Week 12: Equity Investments

We are homing in on the final 1/4 of the curriculum. It has been a long journey so far, and if you have stuck with it throughout, congratulations! Please make sure to fill out your week 11 progress report to record your achievements.

Are you making sure to write down all of the LOS statements before going through each reading? And are you actively searching for the answers as you read through the text?

The week to come:

As discussed last week the equity investments topic area is split in two study sessions, that are further subdivided into 6 readings (3 in each). This week we are going to cover the final 4 readings.

The final reading in the first study session provides a discussion about market efficiency (defining forms of market efficiency and examples of market anomalies). The first reading in the last study session provides an overview of equity securities (common/preferred, public/private, direct/depository receipts etc.). The second reading contains an introduction to company and industry analysis (how are industries defined/delimited and analyzed). The final reading is about equity valuation. Here you will learn some basic tools and concepts including the Gordon growth model and the multistage dividend discount model, that you will need to refer to a lot throughout the program (so it is a good idea to pay close attention to these).

Tip:

Just like last week, there is a significant variation in the relationship between reading size and the number of end of chapter questions in this study session. The last reading (equity valuation) is shorter than the introduction to industry & company analysis, but at the same time it has got more end of chapter questions. It also contains some of the key concepts (like Gordon’s growth model) that we are going to use throughout the program. It is therefore not a bad idea to pay extra attention to the last reading.

As always we are going to apply our standard study approach to master this study session:

  • Please ensure that you write down and answer the LOS as you work your way through each reading. The combined effort of question practice and LOS statement “hunting” will ensure that you are focused on seeking out the most important information as you progress through each reading. Once you are done with each reading flick through your flashcards and make a note in your question log about those that you still struggle with.
  • Also, please ensure that you attempt the end of chapter questions from the underlying curriculum as soon as you finish each reading. As you answer the questions make a note of the most difficult ones in your question log (especially whenever you resort to guessing). When you are done with the questions, review your answers thoroughly (particularly those that you got wrong) and add these questions to your question log as well.
  • Lastly, as you wrap up each reading attempt only the challenging flashcards and end of chapter questions from your question log. Revise your answers and make a note of those that you still struggle with. Continue the same process each day for as many days as required until you have mastered all.

Once you are done with the tasks of this week, please record your status in your week 12 progress report.

In week 13 we are beginning Fixed Income Investments.

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