Description
CFA Institute is pleased to provide you with this Investment Series covering major areas in the field of investments. These texts are thoroughly grounded in the highly regarded CFA Program Candidate Body of Knowledge that serves as the anchor for the three levels of the CFA Program. Currently, nearly 200,000 aspiring investment professionals are devoting hundreds of hours each to master this material, as well as other elements of the Candidate Body of Knowledge, to obtain the coveted CFA charter. We provide these materials for the same reason we have been chartering investment professionals for over 40 years: to lead the investment profession globally by setting the highest standards of ethics, education, and professional excellence.
HISTORY
This book series draws on the rich history and origins of CFA Institute. In the 1940s, a handful of societies for investment professionals developed around common interests in the evolving investment industry. At that time, the idea of purchasing common stock as an investment — as opposed to pure speculation — was still a relatively new concept for the general public. Just 10 years before, the U.S. Securities and Exchange Commission had been formed to help referee a playing fi eld marked by robber barons and stock market panics. In January 1945, a fundamental analysis – driven professor and practitioner from Columbia University and Graham – Newman Corporation wrote an article in the precursor of today ‘ s CFA Institute Financial Analysts Journal , making the case that people who research and manage portfolios should have some sort of credential to demonstrate competence and ethical behavior. This person was none other than Benjamin Graham, the father of security analysis and future mentor to well – known modern investor Warren Buffett. Creating such a credential took 16 years. By 1963, 284 brave souls — all over the age of 45 — took an exam and successfully launched the CFA credential. What many do not fully understand is that this effort was driven by a desire to create professional standards for practitioners dedicated to serving individual investors. In so doing, a fairer and more productive capital market would result.Most professions — including medicine, law, and accounting — have certain hallmark characteristics that help to attract serious individuals and motivate them to devote energy to their life ’ s work. First, there must be a body of knowledge. Second, there need to be entry requirements, such as those required to achieve the CFA credential. Third, there must be a commitment to continuing education. Finally, a profession must serve a purpose beyond one ’ s individual interests. By properly conducting one ‘ s affairs and putting client interests fi rst, the investment professional encourages general participation in the incredibly productive global capital markets. This encourages the investing public to part with their hard – earned savings for redeployment in the fair and productive pursuit of appropriate returns.
As C. Stewart Sheppard, founding executive director of the Institute of Chartered Financial Analysts, said:
Society demands more from a profession and its members than it does from a professional craftsman in trade, arts, or business. In return for status, prestige, and autonomy, a profession extends a public warranty that it has established and maintains conditions of entry, standards of fair practice, disciplinary procedures, and continuing education for its particular constituency. Much is expected from members of a profession, but over time, more is given.
” The Standards for Educational and Psychological Testing, ” put forth by the American Psychological Association, the American Educational Research Association, and the National Council on Measurement in Education, state that the validity of professional credentialing examinations should be demonstrated primarily by verifying that the content of the examination accurately represents professional practice. In addition, a practice analysis study, which confirms the knowledge and skills required for the competent professional, should be the basis for establishing content validity.
For more than 40 years, hundreds upon hundreds of practitioners and academics have served on CFA Institute curriculum committees, sifting through and winnowing out all the many investment concepts and ideas to create a body of investment knowledge and the CFA curriculum. One of the hallmarks of curriculum development at CFA Institute is its extensive use of practitioners in all phases of the process. CFA Institute has followed a formal practice analysis process since 1995. Most recently, the effort involves special practice analysis forums held at 20 locations around the world. Results of the forums were put forth to 70,000 CFA charterholders for verifi cation and confi rmation. In 2007, CFA Institute moved to implement a continuous practice analysis by making use of a collaborative web – based site and ” wiki ” technology. This will open the process to thousands more charterholders and signifi cantly reduce the lag effect of concepts and techniques moving from practice to the Candidate Body of Knowledge.
What this means for the reader is that the concepts highlighted in these texts were selected by practitioners who fully understand the skills and knowledge necessary for success. We are pleased to put this extensive effort to work for the benefit of the readers of the Investment Series.