory arbitrage in this market
  • Describe longevity swap transactions in terms of structure and in comparison to buy-ins and buy-outs
  • Demonstrate knowledge of longevity risk transfer market drivers and impediments.
  • Demonstrate knowledge of risk management challengers in longevity risk transfer transactions.
  • Identify the impediments to the growth of longevity risk transfer markets in terms of asymmetric information, basis risk, and regulation
Chapter 8 -  Private Credit Strategies
  • Demonstrate knowledge of investments in private credit
  • Discuss the risk, return, characteristics, and strategy of mezzanine and senior debt
  • Discuss the risk, return, characteristics, and strategy of capital appreciation strategies and distressed credit
  • Discuss the risk, return, characteristics, and strategy of credit opportunities and specialty finance
  • Explain the variety of strategies, including their risk and return
  • Explain the interaction between the economic cycle and investments in specific private credit strategies
  • Demonstrate knowledge of capital preservation strategies
  • Demonstrate knowledge of return-maximizing strategies
  • Discuss the risks of private credit investments, including scale, leverage, and jurisdiction
  • Demonstrate knowledge of opportunistic and niche strategies
Chapter 9 -  Blockchain and Financial Market Innovation
  • Demonstrate knowledge of blockchain technology
  • Understand a simple distributed ledger
  • Discuss smart contracts and digital assets
  • Discuss the potential of blockchain to reduce the post-trade settlement period
  • Understand how transactions are added to blockchain
  • Demonstrate knowledge of blockchain’s applications, benefits, and challenges
  • Contrast permissioned and permissionless networks
  • Discuss technical and business challenges posed by blockchain technology
  • Contrast public and private networks
  • Understand how blockchain consensus mechanism works
  • Understand immutability of records on blockchain
Topic 3:  Asset Allocation and Portfolio Management moremore less 2 4.5 hours $79
Chapter 1 -  Asset Allocation Processes and the Mean-Variance Model
  • Describe asset allocation and security selection
  • Demonstrate knowledge of the importance of asset allocation.
  • Discuss the role played by investment objectives and investment constraints
  • Recognize how asset owners set investment policy objectives
  • Describe the five typical steps that must be taken to implement a systematic asset allocation program
  • Describe the characteristics of endowments and foundations
  • List and describe the seven common components of an IPS
  • Describe how the mean-variance optimization (MVO) approach can be used to implement an IPS
  • Recognize and describe internal constraints in the context of investment policy
  • Recognize and describe external constraints in the context of investment policy
  • Calculate optimal investment in risky and riskless assets in the context of MVO
  • Discuss how risk and return estimates inform strategic asset allocation (SAA)
  • Describe the characteristics of various types of pension funds
  • Evaluate investment choices given an asset owner’s investment objectives with regard to expected return and standard deviations
  • Demonstrate knowledge of the five steps of the asset allocation process.
  • Discuss how to evaluate the importance of asset allocation and security selection for the performance of a portfolio
  • Demonstrate knowledge of categories of asset owners.
  • Evaluate investment choices given an asset owner’s investment objectives with regard to utility, and calculate expected utility for a given investment
  • Describe the characteristics of sovereign wealth funds
  • Describe the development of a SAA for inclusion in an IPS
  • Describe the process for using information about the value of a portfolio’s liabilities to achieve an optimal portfolio in the context of MVO
  • Describe the process of MVO for a portfolio containing multiple risky assets
  • Describe tactical asset allocation
  • Describe the characteristics of family offices
  • Describe how utility functions are expressed in terms of expected return and variance, and calculate expected utility using expected return and variance to identify attractive investments
  • Demonstrate knowledge of the objectives and constraints of asset owners.
  • Demonstrate knowledge of investment policy objectives.
  • Describe how utility functions are expressed in terms of higher moments, and calculate expected utility using higher moments to identify attractive investments
  • Discuss the role of a hurdle rate when performing a MVO, and calculate the hurdle rate for a given asset
  • Identify issues in using optimization
  • Describe how utility functions are expressed in terms of value at risk, and calculate expected utility using value at risk to identify attractive investments
  • Demonstrate knowledge of investment policy constraints.
  • Demonstrate knowledge of the preparation of an investment policy statement (IPS).
  • Demonstrate how risk aversion can be used to manage a defined benefit pension fund
  • Discuss portfolio optimizers and how they may act as error maximizers
  • Discuss optimization-related data issues for illiquid assets and for large-scale optimization
  • Use information regarding asset allocation decisions to calculate investor risk aversion
  • Demonstrate knowledge of the implementation of an IPS.
  • Demonstrate how to use risk aversion and growing liabilities to manage assets
  • Determine and explain the level of incorporation of higher moments by MVO
  • Identify additional issues related to MVO, and discuss the Black-Litterman approach to asset allocation modeling and additional constraints to the optimization model used by asset allocators
Chapter 2 -  Tactical Asset Allocation, Mean-Variance Extensions, Risk Budgeting, Risk Parity, and Factor Investing
  • Demonstrate knowledge of tactical asset allocation (TAA).
  • Discuss and demonstrate an adjustment of the mean-variance approach to account for the issue of illiquidity
  • Define tactical asset allocation
  • Discuss the specifications required and not required as part of the risk budgeting process
  • List and describe the three steps that are used to implement the risk parity approach when performing the asset allocation component of managing an investment portfolio, and calculate the contribution of an asset to the total risk of a given portfolio
  • Discuss the emergence of using risk factor analysis as the basis for implementing practical investment decisions, and describe three important observations regarding risk factor investing
  • Discuss how risk factors are described
  • Describe how the risk parity approach is used to create and analyze a portfolio
  • Describe the implementation of a risk budgeting approach, and calculate total risk and standard deviation for a given portfolio
  • Describe the Fundamental Law of Active Management (FLOAM), and perform calculations to determine a given manager’s information coefficient
  • Discuss and demonstrate an adjustment of the mean-variance approach to account for the issues related to factor exposures
  • Demonstrate knowledge of extensions to the mean-variance approach.
  • Demonstrate knowledge of risk budgeting.
  • Discuss and demonstrate an adjustment of the mean-variance approach to take estimation risk into account
  • Explain the cost of actively managing alternative investments, and perform calculations regarding the information ratio
  • Apply the risk budgeting technique for a given three-asset portfolio
  • Discuss the primary economic rationale for the risk parity approach
  • Discuss how risk premiums vary across risk factors, and how risk factor returns vary across differing market conditions
  • Describe the characteristics of investability, and assess the investability of risk factors
  • Describe four invalid arguments often put forth to support the use of the risk parity approach to allocating assets in an investment portfolio
  • Apply the risk budgeting approach to decompose the total risk of a portfolio using factors
  • Discuss the costs of actively managing portfolios with alternative investments (i.e., the cost of foregone loss carryforward and four other costs associated with the replacement of an external manager)
  • Demonstrate knowledge of risk parity.
  • Demonstrate knowledge of factor investing.
  • Summarize three observations regarding TAA and reallocation costs, and perform calculations regarding portfolio betas
  • Describe and compare equally weighted portfolios and volatility-weighted portfolios
  • Describe how the analysis of risk factors is applied when performing a risk allocation
  • Discuss the effect of allocations based on risk factors on portfolio performance
  • Identify and discuss the keys to a successful TAA investment process (i.e., return prediction, three notable characteristics of sound TAA model development, and fundamental and technical analysis that underlies TAA models)
Chapter 3 -  The Endowment Model
  • Demonstrate knowledge of endowments and foundations.
  • Describe the defining characteristics of the endowment model, and how it has evolved over time
  • List six advantages large endowments have
  • Discuss the tension that exists between the spending rate of an endowment, the risk of the endowment portfolio, and the goal of maintaining the endowment as a permanent source of capital
  • Define and describe endowments and foundations
  • Discuss the concept of intergenerational equity
  • Compare spending rates of endowments and foundations
  • Discuss types of foundations
  • Discuss liquidity risk in the context of endowments
  • Discuss how an aggressive asset allocation may lead to investment outperformance
  • Demonstrate knowledge of intergenerational equity, inflation, and spending challenges for endowments and foundations.
  • Demonstrate knowledge of the endowment model.
  • Describe advantages of large endowments in selecting alternative asset managers
  • Describe approaches to rebalancing an endowment portfolio
  • Discuss the implications of inflation on managing endowments and foundations
  • Define and discuss tail risk methods for hedging it
  • Describe the effect of the first-mover advantage on the performance of endowments
  • Demonstrate knowledge of key advantages enjoyed by large endowments.
  • Demonstrate knowledge of the risks of the endowment model.
  • Describe the effect of access to a network of talented alumni on the performance of endowments
  • Describe the effect of tolerance for liquidity risk on the performance of endowments
  • Describe the effect of sophisticated investment staff and board oversight on the performance of endowments
Chapter 4 -  Pension Fund Portfolio Management
  • Demonstrate knowledge of the development of pension plans, the motivations driving the use of pension plans, and types of pension plans.
  • Discuss the three approaches that may be used by DB plan managers to measure their risk (i.e., asset-focused risk management, asset-liability risk management, and integrated asset-liability risk management)
  • Describe the portability and job mobility of defined benefit (DB) plans
  • Describe governmental social security plans, and identify ways in which they differ from DB plans
  • Describe the characteristics of DC plans
  • Identify and describe financial phases related to retirement
  • Describe the historical development of pension plans
  • Discuss the reasons for why pension plans may be considered attractive, from the perspectives of both employers and employees
  • Discuss three important investment risks for retirees
  • Distinguish between DC plans and DB plans in terms of their portability, longevity risk, and investment options
  • Describe the roles of an accumulated benefit obligation (ABO) and a projected benefit obligation (PBO) in modeling the liabilities of a DB plan, and list the assumptions necessary to calculate the ABO and PBO of retiree benefits
  • Recognize the four factors that drive the effect of liabilities on the risk of a pension plan
  • Demonstrate knowledge of pension plan risk tolerance and asset allocation.
  • Demonstrate knowledge of defined benefit plans.
  • Recognize and describe the role of five major factors affecting the risk tolerance of a pension plan sponsor
  • Describe both the funded status and the surplus risk of DB plans, and calculate the percentage change in liabilities for a given pension plan’s PBO
  • Discuss asset allocation in DC plans, and how it differs from asset allocation in DB plans
  • Determine a given retiree’s estimated exposure to longevity risk
  • List three basic types of pension plans
  • Describe two major types of annuities
  • Describe target-date funds, and discuss issues surrounding the inclusion of alternative investments in DC plans
  • Discuss reasons why DB plans are waning as measured by the proportion of total pension assets that DB plans manage
  • Describe the strategic asset allocation of a pension plan using two separate buckets
  • Demonstrate knowledge of governmental social security plans.
  • Demonstrate knowledge of the contrasts between DB plans and defined contribution (DC) plans.
  • Discuss asset allocations and liability-driven investing in the context of DB plan investment management
  • Analyze and calculate the value of a given growth annuity
  • Demonstrate knowledge of annuities used for retirement income.
Chapter 5 -  Sovereign Wealth Funds
  • Demonstrate knowledge of the sources of sovereign wealth.
  • Describe the reserve account of a central bank, calculate a given country’s account surplus or deficit, and discuss the causes of account surpluses and deficits
  • List four common motivations that may lead to the establishment of a SWF
  • Analyze the governance and management of the Norwegian Government Pension Fund Global
  • Describe the characteristics of stabilization funds
  • Identify factors that have driven growth in the establishment of SWFs
  • Discuss factors that affect the governance of SWFs
  • List the ten principles of the Linaburg-Maduell Transparency Index
  • Identify the basic characteristics of the world’s largest SWFs
  • Describe the characteristics of reserve funds and savings funds
  • Analyze the governance and management of China Investment Corporation (CIC)
  • Discuss the investment management of various types of SWFs
  • Describe the effects of changes in the reserve account, and list five drivers of currency exchange rates
  • Demonstrate knowledge of four types of SWFs.
  • Demonstrate knowledge of the establishment and management of SWFs.
  • Discuss the effects of commodity exports on a nation’s reserve account
  • Describe Dutch disease, and discuss various types of sterilization policies
  • Analyze the governance and management of Temasek Holdings (Singapore)
  • Describe the characteristics of development funds
  • Summarize the Santiago Principles
  • Discuss managing the size of a SWF
  • Demonstrate knowledge of the emergence of SWFs.
  • Demonstrate knowledge of the governance and political risks of SWFs.
  • Demonstrate knowledge of the economics of the management of three SWFs.
Chapter 6 -  The Family Office Model
  • Describe factors affecting risk management of first-generation wealth
  • Discuss how macroeconomic factors affect family office investment decisions
  • Discuss how the importance of tax efficiency affects how family office investments are structured
  • Discuss the treatment of art as a lifestyle asset in the management of family wealth
  • Discuss the governance structures of family offices
  • Describe the characteristics of family offices
  • Recognize various general goals of family offices
  • Demonstrate knowledge of the identification of family offices.
  • List and describe ten natural advantages family offices have that help them manage their overall portfolios
  • Describe and distinguish the primary characteristics of charity and philanthropy
  • Describe the characteristics and goals of impact investing
  • Demonstrate knowledge of the goals, benefits, and business models of family offices.
  • Describe the benefits provided by a family office, as compared to a private bank or traditional asset manager
  • Describe the challenges associated with sustaining family wealth
  • Discuss storage costs and other costs of lifestyle assets, and describe the function of free ports
  • Describe the taxability of short-term and long-term capital gains in the United States, describe how Section 1256 contracts can benefit investors, and calculate after-tax profits for a given portfolio
  • Discuss the benchmark considerations used to manage and assess the investment of first-generation wealth
  • Discuss the goals of family offices that are responsible for managing the investment of post-first-generation wealth, and compare asset allocations and liquidity profiles for family offices to those of endowments
  • Discuss how family offices can increase tax efficiency with hedge funds
  • Recognize the consideration and use of lifestyle assets as constraints in the asset allocation process when constructing a family office investment portfolio
  • Describe strategies used to maintain family wealth across generations
  • Discuss the characteristics of the various models and structures of family offices
  • Demonstrate knowledge of how the goals of family offices are affected by the stage of the family life cycle.
  • Demonstrate knowledge of the macroeconomic exposures of family offices.
  • Discuss considerations involved in inheritance and succession planning
  • List concierge services offered through family offices
  • Demonstrate knowledge of the macroeconomic exposures of family offices.
  • Demonstrate knowledge of the lifestyle assets of family offices.
  • Demonstrate knowledge of the governance of family offices.
  • Demonstrate knowledge of charity, philanthropy, and impact investing.
  • Demonstrate knowledge of the ten competitive advantages of family offices.
Topic 4:  Private Equity moremore less 2 4.5 hours $79
Chapter 7 -  Private Equity Market Structure
  • Recognize the differences between the organized private equity market and the informal private equity market
  • Compare the key characteristics and performance of venture capital and buyout
  • Demonstrate knowledge of the main strategies of private equity investment.
  • Describe the conditions under which private equity funds typically enter into the funding process, and the advantages of doing so for private equity investors
  • Summarize the characteristics and activities of private equity funds of funds
  • Discuss the symbiotic relationship between LPs and GPs, and its advantages for both LPs and GPs
  • Describe the conditions addressed in the two main categories of clauses in limited partnership agreements (LPAs)
  • Compare direct investments and co-investments in the private equity space
  • Recognize the expected advantages of private equity co-investing
  • Discuss factors that affect how well LPAs fit into the private equity market environment
  • Recognize the stages of the relationship life cycle of the GP-LP relationship, and discuss how the GP-LP relationship changes throughout the life cycle
  • Describe the costs of private equity funds of funds
  • Discuss how private equity funds benefit from inefficiencies in traditional corporate structures
  • Demonstrate knowledge of the main differences between venture capital and buyout.
  • Discuss the business models of both venture capital and buyout funds
  • Describe the three primary investment strategies (i.e., venture capital, buyout, and mezzanine) used by private equity managers, along with two other strategies (i.e., rescue and replacement capital)
  • Describe the structuring of venture capital and buyout deals
  • Demonstrate knowledge of how private equity funds as intermediaries.
  • Discuss the different forms of private equity fund intermediation
  • Discuss the value added by private equity funds of funds (i.e., diversification and intermediation, resources and information, selection skills and expertise, and incentives and oversight)
  • Describe key elements of corporate governance of private equity limited partnerships
  • Recognize the expected disadvantages of private equity co-investing
  • Describe the investment process for private equity co-investment
  • Discuss decisions regarding investment objectives, size, and term of a private equity fund
  • Describe the structure of the organized private equity marketplace
  • Demonstrate knowledge of private equity funds of funds as intermediaries.
  • Discuss the role of the private equity manager in venture capital and buyout investment
  • Demonstrate knowledge of the relationship life cycle between private equity limited partners (LPs) and general partners (GPs).
  • Describe management fees and expenses in private equity limited partnerships
  • Discuss carried interest in private equity limited partnerships, and calculate carried interest
  • Demonstrate knowledge of the key features of private equity limited partnerships.
  • Demonstrate knowledge of private equity co-investments.
  • Discuss preferred returns, or hurdle rates, in private equity limited partnerships
  • Discuss GP capital contributions to private equity funds
  • Describe the key-person provision in private equity limited partnerships
  • Discuss termination and divorce in private equity limited partnerships
  • Explain the distribution waterfall of a private equity fund, and calculate distributions for a given fund
Chapter 8 -  Private Equity Benchmarking
  • Demonstrate knowledge of the role of benchmarks in private equity investing.
  • Demonstrate knowledge of the valuation of private equity assets.
  • Discuss challenges in valuing private equity assets
  • Discuss why time weighted performance measures are not appropriate in the context of private equity
  • Recognize needs served by investment benchmarks
  • Define asset-based benchmarks and peer-group benchmarks
  • Describe the rationale for using peer groups when benchmarking private equity funds
  • Recognize the characteristics of listed private equity indices
  • Describe and discuss Bailey criteria
  • Discuss basic principles for benchmarking a portfolio of private equity funds
  • Calculate and interpret performance metrics for private equity investment based on samples of private equity fund net asset values (NAVs) and/or returns
  • Apply a classic benchmark analysis to samples of private equity funds
  • Describe methods for calculating performance measures for a portfolio of private equity funds, and perform such calculations for a given portfolio
  • Discuss factors to consider when selecting private equity benchmarks
  • Discuss the use of public equity indices in benchmarking private equity investments
  • Evaluate the structural characteristics of peer-group data used for private equity benchmarking
  • Define absolute return and relative return in the context of benchmark categorization
  • Identify steps of constructing a private equity benchmark
  • Describe and calculate common performance measures for private equity funds (i.e., the internal rate of return [IRR], the modified internal rate of return [MIRR], the distribution to paid-in [DIP] ratio, the residual value to paid-in [RVPI] ratio, and the total value to paid-in [TVPI] ratio)
  • Demonstrate knowledge of methods used to measure performance of private equity funds.
  • Demonstrate knowledge of types of private equity benchmarks.
  • Explain the J-curve concept and recognize its various types
  • Discuss challenges in using peer-group-data providers
  • Calculate and interpret the public market equivalent (PME) of a given investment
  • Apply commitment weighting to a set of benchmarks
  • Apply a public market equivalent analysis to samples of private equity funds
  • Describe how Monte Carlo simulation can be used to synthetically generate a private equity benchmark
  • Describe the characteristics of peer groups used for benchmarking private equity investment
  • Demonstrate knowledge of asset-based benchmarks.
  • Demonstrate knowledge of private equity peer groups and their use in the private equity benchmarking process.
  • Recognize the biases the publicly available databases are subject to
  • Describe methods for controlling for risk differences between benchmarks and equity funds
  • Demonstrate knowledge of methods for determining what constitutes an appropriate private equity benchmark.
  • Demonstrate knowledge of benchmarking private equity funds.
  • Demonstrate knowledge of benchmarking a portfolio of private equity funds.
Chapter 9 -  Fund Manager Selection and Monitoring
  • Demonstrate knowledge of issues regarding performance persistence among private equity fund managers.
  • Recognize the elements of the private equity fund manager selection process
  • Summarize the link between prior returns and future returns for a private equity fund manager
  • Explain the due diligence-related considerations involved when making a decision about whether to commit capital to a private equity fund manager
  • Discuss the role of monitoring in the larger control system within the investment process
  • Explain the importance of monitoring an LP’s overall portfolio composition to control risk
  • Identify the factors that determine the level of monitoring intensity that is necessary for a given private equity fund
  • Discuss factors that have driven the development of the secondary market for private equity funds
  • Discuss considerations regarding transparency in the context of private equity investment
  • Discuss the issues related to the information disclosed by private equity funds in their reporting to investors
  • Describe the global size, transactional volume, growth, and opacity of the secondary market for private equity investment
  • Discuss the three forms of active involvement by an LP in a private equity fund’s governance process
  • Discuss how monitoring private equity investment can help an LP to avoid negative consequences of style drift
  • Describe the trade-offs for an LP when monitoring private equity fund managers
  • Discuss empirical evidence that supports the performance persistence hypothesis in private equity investment
  • Discuss the processes of determining a wish list, classifying management teams, and deal sourcing in the private equity fund manager selection process
  • Demonstrate knowledge of private equity fund manager selection and deal sourcing.
  • Demonstrate knowledge of decision making and commitment for private equity investment.
  • Describe six challenges to the performance persistence hypothesis
  • Describe how LPs may create significant value through the proactive monitoring of their private equity fund holdings
  • Describe two actions outside of a private equity fund’s governance process that an LP can take when fund management is facing issues of adversity underperforming
  • Identify the characteristics of typical private equity investment opportunities available in the secondary market
  • Summarize rationales supporting the desire of both GPs and LPs for lower levels of transparency in informational reporting by private equity fund managers
  • Describe the motivations of buyers and sellers in private equity transactions in the secondary market
  • Describe two actions outside of private equity fund investing that an LP can take to gain investment exposure
  • Analyze the private equity performance persistence hypothesis based on evidence presented by transition matrices
  • Demonstrate knowledge of principles for monitoring private equity funds.
  • Demonstrate knowledge of the objectives for monitoring private equity funds.
  • Describe potential implementation issues encountered by LPs who select their investments in private equity funds based on the performance persistence hypothesis
  • Recognize obstacles to investment in the secondary market
  • Discuss sources of private equity investment opportunities in the secondary market
  • Demonstrate knowledge of information gathering as part of the monitoring of private equity funds.
  • Demonstrate knowledge of the actions that result from monitoring.
  • Identify factors governing pricing and valuation in the secondary market for private equity funds, and calculate secondary prices and discounts for a given fund
  • Discuss the limitations of the secondary market for private equity investment
  • Demonstrate knowledge of the secondary market for private equity investment.
Chapter 10 -  Private Equity Operational Due Diligence
  • Demonstrate knowledge of the scope and importance of operational due diligence (ODD).
  • List and discuss the eight steps investors follow when performing the ODD process on alternative investments
  • Describe operational risk as a driver of operational due diligence, and recognize the operational risk areas typically reviewed during ODD
  • State the two primary considerations that drive the design of private equity legal structures
  • Discuss considerations in the analysis of private equity valuations in the context of legal documentation
  • Describe the private equity ODD document collection process, including the purposes for document collection, and the relevance of operational risk profiles
  • Describe considerations in determining the best location for LPs to visit with general partners (GPs)
  • Discuss considerations related to the ongoing monitoring of a private equity investment
  • Recognize the concept of meta risk and what it encompasses
  • Recognize common fund and firm service providers
  • Discuss primary investor goals when interacting with fund and firm service providers
  • Discuss the advantages and disadvantages of performing desk reviews as part of the ODD process
  • Recognize the three primary sources of documentation for investors during an ODD review
  • Describe key characteristics of private equity fund advisory committees
  • Discuss common private equity legal structures, including their various partnership entities and layers
  • Distinguish between ODD and investment due diligence
  • Recognize considerations involved in executing the primary steps of the ODD process
  • Demonstrate knowledge of the eight core elements of the operational due diligence process.
  • Demonstrate knowledge of the document collection process in private equity ODD.
  • Explain the importance of conducting ODD on private equity investments, both generally and in comparison with other types of alternative investment structures (e.g., hedge funds)
  • Discuss the key functions of the offering memorandum (OM) (a.k.a. private placement memorandum [PPM]), and the function of side letters
  • Recognize common sections of private equity audited financial statements, and discuss important considerations in analyzing such statements
  • Describe best practices when developing the agenda in connection with an on-site visit
  • Discuss common considerations of LPs when reviewing private equity documentation related to information technology (IT) and business continuity planning/disaster recovery
  • Recognize how the different focus and goals of legal counsel and limited partners (LPs) affect their review of legal documents in ODD
  • List the five key benefits of performing ODD on private equity investments
  • Demonstrate knowledge of the analysis of legal documentation in private equity ODD.
  • Demonstrate knowledge of stages of operational due diligence other than the analysis of legal documents.
  • State and describe four explanation for the historical expansion of the scope of items covered when performing ODD
  • List and describe key areas of an OM that are considered during ODD, including those associated with fees and carried interest
  • Demonstrate knowledge of on-site visits with private equity fund managers.
  • Demonstrate knowledge of evaluating meta risks.
  • Demonstrate knowledge of fund service provider review and confirmation.
  • Demonstrate knowledge of ongoing private equity ODD monitoring considerations.
Chapter 11 -  Private Equity Investment Process and Portfolio Management
  • Demonstrate knowledge of the private equity investment process.
  • Recognize the main decisions involved in an institutional private equity investment process
  • Discuss considerations in the private equity fund selection process
  • Describe the bottom-up approach in the context of private equity investment
  • Describe the core-satellite approach to private equity portfolio construction
  • Recognize the key factors to be considered in determining the balance between core and satellite portfolios
  • Describe the top-down approach in the context of private equity investment
  • Discuss monitoring private equity investments
  • Discuss the main challenges of institutional private equity investment process
  • Demonstrate knowledge of private equity portfolio design.
  • Demonstrate knowledge of private equity portfolio construction.
  • Discuss private equity portfolio objectives
  • Discuss private equity investment liquidity management and the role of the overcommitment strategy
  • Discuss the mixed approach in the context of private equity investment
  • Discuss diversification in the context of private equity portfolios
  • Discuss naïve diversification in the context of private equity portfolios
  • Discuss the implementation of private equity portfolio management decisions
  • Discuss setting private equity allocation in the context of the endowment model
  • Demonstrate knowledge of risk-return management of a private equity portfolio.
  • Describe the cost-averaging approach and the market-timing approach to management of private equity portfolios
Chapter 12 -  Measuring Private Equity Risk
  • Demonstrate knowledge of four significant risks of private equity.
  • Describe market risk, liquidity risk, commitment risk, and capital or realization risk
  • Contrast buy-to-sell and buy-to-keep private equity investment philosophies
  • Discuss the problems and limitations associated with applying VaR for private equity investments
  • Explain CFaR, including the relevancy of CFaR for private equity fund LPs, and compare and contrast CFaR and traditional VaR as measures of risk exposures
  • Describe two principal methods for valuing private equity assets
  • Discuss risk considerations of institutional private equity investors
  • Discuss VaR based on cash flow volatility, including terminal wealth dispersion determination, the total value to paid-in (TVPI) ratio, the risk profile for a portfolio of funds, and the eight issues affecting the VaR calculation process
  • Discuss three types of arbitrage opportunities that private equity investors can pursue
  • Distinguish between operational risk and private equity financial risk
  • Demonstrate knowledge of the modeling of private equity.
  • Demonstrate knowledge of methods for determining the value of a private equity asset.
  • Discuss private equity liquidity risk and capital risk from the perspective of a limited partner [LP]
  • Describe, apply, and interpret simulation based VaR for a private equity fund
  • Explain the impact of undrawn commitments
  • Demonstrate knowledge of how to apply the value at risk (VaR) concept to private equity.
  • Demonstrate knowledge of calculating VaR based on cash flow at risk (CFaR).
Chapter 13 -  The Management of Liquidity
  • Describe investment periods and harvesting periods with regard to private equity fund cash flows
  • Recognize approaches to achieving a competitive total return on committed capital and ensuring that capital calls can be met
  • Discuss the liquidity and funding risks involved in private equity fund allocation
  • Demonstrate knowledge of liquidity risk and cash flow management.
  • Discuss overcommitment and opportunity costs in the context of private equity funds
  • Describe investment strategies for managing undrawn capital
  • Discuss considerations involved in the long-term management of investment commitments
  • Discuss the approach of using estimates as the basis for projecting liquidity when building a model for private equity investment
  • Discuss the approach of using forecasts as the basis for projecting liquidity when building a model for private equity investment
  • List and describe four inputs to projection models used by alternative investment and private equity fund-of-funds managers
  • Describe strategies that an investor may employ to address the return challenges and interdependencies presented by commitments made to private equity funds
  • Demonstrate knowledge of private equity cash flow schedules.
  • List the four advantages of modeling the cash flows of private equity investments
  • Describe five well-diversified and stable sources of liquidity
  • Define illiquid assets in the context of private equity investments
  • Demonstrate knowledge of five sources of liquidity.
  • Calculate the overcommitment ratio of a given investment
  • Discuss the approach of using scenarios as the basis for projecting liquidity when building a model for private equity investment
  • Demonstrate knowledge of investment strategies for managing undrawn capital.
  • Describe funding risk as a source of liquidity risk for private equity investors
  • Describe exit risk as a source of liquidity risk for private equity investors
  • Demonstrate knowledge of approaches to modeling cash flow projections.
  • Demonstrate knowledge of three approaches to forming model projections.
  • Demonstrate knowledge of the use of an overcommitment strategy in private equity funds.
Topic 5:  Real Assets moremore less 3 5.5 hours $89
Chapter 14 -  Real Estate as an Investment
  • Identify and discuss five potential advantages of real estate that encourage its inclusion in an investment portfolio
  • Discuss heterogeneity within real estate subcategories
  • Demonstrate knowledge of the attributes of real estate.
  • Discuss the factors that affect the inflation protection potential of real estate investment
  • Describe the components of the four-quadrant model, and its potential uses for analyzing real estate investment
  • Discuss four especially common categories used to differentiate real estate investments given by equity versus debt, domestic versus international, residential versus commercial, and private versus public
  • Discuss additional categories used to classify real estate investments (i.e., categorization by market, and classification based on risk and return characteristics)
  • Demonstrate knowledge of real estate asset allocation.
  • Define, describe, and compare the top-down and bottom-up asset allocation approaches
  • Identify and discuss three potential disadvantages of real estate that discourage its inclusion in an investment portfolio
  • Demonstrate knowledge of methods of categorizing real estate.
  • Demonstrate knowledge of the return drivers for real estate.
  • Demonstrate knowledge of the four-quadrant model.
Chapter 15 -  Real Estate Indices and Unsmoothing Techniques
  • Demonstrate knowledge of real estate indices and unsmoothing.
  • Demonstrate knowledge of the concept of smoothed pricing.
  • Identify the uses of real estate price indices
  • Explain how and why current reported prices are modeled as a function of past true prices
  • Explain the process of unsmoothing a return series using first-order autocorrelation
  • Explain the process the process of unsmoothing a historical return series
  • Discuss the types of noise in transaction prices and appraised values of real estate properties, explanations for the noise, and problems created by noisy pricing
  • Discuss three primary approaches to appraising real estate, and identify the two primary advantages and three primary disadvantages of appraisal-based models
  • Identify the key characteristics of transaction-based real estate indices
  • Evaluate the historical performance of real estate indices
  • Recognize popular global real estate indices and their key characteristics
  • Discuss the effect of price smoothing on arbitrage in a perfect market
  • Identify factors that contribute to persistence in price smoothing
  • Discuss residential real estate property indices
  • Evaluate the historical performance of mortgage REITs
  • Discuss the repeat-sales method (RSM) for estimating transaction-based price indices, including two key advantages and three key disadvantages, and apply the process for using the RSM to construct an index
  • Describe NCREIF and key characteristics of the NCREIF Property Index (NPI)
  • Describe how the first order autocorrelation coefficient can be estimated
  • Describe the three steps of the unsmoothing process
  • Explain how and why current reported returns are modeled as a function of past true but unobservable returns
  • Define unsmoothing and explain the rationale for the process
  • Demonstrate knowledge of models of price and return smoothing.
  • Demonstrate knowledge of the process of unsmoothing a price or return series.
  • Explain how estimated values of true prices can be determined from reported prices using an estimation of the parameter for first order autocorrelation
  • Describe the process of unsmoothing a return index based on a model of smoothed price changes rather than returns
  • Explain how the estimated autocorrelation coefficient can be used to calculate the volatility and the beta of an unsmoothed return series
  • Describe the comparable sales method of appraisals
  • Discuss the hedonic pricing method (HPM) for estimating transaction-based price indices, including its five key advantages and six key disadvantages, and apply the three-step process for calculating a hedonic price index
  • Evaluate the historical performance of equity REITs
  • Describe the NCREIF Farmland Index and the NCREIF Timberland Index
  • Recognize problems that can result from price smoothing
  • Describe market-traded real estate vehicles (typically classified as real estate investment trusts [REITs])
  • Compare and contrast RSM and HPM indices
  • Describe and apply the discounted cash flow analysis method (a.k.a. income approach) of appraisals
  • Describe the relationship between the variances of true and reported returns
  • Explain the process for unsmoothing returns with higher-order autocorrelation
  • List and discuss four explanations for smoothed prices and delayed price changes in a price index
  • Demonstrate knowledge of the application of the unsmoothing process.
  • Demonstrate knowledge of noisy pricing.
  • Describe the relationship between the betas of true and reported returns
  • Describe sample selection biases associated with transaction-based indices
  • Describe real estate mortgage (or debt) indices
  • Interpret the results of unsmoothing a return series
  • Demonstrate knowledge of appraisal-based real estate indices.
  • Demonstrate knowledge of transaction-based real estate indices.
  • Demonstrate knowledge of major real estate indices.
  • Demonstrate knowledge of the historical performance of real estate indices.
Chapter 16 -  Investment Styles, Portfolio Allocation, and Real Estate Derivatives
  • List, define, and discuss the investment characteristics of the three NCREIF real estate investment styles
  • Describe individual properties according to the three NCREIF real estate investment styles and the eight attributes developed by NCREIF
  • Demonstrate knowledge of the three NCREIF real estate investment styles.
  • List and describe three main reasons for introducing styles into real estate portfolio analysis
  • Describe the basic characteristics of style boxes, and how they can be used in analyzing real estate investments
  • Describe and apply cap rates with respect to real estate investments
  • Discuss considerations in the development of risk and return estates for real estate styles
  • Describe and calculate property total return swaps
  • Identify the uses of real estate derivatives by institutional investors
  • Identify three potential benefits offered by the existence of derivatives on housing prices
  • Describe real estate forward, futures, and options contracts
  • Describe return estimates for core real estate
  • Demonstrate knowledge of eight attributes used to differentiate the NCREIF real estate investment styles.
  • Describe real estate portfolios according to the three NCREIF real estate investment styles
  • Demonstrate knowledge of three purposes of real estate style analysis.
  • Demonstrate how the true volatility of core real estate risk can be estimated from both the smoothed volatility and from the first order correlation coefficient
  • Describe structured real estate index notes
  • Identify two critical factors for the effective management of risk using real estate derivatives
  • Recognize seven advantages and six disadvantages of property derivatives
  • Describe traded derivatives of mortgage-backed securities
  • Show how the beta of a true series can be estimated from the beta of a smoothed series and an autocorrelation coefficient
  • Demonstrate knowledge of real estate style boxes.
  • Demonstrate knowledge of capitalization (cap) rates and the expected returns of real estate.
  • Discuss how risk-premium methodologies can be applied in estimating expected returns for noncore (i.e., value-added and opportunistic) real estate investments
  • Describe stock market-based property return indices (SMPRIs)
  • Describe methods used by PSERS and CalSTRS to develop absolute target rates of return for noncore real estate assets
  • Demonstrate knowledge of using real estate styles to develop investment risk and return expectations.
  • Demonstrate knowledge of the characteristics of real estate derivatives.
  • Demonstrate knowledge of the types of tradable real estate derivatives and specialized real estate indices.
Chapter 17 -  Listed Versus Unlisted Real Estate Investments
  • Demonstrate knowledge of unlisted real estate funds.
  • Describe unlisted open-end real estate
  • Distinguish between securitization and the pooling of securities
  • Describe real estate investment trusts (REITs) and real estate operating companies (REOCs)
  • Compare and contrast the historical investment performance characteristics from the returns of an appraisal-based real estate index (NPI) with those from the returns of a market-based real estate index (REIT Index) over a given period
  • Summarize four explanations of the observed relationship between the volatilities of appraisal-based real estate indices and market-based real estate indices
  • Describe real estate index-based exchange-traded funds (ETFs)
  • Discuss the mechanics and trading of ETFs, and how these characteristics facilitate arbitrage
  • Describe unlisted closed-end real estate funds
  • Demonstrate knowledge of listed real estate funds.
  • Demonstrate knowledge of market-based versus appraisal-based returns.
  • Describe unlisted real estate funds of funds
  • Explain how listed real estate positions can be used to hedge unlisted real estate positions
  • Compare and contrast the investment characteristics of REITs, ETFs, and listed funds and mutual funds
  • Discuss the importance of accurate pricing and risk estimation
  • Recognize six key advantages and two key disadvantages of listed real estate funds
  • Discuss two views of the effectiveness of relying on REITs as indicators of private real estate positions
  • State four key advantages and three key disadvantages of unlisted real estate funds
  • Demonstrate knowledge of arbitrage, liquidity, and segmentation with regard to real estate funds.
  • Describe financial market segmentation
  • Discuss the global real estate securities market, focusing on global REITs
  • Describe non-traded REITs
  • Explain how turnover, dealer sales, and agency costs affect REIT market values
  • Discuss how real estate price volatility and liquidity affect the effectiveness of shortterm REITs as risk management tools
  • Compare and contrast traded REITs with non-traded REITs across five major distinguishing characteristics
  • Interpret historical evidence regarding whether REITs are effective as short- to intermediate-term hedging vehicles for appraised real estate values
  • Discuss whether real estate can serve as an effective diversifier
Chapter 18 -  International Real Estate Investments
  • Demonstrate knowledge of the basic concepts of international real estate investing.
  • Discuss three reasons why agency relationships are important in international real estate investing
  • Discuss the primary obstacles, benefits, and risks of investing in real estate internationally
  • Explain why investment in international real estate is generally associated with higher expected returns
  • Discuss the advantages and disadvantages of international equity real estate investment trusts (REITs)
  • Describe the advantages and disadvantages of various forms of real estate equity investments and debt investments
  • Analyze the potential diversification benefits associated with allocations to international real estate from both theoretical and empirical perspectives
  • Identify the sources and explain the implications of asymmetric information in international real estate investing
  • Demonstrate knowledge of the opportunities associated with international real estate investing.
  • Demonstrate knowledge of the challenges associated with international real estate investing.
  • Describe the sources and effects of illiquidity and transactions costs in international real estate inv
  • Evaluate the effect of income taxation on the performance of, and optimal allocations to, real estate investments from a global perspective
  • Analyze and calculate the effect of depreciation tax shields on international real estate investments
  • Describe the political and economic risks associated with international real estate investing
  • Demonstrate knowledge of strategies for establishing a global real estate investment program.
  • Discuss and calculate exchange rate risk in the context of international real estate investing
  • Explain and calculate the effect of deferral of taxation of gains on international real estate investments
  • Discuss the combined effects of depreciation, deferral, and leverage on international real estate investments
  • Recognize legal risks encountered in international real estate investing
  • Explain and calculate the effect of leverage on international real estate investments
Chapter 19 -  Infrastructure as an Investment
  • Demonstrate knowledge of infrastructure assets.
  • Describe the effect of the stage of maturity on infrastructure’s risk-return profile
  • Identify the distinguishing characteristics of infrastructure as an asset class
  • List and describe the twelve defensive attributes of infrastructure assets
  • Describe infrastructure financing and investment options
  • Compare and contrast active management and passive management investment styles
  • Compare and contrast investment in infrastructure assets with investments in bonds, real estate, buyouts, and equities
  • Describe the characteristics, advantages, and disadvantages of PPPs
  • Discuss the rationales behind governmental regulation and public policy that affect infrastructure assets
  • Compare and contrast the historical performance of infrastructure funds with that of other asset classes
  • Describe stages of infrastructure asset maturity and the effect of asset maturity on the risk-return profile of the asset
  • Discuss private infrastructure funds
  • Describe three approaches used to classify infrastructure assets by their economic nature
  • Describe the effect of the geographic location on infrastructure’s risk-return profile
  • Demonstrate knowledge of the key characteristics of infrastructure that dictate its risk-return profile.
  • Demonstrate knowledge of attributes of infrastructure assets that make infrastructure attractive as a defensive investment.
  • Describe the effect of the sector scope on infrastructure’s risk-return profile
  • Discuss factors affecting the demand for infrastructure assets
  • Discuss publicly traded infrastructure funds
  • Describe the role geographic scope plays in shaping the risk-return profile of an infrastructure fund
  • Describe the role sector scope plays in shaping the risk-return profile of an infrastructure fund
  • Discuss direct infrastructure deals
  • Discuss the supply of infrastructure assets
  • Demonstrate knowledge of methods used to access infrastructure investment opportunities.
  • Demonstrate knowledge of infrastructure fund strategy classification.
  • Discuss publicly traded infrastructure companies
  • Recognize the characteristics of core infrastructure and peripheral infrastructure
  • Discuss debt type infrastructure investments
  • Demonstrate knowledge of how infrastructure compares with other asset classes.
  • Demonstrate knowledge of public-private partnerships (PPPs).
  • Demonstrate knowledge of how regulation and public policy affect infrastructure assets.
  • Demonstrate knowledge of the historical performance of infrastructure funds.
Chapter 20 -  Farmland and Timber Investments
  • Demonstrate knowledge of the motivations for, and characteristics of, farmland investment.
  • List and describe three motivations that drive investments in farmland
  • List and discuss the three primary approaches to accessing returns from agricultural assets
  • Evaluate the historical returns to U.S. farmland
  • List the primary macro factors driving global agricultural demand and supply
  • Describe the four economic functions of agricultural infrastructure
  • Identify the investment characteristics of real assets
  • Describe four key attractions to timber investment
  • Discuss the history and drivers of returns to timberland investing
  • Discuss the risk and return expectations for agriculture investments
  • Discuss three drivers of productivity of agricultural infrastructure
  • Discuss how changes in worldwide populations, incomes, and food affect the performance of farmland investments
  • Discuss macroeconomic factors that explain U.S. farmland returns
  • Discuss approaches investors can employ to capture improvements in agricultural yield, and calculate the change in a given crop yield
  • Identify three key characteristics of U.S. farmland investment
  • Demonstrate knowledge of the global demand for agricultural products.
  • Demonstrate knowledge of investor approaches to accessing the returns of agricultural assets.
  • Discuss investment opportunities in non-U.S. farmland
  • Describe the main factors that have driven historical growth in agricultural yields
  • Evaluate the heterogeneity of U.S. farmland returns
  • Discuss how the increasing production of biofuels affects demand for agricultural products
  • Discuss how the ease of investment, high liquidity, effective inflation hedging, positive portfolio diversification, and low interest rate sensitivity of agriculture investments affect their appropriateness for an institutional portfolio
  • Describe the risks associated with international timber investing
  • Evaluate the investment implications of timberland rotation
  • characteristics of real assets
  • Explain characteristics of indices produced by The National Council of Real Estate investment Fiduciaries (NCREIF), and describe the NCREIF Farmland Index
  • Discuss the determinants of agricultural profitability
  • Contrast returns to farmland investment with those of U.S. timberland investment
  • Demonstrate knowledge of the factors that contribute to the returns to farmland.
  • Demonstrate knowledge of investing in agriculture infrastructure.
  • Describe the effect of government agricultural subsidies on agricultural returns
  • Describe the causes and consequences of the significant price appreciation observed in U.S. farmland over the period 2009-2014
  • Demonstrate knowledge of global investing in timberland.
  • Demonstrate knowledge of farmland and timber investments, as compared with other real assets investments.
Chapter 21 -  Investing in Intellectual Property
  • Demonstrate knowledge of the characteristics of intellectual property.
  • Describe the characteristics of intellectual property (IP) assets
  • Discuss historical revenues for film production and distribution
  • Discuss reasons for considering art as an investment
  • Discuss theoretical and empirical evidence regarding the returns to R&D and patent expenditures
  • List and describe six characteristics of IP that overlap with the characteristics of real assets
  • Identify strategies for accessing R&D through the acquisition and monetization of patent-related IP
  • Describe the empirical evidence on the investment performance of art as an asset class
  • Recognize the four stages in the film production and distribution life cycle
  • Demonstrate knowledge of the investment properties of film production and distribution.
  • Demonstrate knowledge of the investment properties of visual works of art.
  • Describe the costs and financing structures associated with film production and distribution
  • Discuss characteristics of art that are hypothesized to drive returns to art investments
  • Discuss patent enforcement and litigation strategies and how these processes affect returns on patent investments
  • Describe the patent sale license-back (SLB) strategy
  • Evaluate the historical risk-return profile and correlations of the art market
  • Recognize the four key evidence-based conclusions regarding film production profitability
  • Demonstrate knowledge of the investment properties of research and development (R&D) and patents.
  • Demonstrate knowledge of six characteristics common to both IP and real assets.
  • Describe the factors and variables involved in estimating the relationship of returns to film production
  • Recognize patent lending strategies
  • Discuss potential buyers for patents and the concept of patent pooling
  • Describe the risks involved with patent investment
Topic 6:  Commodities moremore less 4 4.5 hours $79
Chapter 22 -  Key Concepts in Commodity Markets
  • Demonstrate knowledge of the economics of commodity spot markets.
  • Describe the process of commodity transformation
  • Discuss the theory of storage and the concept of convenience yield
  • Discuss the relationship between the slope of the forward curve and the cost of carry
  • Analyze factors affecting the relationship between commodity prices and the business cycle
  • List and discuss the three sources into which returns on commodity contracts may be decomposed
  • Discuss empirical evidence on the effects of rebalancing on return
  • Describe the rationale for using commodities as an inflation hedgeDescribe the rationale for using commodities as an inflation hedge
  • Discuss the effects of exchange rate changes and risks on commodity market prices and participants
  • Discuss the effects commodity prices have on currencies and national economies
  • Discuss evidence regarding the efficacy of commodities as an inflation hedge
  • Describe the effects of rebalancing when commodity prices are not mean-reverting
  • Describe how the forward curve can indicate scarcity In commodity markets
  • Describe the properties of spot commodity prices, including evidence regarding longrun returns, and the causes and effects of supercycles and short-term fluctuations
  • Discuss the relationship between market expectations and forward curves
  • List and explain the three determinants of convenience yield
  • List and discuss the seven risks to which commodity trading exposes trading firms
  • Demonstrate knowledge of commodity trading firms, risks, and speculation.
  • Demonstrate knowledge of the economics of commodity futures markets.
  • Discuss speculation in commodity markets
  • List and describe the major components of the cost of carry, and calculate convenience yield for a given commodity
  • Describe the concept of normal backwardation, and discuss its relationship to the liquidity preference hypothesis
  • Recognize and approximate the effect of rebalancing on geometric and arithmetic mean returns
  • Describe the rationale for the inverse relationship between financial assets and both commodities and inflation
  • Analyze historical performance of commodity investments
  • Discuss commodity storage models, and the relationship between storage models and the futures curve for a commodity
  • Describe commodity arbitrage and the cost of carry without convenience yield
  • Discuss the effects of commodity speculation on pricing and risk
  • Demonstrate knowledge of commodity forward curve theories.
  • Demonstrate knowledge of the decomposition of returns to futures-based commodity investment.
  • Describe commodity arbitrage and the cost of carry with convenience yield
  • Discuss the preferred habitat hypothesis, segmented markets, and option-based models of the term structure, and their effects on forward curves
  • Discuss research findings regarding the financialization of commodity returns
  • Demonstrate knowledge of the use of commodities as an inflation hedge.
  • Demonstrate knowledge of the relationship between commodity prices and exchange rates.
  • Demonstrate knowledge of the effects of rebalancing and the historical performance of commodity futures.
Chapter 23 -  Allocation to Commodities
  • Demonstrate knowledge of the five beneficial characteristics of allocations to commodity futures.
  • List the five beneficial characteristics for investors when allocating to commodity futures
  • Discuss the unique risk and return characteristics of commodities, as compared to traditional investments
  • Describe directional strategies in commodities markets
  • Describe relative strategies in commodities markets
  • Describe various types of calendar spreads, and calculate the position profit and loss for a commodity spread trade
  • Describe how equity and debt of commodity-based firms tend to act as hybrid investments
  • Discuss the commodity risk management strategies of commodity producers
  • Describe processing spreads, including typical users and common types
  • Describe the effects of full collateralization on commodity risk, diversifying a traditional portfolio with commodity futures, and adding commodities exposure in an asset-liability management investment setting
  • Demonstrate knowledge of commodity investment strategies.
  • Demonstrate knowledge of directional strategies.
  • Describe the hedging benefits of commodity futures over time and in various economic cycles
  • Describe substitution commodity spreads, two major types of substitutions in commodities, and how to determine entry and exit points with a substitution test statistic
  • Describe the effect of commodity prices on the risk associated with investing in securities issued by commodity-based firms
  • Discuss commodity-based equity and debt investment strategies
  • Describe quality and location spreads, and how they differ from substitution spreads
  • Discuss the performance of commodities in each of the four major business cycle phases
  • Demonstrate knowledge of relative value strategies.
  • Demonstrate knowledge of commodity futures and options spreads.
  • Explain how mean reversion can be a great benefit of commodity investment
  • Describe intermarket relative value strategies
  • Understand why commodity investment may be well suited to capture diversification return
  • Demonstrate knowledge of capital structure and commodity-based corporations.
  • Explain why volatility reduction enhances geometric mean returns, but does not enhance expected values in commodity investing
  • Discuss the source of positive risk premium of commodity investments and the effect of this positive risk premium on investment decisions
  • Discuss the source of positive skewness of commodity investments and the effect of this positive skewness on investment decisions
Chapter 24 -  Accessing Commodity Investment Products
  • Demonstrate knowledge of the benefits and drawbacks of direct ownership of physical commodities.
  • Discuss strategies related to financing the production and trade of physical commodities
  • Describe the characteristics of commodity indices
  • Discuss the benefits and drawbacks of direct ownership of various types of physical commodities
  • Recognize the types of instruments, indices, and vehicles institutional investors may use to obtain commodity exposure through indirect investments
  • Discuss four factors that influence returns on commodity indices, and their effects on return attribution
  • Describe the effect on performance of the eight sources of commodity index returns
  • Describe the characteristics of value-based commodity indices and quantity-based commodity indices
  • Describe the difficulties encountered with validating the performance improvements resulting from second-generation and third-generation commodity index enhancements
  • Describe the roll techniques associated with second-generation enhanced commodity indices
  • Describe the characteristics of total return indices and excess return indices
  • Describe the four measures of return attribution (i.e., spot return, excess return, total return, and realized roll return) that are typically published by commodity index providers
  • Describe the characteristics of commodity index swaps
  • Recognize the effect of a commodity index’s methodology on volatility and return levels
  • Describe how leveraged notes may offer leveraged exposure to commodity indices
  • Demonstrate knowledge of the benefits and drawbacks of indirect ownership of commodities.
  • Demonstrate knowledge of leveraged and option-based commodity investment structures.
  • Discuss the characteristics of principal-guaranteed notes
  • Describe the characteristics of public commodity-based equities
  • Calculate returns for a given commodity index
  • Describe the characteristics of the two types of roll methodology a commodity index may employ
  • Describe the roll techniques associated with third-generation enhanced commodity indices
  • Discuss considerations involved in the choice of weighting methodology
  • Describe the characteristics of bonds issued by commodity firms
  • Demonstrate knowledge of the basic concepts associated with commodity indices.
  • Demonstrate knowledge of eight sources of commodity index returns.
  • Describe the characteristics of commodity-based mutual funds and exchange traded funds (ETFs)
  • Describe the characteristics of first generation commodity indices
  • Describe the characteristics of public and private commodity partnerships
  • Demonstrate knowledge of the factors to be considered in designing commodity indices.
  • Demonstrate knowledge of performance enhancements provided by second-generation and third-generation commodity indices.
  • Describe the characteristics of commodity-linked investments
  • Describe the characteristics of commodity-based hedge funds
  • Demonstrate knowledge of commodity index return calculations.
  • Discuss strategies related to financing the production and trade of physical commodities
Topic 7:  Hedge Funds and Managed Futures moremore less 5 12.5 hours $159
Chapter 25 -  Managed Futures
  • Discuss the structure and key features of the managed futures industry
  • Discuss and compare managed futures strategies defined by the core dimension of data sources
  • Demonstrate knowledge of the structure of the managed futures industry.
  • Discuss the conclusions of academic research regarding the benefits of CTAs
  • Describe the adaptive markets hypothesis (AMH)
  • Recognize the four core decisions of a futures trading system
  • Describe the use of data processing in futures portfolio construction
  • List and describe four practical implications of the AMH
  • Describe the sources of return for CTAs
  • Demonstrate knowledge of four core dimensions of managed futures investment strategies.
  • Discuss and compare managed futures strategies defined by the core dimension of implementation styles
  • Discuss and compare managed futures strategies defined by the core dimension of strategy focus
  • Demonstrate knowledge of the foundations of managed futures.
  • List and describe eight positive risk-return trade-offs that CTAs provide for their investors
  • Discuss the topics of divergence, dislocation, and momentum with regard to markets and the AMH
  • Describe approaches to position sizing in futures portfolio construction, and calculate the number of futures contracts in a given allocation
  • Describe process of market allocation in managed futures portfolio construction
  • Discuss how market divergence may be measured, and calculate signal-to-noise ratio (SNRt) for a given price series and the market divergence index (MDI) for a given signal observation period
  • Demonstrate knowledge of the benefits of commodity trading advisors (CTAs).
  • Discuss and compare managed futures strategies defined by the core dimension of time horizons
  • Demonstrate knowledge of systematic futures portfolio construction.
  • Define crisis alpha opportunities, and describe characteristics of systematic trend following strategies and their implications during periods of equity market crisis
  • Summarize the role of trading execution in a managed futures portfolio construction
Chapter 26 -  Investing In CTAs
  • Demonstrate knowledge of the historical performance of commodity trading advisors (CTAs).
  • Discuss considerations involved in the allocation of capital and risk by CTA managers
  • Identify factors that contribute to the operational and informational efficiency of futures markets
  • Discuss the benchmarking of CTAs with an index of long-only futures contracts
  • Identify factors that affect an investor’s choice of a suitable managed futures investment product
  • Describe the relationship between crisis alpha and CTA performance
  • Recognize the portfolio diversification benefits of CTA investment for a 60/40 investor
  • Discuss four factors that drive CTA portfolio construction
  • Discuss the benchmarking of CTAs with peer groups
  • Analyze the statistical properties of CTA returns, and compare and contrast these properties with those of returns with other asset classes
  • Compare and contrast the leverage of traditional investments with the implicit leverage of futures positions
  • Demonstrate knowledge of the diversification benefits provided by CTAs.
  • Demonstrate knowledge of CTA risk measurement and risk management.
  • Discuss the functions of margin accounts and collateral management in managed futures positions and portfolios, and calculate trading level, funding level, and notional level for a given account
  • Discuss the effects of trend-following strategies on the skewness of a portfolio’s return profile
  • Discuss the benchmarking of CTAs with algorithmic indices
  • Describe the various structures of CTA products and funds
  • Recognize the portfolio diversification benefits of CTA investment for a fund of hedge funds investor
  • Describe the structuring of CTA products using managed accounts
  • Discuss the relationship between a CTA’s investment strategy and benchmark selection
  • Describe the risk factors to which CTAs are exposed
  • Describe capital at risk and its relevance for managed futures trading programs and portfolios
  • Demonstrate knowledge of three approaches to the benchmarking of CTAs.
  • Demonstrate knowledge of CTA managed accounts and platforms.
  • Discuss value at risk (VaR) with regard to managed futures, and calculate VaR for a given portfolio
  • Discuss theory and evidence regarding the relationship between market divergence and the performance of CTAs
  • Recognize five conclusions from empirical studies regarding CTA benchmarking
  • Describe the structuring of CTA investment using platforms
  • Compare and contrast the structural characteristics of common CTA structures
  • Discuss the exposure of CTAs to market volatility
  • Discuss maximum drawdown and drawdown duration, and calculate maximum drawdown for a given CTA
  • Describe the use of simulation analysis in managed futures investing
  • Describe the effects of gamma exposure on CTAs
  • Discuss the use of the omega ratio in the context of a CTA fund or a diversified portfolio of CTAs, and calculate the omega ratio for a given investment
Chapter 27 -  Hedge Funds: Relative Value Strategies
  • Demonstrate knowledge of the limits to arbitrage of relative valuation.
  • Define and describe convertible arbitrage
  • Describe the characteristics of a relative value investment strategy
  • Compare and contrast pairs trading and convertible arbitrage
  • Discuss the general framework for equity market-neutral strategies, and perform calculations to determine whether given variables are independent
  • Describe the characteristics of a relative value investment strategy
  • List three broad steps for the implementation of a convertible arbitrage strategy
  • Demonstrate knowledge of convertible arbitrage.
  • Demonstrate knowledge of equity market-neutral investment strategies, particularly pairs trading
  • Discuss reasons why convertible bonds may be underpriced
  • Explain the absence of arbitrage in the pricing of derivative contracts
  • Discuss the conceptual framework for a pairs trading strategy, including four steps for implementation
  • Describe the details of implementing a pairs trading strategy, summarize the conclusions of related research studies, and perform calculations to determine whether stock prices are co-integrated
  • Analyze examples of arbitrage opportunities
  • Describe the strategy of arbitrage with convertible bonds, and analyze a given example of the strategy
  • Describe the valuation of convertible securities using the component approach, and use this approach to calculate the price of a given convertible bond
  • Describe the factors that limit pure and/or risk arbitrage opportunities
  • Describe the sources of risk and return in a pairs trading investment strategy
  • Summarize the market size and historical performance of pairs trading investment strategies
  • Discuss the concept of efficiently inefficient markets
  • Describe the valuation of convertible securities using the binomial model, and use this approach to calculate the price of a given convertible bond
  • Describe convertible bond behavior at various stock price levels
  • Describe the application of the Greeks to the analysis of convertible bond pricing
  • Discuss the implementation of a convertible bond arbitrage strategy
  • Describe four non-equity risks of convertible bond arbitrage strategies
  • Describe the five sources of convertible arbitrage returns
  • Summarize the market size and historical performance of convertible arbitrage investment strategies
Chapter 28 -  Hedge Funds: Directional strategies
  • Compare and contrast equity long/short strategies, global macro strategies, and quantitative hedge fund strategies
  • Demonstrate knowledge of the financial economics of directional strategies.
  • Describe the equity long/short investment strategy
  • Summarize the history of the global macro hedge fund industry
  • Analyze historical performance of equity long/short and global macro hedge fund strategies
  • Describe the key characteristics of global macro strategies
  • Recognize the potential equity long/short investment opportunity set
  • Demonstrate knowledge of equity long/short hedge fund strategies.
  • Discuss the effect of informational market efficiency on directional hedge fund strategies
  • Describe behavioral finance, and discuss how behavioral biases affect investor behavior
  • Demonstrate knowledge of global macro hedge funds and strategies.
  • Discuss the value, growth, and blend approaches to equity long/short investing
  • Compare and contrast the discretionary trading approach and the systematic trading approach
  • Compare global macro managers to commodity trading advisors (CTAs)
  • Describe and compare the bottom-up approach and the top-down approach to fundamental analysis
  • Demonstrate knowledge of the historical performance of directional strategies.
  • Describe Gordon’s growth model and the enterprise valuation model for fundamental equity valuation, and use these models to calculate valuations for a given investment
  • Discuss various schools of thought regarding sources of returns of which global macro funds are trying to take advantage
  • Describe multistrategy global macro funds
  • Describe the sector-specific approach and the activist approach to equity long/short investment
  • Discuss the steps involved in the process of executing a long/short hedge fund strategy (i.e., idea generation, optimal idea expression, position sizing, and trade execution)
  • Describe directional currency trades, and apply the Fisher equation
  • Discuss the possible effect of global macro funds on financial market volatility in emerging markets
  • Recognize the risks associated with equity long/short investing, and describe how they may be managed
  • Describe the issues of managerial expertise, sources of returns, and return attribution as they apply to the analysis of equity long/short strategies, and calculate the return on a given long/short investment
  • Describe four models used for currency trading
  • Describe carry models for currency trading, and determine whether interest rate parity is satisfied in a given scenario
  • Discuss the procedures involved in the investment process for a fundamental equity long/short manager
  • Describe trend-following and momentum models for currency trading
  • Describe value and volatility models for currency trading, and calculate the end-ofperiod exchange rate in a given scenario
  • Discuss risk management techniques used for global macro funds, and how they affect the portfolio construction process
Chapter 29 -  Hedge Funds: Credit Strategies
  • Demonstrate knowledge of the economics of credit risk.
  • Recognize the general characteristics of credit instruments typically traded by hedge funds
  • Describe the basic concepts of credit risk modeling, including the difference between sovereign and higher-levered entities, the related effects of credit risk, and credit risk modeling approaches
  • Apply the Merton model to determine equity values and payoffs to bondholders for a given investment
  • Describe the characteristics of reduced-form models
  • Compare and contrast the advantages and disadvantages of structural models and reduced-form models
  • Describe empirical credit models, and recognize how they differ from structural and reduced-form models
  • Define distressed debt
  • Discuss the processes and characteristics of bankruptcy laws across the globe
  • Describe the loan-to-own control-oriented approach to implementing distressed debt investment strategies
  • Identify factors to consider in valuing a potential distressed debt investment
  • Describe a typical asset-based loan (ABL) borrower, and the unique characteristics of the ABL market
  • Describe the characteristics and application of the KMV model
  • Use the KMV model to estimate the credit score (the distance to default) for a given firm
  • Explain why borrowers select asset-based lending
  • Discuss the effect of liquidity risk on the value of a distressed debt investment
  • Describe the classic approach to implementing distressed debt investment strategies
  • Describe trade claims
  • Describe the purpose and characteristics of the Altman Z-score model
  • Discuss the role of default intensity in reduced-form models, and calculate default intensity for a given firm
  • Use the Black-Scholes option pricing model in the Merton model to price a given firm’s equity as a call option on the stock of the underlying company
  • List and describe types of credit events that may lead to an increase in credit risk, and define exposure at default (EAD) and loss given default (LGD)
  • Demonstrate knowledge of credit risk modeling.
  • Demonstrate knowledge of the Merton model.
  • Define adverse selection and moral hazard, and describe how they relate to credit risk
  • Use the Black-Scholes option pricing model in the Merton model to price a given firm’s debt as a put option on the stock of the underlying company
  • Demonstrate how default intensity can be incorporated into the valuation of risky debt
  • List and describe the five financial ratios that are used as inputs to determine Altman Z-scores
  • Describe the characteristics of distressed debt, and how the size of the distressed debt universe is measured
  • Describe trading-oriented approach to implementing distressed debt investment strategies
  • Discuss the effect of mark-to-market risk on the value of a distressed debt investment
  • Describe the features of asset-based lending
  • Use the KMV model to estimate the expected default frequency for a given investment
  • Describe common uses of asset-based lending proceeds
  • Discuss the effect of legal and jurisdiction risk on the value of a distressed debt investment
  • Describe debtor-in-possession (DIP) loan approach to implementing distressed debt investment strategies
  • Discuss common factors that cause financial distress for borrowers
  • Calculate and interpret Z-scores in Altman’s credit scoring model
  • Recognize the relationship among credit spreads, default intensities, and recovery rates, and use two of these factors as variables to solve for the third for a given investment
  • Analyze the role of credit spreads in structural models and how the credit spread can be used to calculate the price of risky debt
  • Discuss how probability of default (PD) and recovery rate (RR) affect credit risk, and calculate loss given default and expected loss from credit risk
  • Demonstrate knowledge of the Kealhover, McQuown, and Vasicek (KMV) credit risk model.
  • Demonstrate knowledge of reduced-form models.
  • Evaluate advantages and disadvantages of the Merton model
  • Describe the two predominant reduced-form credit models
  • Describe the countercyclical nature of distressed debt opportunities
  • Describe the structures of ABLs and their collateral requirements
  • Describe ABL lender protection and covenants
  • Discuss the types of investors and investment vehicles in distressed debt
  • Discuss four important properties of the Merton model
  • Demonstrate knowledge of the pros and cons of structural and reduced-form models.
  • Demonstrate knowledge of empirical credit models.
  • Describe the roles of fundamental valuation and informational inefficiency as return drivers in distressed debt investment
  • Discuss five specialized risks inherent to ABLs (i.e., valuation, process and people, hedging, legal, and timing/exit)
  • Describe the roles of catalytic events and activism as return drivers in distressed debt investment
  • Demonstrate knowledge of distressed debt investment strategies.
  • Demonstrate knowledge of bankruptcy laws across the globe.
  • Demonstrate knowledge of the implementation of distressed debt investment strategies.
  • Demonstrate knowledge of the valuation risks involved in distressed debt investing.
  • Demonstrate knowledge of asset-based lending.
Chapter 30 -  Volatility, Correlation, and Dispersion Products and Strategies
  • Demonstrate knowledge of volatility, risk factors, and risk premiums.
  • Discuss volatility processes with jump risk, and apply equations that represent returns and changes in volatility
  • Discuss volatility as a return factor exposure
  • Explain how writing options can be used as a short volatility strategy
  • Describe the economic rationale for the existence of volatility products
  • Describe the four subcategories of volatility hedge funds
  • Describe the characteristics and mechanics of vertical intra-asset (skew) option spreads, describe how vertical spreads take advantage of volatility skew, and discuss how to use vertical spreads in equities while hedging delta risk
  • Describe the characteristics of horizontal intra-asset (skew) spreads
  • Define vega risk, and describe one common approach used to normalize it
  • List and describe four features common to both volatility products and bonds
  • Explain how writing option straddles and strangles can be used as a short volatility strategy
  • Describe how the returns of volatility correlate with the returns of the market index, and the effect of volatility factors on risk premium
  • Describe volatility processes and regime changes
  • Demonstrate knowledge of how options can be used to manage the volatility exposure and risk premiums of a portfolio.
  • Demonstrate knowledge of modeling of volatility processes.
  • Discuss evidence supporting the idea that volatility is a unique, if unobservable, risk factor
  • Explain how writing option butterflies and condors can be used as a short volatility strategy
  • Describe the characteristics of variance swaps, including their link to realized volatility
  • Interpret the return characteristics of volatility funds
  • Describe the characteristics of inter-asset option spreads
  • Describe the characteristics of relative value volatility funds, short volatility funds, long volatility funds, and tail risk funds
  • Describe the Chicago Board Options Exchange (CBOE) Volatility Index (VIX), and recognize the steps for calculating the VIX
  • Discuss how the Greeks can be used to manage the risk of option portfolios
  • Describe how volatility derivatives can be used by investors to hedge market risk exposure
  • Demonstrate knowledge of volatility products.
  • Demonstrate knowledge of option-based volatility strategies.
  • Analyze a given position to determine the position’s volatility exposure
  • Describe futures contracts and options based on the VIX, recognize how the VIX term structure can serve as a proxy for portfolio insurance, and describe VIX-related options and ETFs
  • Evaluate the results of tests designed to access the level of tail risk protection provided by the four volatility strategies
  • Calculate the price of a given 30-day hypothetical contract
  • List and describe six key properties of realized volatility
  • Demonstrate knowledge of volatility hedge funds and their strategies.
  • Describe the implied volatility structures of derivatives
  • Describe the mechanics of, price modeling of, and motivations for correlation swaps; calculate the net payment on a given correlation swap; and describe dispersion trades
  • Identify the common theme found in the pricing and trading of volatility and volatility products
  • Evaluate the evidence that short volatility positions are associated with a positive risk premium
  • Describe the dynamics of the volatility risk premium
  • List and describe two reasons that explain the relatively short recovery period from drawdowns that exists for investment in volatility strategies
  • List and describe two reasons that explain why the mean reversion that occurs with realized volatility is not an arbitragable property
Chapter 31 -  Hedge Fund Replication
  • Demonstrate knowledge of the basics of hedge fund replication products.
  • Describe the two key issues regarding the benefits provided by replication products
  • Describe the basic characteristics of hedge fund replication products
  • Discuss the potential benefits to investors of using replication products
  • Estimate the risk and return of a given fund of hedge funds
  • Describe the factor-based approach
  • Describe the payoff-distribution approach to hedge fund replication
  • Describe the algorithmic approach to hedge fund replication
  • Describe ETFs and how they can be used as hedge fund replication products
  • Describe AMFs, also known as liquid alternative funds
  • Identify and describe three potential benefits to hedge managers of offering AMFs
  • Recognize three distinct advantages of ETFs over mutual funds
  • Discuss how the algorithmic approach can be applied to merger arbitrage, convertible arbitrage, and momentum strategies
  • Compare and contrast the factor-based replication approach and the payoffdistribution replication approach, and describe the calculations that are necessary to replicate the probability distribution of a given hedge fund benchmark
  • Discuss the four issues that must be addressed in constructing a replication product using the factor-based approach
  • Describe three theories for the increased beta and decreased alpha in hedge fund returns
  • Discuss the eight potential benefits unique to hedge fund replication products (i.e., liquidity, transparency, flexibility, lower fees, hedging, lower due diligence and monitoring risks, diversification, and benchmarking)
  • Demonstrate knowledge of the potential benefits of replication products.
  • Demonstrate knowledge of the case for using hedge fund replication.
  • Analyze the level of alpha that is generated by the aggregate of hedge fund managers, and compare this with the alpha available to investors who select individual managers
  • Discuss the three steps involved in setting up a factor-based replication program, and describe the calculations that are necessary to estimate asset weights for a given portfolio
  • Summarize the empirical research evidence regarding the payoff-distribution approach
  • Compare the costs of alternative ETFs to those of traditional investment ETFs
  • Discuss the potential benefits to an investor of allocating capital to AMFs instead of to hedge funds
  • Describe and evaluate the risks associated with investing in an AMF
  • Discuss two key concepts in factor-based replication
  • Discuss how replication products can serve as a source of alpha or alternative beta
  • Demonstrate knowledge of the unique benefits provided by replication products.
  • Demonstrate knowledge of the factor-based approach to replication.
  • Summarize and evaluate empirical research related to the factor-based approach used to benchmark and replicate hedge funds
  • Demonstrate knowledge of the payoff-distribution approach to replication.
  • Demonstrate knowledge of the algorithmic (or bottom-up) approach to replication.
  • Demonstrate knowledge of alternative mutual funds (AMFs).
  • Demonstrate knowledge of exchange-traded funds (ETFs).
Chapter 32 -  Funds of Hedge Funds and Multistrategy Funds
  • Define and describe funds of hedge funds
  • Demonstrate knowledge of the approaches used by investors to gain hedge fund exposure.
  • Recognize factors contributing to the development of hedge fund indices, and arguments presented against hedge fund index investing
  • Discuss the historical performance of funds of hedge funds
  • Describe the assets under management (AUM)-weighted approach to constructing a fund of hedge funds portfolio
  • Discuss considerations in the selection of hedge funds for inclusion in a fund of hedge funds portfolio
  • Discuss potential benefits of investing in funds of hedge funds
  • Discuss potential disadvantages of investing in funds of hedge funds
  • Compare and contrast the key features of funds of hedge funds and multistrategy funds
  • Discuss three approaches used by funds of hedge funds managers to add value for their investors (i.e., through strategic allocation, through tactical allocation, and through fund selection)
  • Discuss the advantages and disadvantages of the direct approach to obtaining hedge fund exposure in portfolios
  • Describe the five services provided as part of the delegated approach to obtaining hedge fund exposure in portfolios
  • Analyze evidence regarding value added by the use of these approaches by fund of hedge fund managers
  • Describe the equally weighted approach to constructing a fund of hedge funds portfolio
  • Describe the desirable characteristics of investment indices, and the challenges of creating representative, investable hedge funds indices
  • Demonstrate knowledge of the characteristics of funds of hedge funds.
  • Summarize the historical background of funds of hedge funds
  • Describe the diversification goals of various types of funds of hedge funds
  • Demonstrate knowledge of the performance of funds of hedge funds.
  • Discuss noninvestable hedge fund indices, including five issues that complicate tracking of broad-based noninvestable hedge fund indices
  • Describe the equally risk-weighted approach to constructing a fund of hedge funds portfolio
  • Describe the index approach to obtaining hedge fund exposure in portfolios
  • Describe the mean-variance optimization approaches (unconstrained and constrained) to constructing a fund of hedge funds portfolio
  • Discuss investable hedge fund indices
  • Demonstrate knowledge of approaches to fund of hedge funds portfolio construction.
  • Discuss characteristics of funds of hedge funds that reduce potential biases in reporting
  • Demonstrate knowledge of factors affecting manager selection for a fund of hedge funds.
  • Describe the mean-variance with constraints on higher moments approach to constructing a fund of hedge funds portfolio
  • Describe the personal allocation biases approach to constructing a fund of hedge funds portfolio
  • Demonstrate knowledge of benefits of allocating to funds of hedge funds.
  • Demonstrate knowledge of disadvantages of allocating to funds of hedge funds.
  • Demonstrate knowledge of the differences between funds of hedge funds and multistrategy funds.
  • Demonstrate knowledge of how funds of hedge funds add value for investors.
  • Demonstrate knowledge of hedge fund indices.
Chapter 33 -  Hedge Fund Operational Due Diligence
  • Demonstrate knowledge of the differences in the operational due diligence (ODD) processes for hedge fund investment and private equity investment.
  • Describe the major differences between hedge funds and private equity that affect the ODD processes for those types of investments
  • Identify and describe the four operational steps in the hedge fund trading process
  • Identify and describe the four primary reasons for a hedge fund to hold a cash position
  • Discuss the analysis of hedge fund prime brokers as part of the ODD process
  • Discuss four popular approaches used by investors in designing an approach to allocating resources for ODD reviews
  • Recognize the structures of hedge fund governance, and discuss the duties of committees, boards, and directors
  • Discuss the reasons for including analysis of insurance coverage in an ODD review, and recognize common types of hedge fund insurance
  • Compare the operational procedures of funds of hedge funds with those of hedge funds
  • Discuss structure and content of the documentation of results and conclusions of an ODD investigation
  • Discuss common operational decisions and allocation conclusions that result from the ODD process
  • Describe three models investors use to determine which key fund personnel to investigate as part of the ODD process
  • Identify areas commonly overseen by a hedge fund compliance department
  • Explain why ODD analysis of a hedge fund’s compliance function should include review of fund employees’ personal trading, common compliance risks regarding personal trading, compliance risks regarding insider trading, electronic communication monitoring, and the work of third-party compliance consultants
  • Recognize and define five areas that are typically covered during the background investigation process
  • Discuss the unique factors included in the ODD process for funds of hedge funds
  • Discuss the analysis of hedge fund administrators as part of the ODD process
  • Explain why internal hedge fund review processes and administrator checks are crucial as they relate to the processing of subscriptions and redemptions
  • Identify and describe additional factors investors analyze to identify operational risks
  • Demonstrate knowledge of the four operational steps in the analysis of hedge fund operational trading procedures.
  • Demonstrate knowledge of the analysis of hedge fund cash management and movement.
  • Identify the reasons for having an independent service provider verify the operational data of a hedge fund
  • Discuss factors involved in organizing and interpreting the results of hedge fund investigative due diligence
  • Demonstrate knowledge of the analysis of hedge fund external parties.
  • Demonstrate knowledge of the analysis of hedge fund compliance considerations.
  • Demonstrate knowledge of documenting the ODD process.
  • Demonstrate knowledge of operational decision making and allocation considerations.
  • Demonstrate knowledge of investigative due diligence.
  • Demonstrate knowledge of four approaches to resource allocation for ODD.
  • Demonstrate knowledge of the governance of hedge funds.
  • Demonstrate knowledge of hedge fund insurance.
  • Demonstrate knowledge of the process for performing ODD on funds of hedge funds.
Chapter 34 -  Regulation and Compliance
  • Demonstrate knowledge of three foundational principles of financial market regulation.
  • Discuss the three principles on which financial regulations are based
  • Summarize the role of the U.S. Securities and Exchange Commission (SEC) in the regulation of financial markets within the United States
  • Describe the historical development of the structure and governance of the European Union (EU)
  • Discuss the regulation of hedge funds in the continent of Asia, and specifically in Hong Kong, Singapore, South Korea, and Japan
  • Identify and describe regulations for alternative asset managers in Europe
  • Describe the legal foundation of regulation of hedge funds in the United States
  • Demonstrate knowledge of the regulation of alternative investments in the United States.
  • Demonstrate knowledge of the regulation of alternative investments in Europe.
  • Discuss the core operating principles that govern the hedge fund regulatory scheme in the United States
  • Discuss European regulations regarding registration, exemptions to compliance, obtaining registration, AIFMD fund directives and fund requirements, marketing materials, formal risk management and accountability, and required reporting
  • Describe the role of the European Securities and Markets Authority (ESMA), violation penalties, and the role of ESMA in the enforcement of European regulation
  • Describe hedge fund registration requirements in the United States
  • Demonstrate knowledge of the regulation of hedge funds in Asia.
  • Describe requirements for registered advisors to establish and maintain an adequate compliance program, including duties of the chief compliance officer, code of ethics, three types of SEC inspections, and responses to the outcomes of SEC inspections
  • Discuss the regulation of non-EU managers in Europe
  • List and describe the various reporting requirements for hedge funds in the United States
  • Summarize the regulation of private equity funds in the United States
Topic 8:  Structured Products moremore less 2 2.5 hours $49
Chapter 35 -  Structured Products I: Fixed-income Derivatives and Asset-backed Securities
  • Demonstrate knowledge of the main approaches to term structure modeling.
  • Recognize the main approaches used to model the term structure of interest rates
  • Describe, discuss and apply Vasicek’s model
  • Describe interest rate caps and floors, and calculate cap payments and floor payments
  • Discuss the structure and characteristics of ABSs
  • Discuss the features and distinguishing characteristics of ALBSs, and calculate prepayment rates
  • Discuss the features and distinguishing characteristics of CCRs
  • Describe arbitrage-free models of the term structure
  • Describe, discuss and apply the Ho and Lee model
  • Describe callable bonds, and calculate the value of a callable bond
  • Describe, discuss and apply the Cox, Ingersoll, and Ross (CIR) model
  • Demonstrate knowledge of equilibrium models of the term structure.
  • Demonstrate knowledge of arbitrage-free models of the term structure.
  • Describe the mechanics and uses of interest rate swaps (IRSs)
  • Describe and apply the process for valuing an IRS
  • Demonstrate knowledge of interest rate derivatives.
  • Demonstrate knowledge of asset-backed securities (ABSs).
  • Discuss the risks associated with open positons in IRSs
  • Demonstrate knowledge of auto loan-backed securities (ALBSs).
  • Demonstrate knowledge of credit card receivables (CCRs).
Chapter 36 -  Structured Products II: Insurance-Linked Products and Hybrid Securities
  • Demonstrate knowledge of insurance-linked securities.
  • Describe the characteristics of insurance-linked securities (ILS)
  • Describe the characteristics and mechanics of catastrophe bonds
  • Describe the characteristics of longevity risk
  • Describe the characteristics of mezzanine debt ( MD)
  • Compare the characteristics of MD with the characteristics of senior debt and equity
  • Describe the process for hedging longevity risk using longevity swap contracts
  • Describe the characteristics of four trigger types of catastrophe bonds
  • Demonstrate knowledge of catastrophe (cat) bonds.
  • Demonstrate knowledge of longevity and mortality risk-related products.
  • Discuss the historical performance of catastrophe bonds
  • Describe the characteristics of mortality risk
  • Discuss the benefits and disadvantages of mezzanine debt to issuers and investors
  • Describe the structural terms and internal rates of return (IRR) typically associated with investment in MD
  • Discuss life insurance settlements, including its components, processes, and participants
  • Describe the process used to establish coupon rates that catastrophe bond investors expect to receive on their investment, and calculate the total coupon rate to investors
  • Demonstrate knowledge of mezzanine debt.
  • Describe the characteristics of catastrophe derivatives
  • Model a life insurance settlement, and calculate the net present value for a given policy
  • Describe the characteristics of various mezzanine products (i.e., subordinated debt with step-up rates, subordinated debt with PIK interest, subordinated debt with profit participation, subordinated debt with warrants, and convertible loans), and calculate payments to investors for a given bond
  • Discuss the uses of mezzanine debt and financing in project finance
  • Describe viatical settlements, and identify the characteristics that distinguish them from life settlements
  • Discuss the credit risk of catastrophe bonds, and list alternatives devised to mitigate and manage this risk
  • Discuss the benefits and risks of investing in viatical settlements

Check out details of our courses below.

Online Courses Instructors System Requirements  

Both course options provide unlimited access to recordings of course sessions from any computer and tablet/iPad until the end of the current CAIA exam period.

  • Complete Course - perfect for professionals who want both flexibility and structure in their study programs. Set your personal study schedule and then work through the curriculum with the instructor-guided program.
  • Course by Topic - perfect for candidates who prefer a self-study approach, but want guidance on specific Topics.

UpperMark courses explain and summarize CAIA exam material, carefully demonstrate calculations, and provide personal guidance for success on the exam. Other essential components of our courses -

  • Thorough instruction of the CAIA exam material.
  • Clear explanations of concepts and formulas.
  • Step-by-step presentations of calculations.
  • Personal guidance from UpperMark's experienced faculty.
  • Exclusive lecture notes for each course session - print lecture notes and annotate them while watching the course. Our lecture notes are an excellent summary of the CAIA material - an ideal study resource.

Complete Course attendees also have access to valuable office hours and recordings of office-hour sessions.

Start your studies early and study at your own pace!

 

Course

DETAILS
  • Course: Complete Set (Topics 1-8)
  • Course: Topic 1
  • Course: Topic 2
  • Course: Topic 3
  • Course: Topic 4
  • Course: Topic 5
  • Course: Topic 6
  • Course: Topic 7
  • Course: Topic 8
  • Course: Topic 9
$499


Best Value!
Platinum Suite

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