Economics: Study Session 4
Study Session Materials
New Readings from the 2008 CFA Program
Complete List of CFA Program Readings
Topic Overview
Economics for Valuation
This study session builds on the principles of economics from Level I and links them to the valuation process. The readings discuss how the economic environment impacts a firm's performance. The first topic is alternative theories of economic growth, including capital investment, productivity, human capital, and technology. Governments can influence economic growth to an extent by applying different regulations, each of which has an associated cost for firms or consumers.
Most large firms do not exclusively trade within their own borders, but
transact business with companies or individuals outside their own
country. Foreign exchange fluctuations have an impact on the bottom line
and hence on the valuation of a firm. However, buyers’ decisions are also
based on parity relations; in other words, buyers will purchase goods and
services where they can get the most for their money. Finally, the study
session ends with a review of the measures of economic progress.
View learning outcome statements (LOS) for readings objectives.
New Readings from the 2008 CFA Program
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“Trading with the World” Ch. 33, Economics, 7th edition, Michael Parkin (Pearson Addison-Wesley, South-Western, 2005) |
View LOS |
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“International Finance” Ch 34, Economics, 7th edition, Michael Parkin (Pearson Addison-Wesley, South-Western, 2005) |
View LOS |
Complete List of CFA Program Readings
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“Economic Growth” Ch. 25, Economics, 7th edition, Michael Parkin (Pearson Addison-Wesley, South-Western, 2005) |
View LOS |
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“Regulation and Antitrust Policy in a Globalized
Economy” Ch. 27, Economics Today, 12th edition, Roger LeRoy Miller pp. 651–659, including “Issues and Applications” on pages 664–665 (Pearson Addison-Wesley, 2004) |
View LOS |
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“Trading with the World” Ch. 33, Economics, 7th edition, Michael Parkin (Pearson Addison-Wesley, South-Western, 2005) |
View LOS |
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“International Finance” Ch 34, Economics, 7th edition, Michael Parkin (Pearson Addison-Wesley, South-Western, 2005) |
View LOS |
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“Foreign Exchange” Ch. 1, pp. 7-21, International Investments, 5th edition, Bruno Solnik and Dennis McLeavey (Addison Wesley, 2004) |
View LOS |
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“Foreign Exchange Parity Relations” Ch. 2, pp. 44–78, International Investments, 5th edition, Bruno Solnik and Dennis McLeavey (Addison Wesley, 2004) |
View LOS |
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“Measuring Economic Activity” Ch. 3, Guide to Economic Indicators, Fifth Edition (The Economist, 2003) |
View LOS |