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| Chartered Financial Analyst (CFA) |
What it is:
"CFA" is the designation attained by a person who has successfully
completed all three phases of the Chartered Financial Analyst (CFA) program.
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How it Works/Example(s):
To become a Chartered Financial Analyst, an individual must first have a
bachelor's degree and three years of practical experience in the investment
industry. He or she must then pass a series of three, six-hour examinations.
Passing these rigorous tests requires a comprehensive understanding of
accounting, economics, and portfolio management, as well as successful
demonstration of a high level of proficiency in the valuation and analysis of
both equity and fixed-income securities.
-- Financial Statement Analysis
-- Micro and Macro Economics
-- Securities Analysis and Valuation
-- Derivatives
-- Statistics
-- Fundamental and Technical Analysis
-- Corporate Finance
-- Global Markets
-- Portfolio Management
-- Ethics
Why it Matters:
A CFA certificate is one of the highest awards bestowed in the investment
industry, and is an internationally recognized and respected designation.
Furthermore, to become a Chartered Financial Analyst, the organization which
administers the program, the CFA Institute (formerly known as AIMR - the
Association for Investment Management and Research) also requires an adherence
to certain ethical standards and principles.
The coursework for the program is generally considered to be "master's level" and typically requires several hundred hours of study time per level. Still, even as the number of applicants has risen from 7,000 to over 30,000 during the last decade, the failure rate for the level one exam remains around 66%, or nearly two-thirds. As of the beginning of 2005, there fewer than 70,000 people worldwide had earned the CFA credential.
Chartered Financial Analysts usually
end up working for a broad range of employers, ranging from mutual fund firms to
hedge funds to investment banks to brokerage houses to boutique money managers.
Regardless of their exact job description, though, the three-letter CFA
designation represents the definitive mark of a competent financial analyst
bound to the highest standards of ethical behavior.
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