J. Anson, PhD, JD, CPA, CFA, CAIA
Kris Boudt, PhD
Alistair Bryne, PhD, CFA
Gerald W. Buetow Jr., PhD, CFA
Roger G. Clarke, PhD
W. Sean Cleary, PhD, CFA
Bruce M. Collins, PhD
Robert M. Conroy, DBA, CFA
Garry B. Crowder, JD
Christopher L. Culp, PhD
Joakim Darras
Pamela P. Drake, PhD, CFA
Frank J. Fabozzi, PhD, CFA, CPA
Ryan C. Fuhrmann, CFA
Khalid Ghayur, CFA
Felix Goltz
Larry Harris, PhD
Ronan G. Heaney
IMCA
David Iverson
Robert R. Johnson, PhD, CFA
David M. Jones, PhD
Paul D. Kaplan, CFA
Hossein Kazemi, PhD, CFA
Dorothy C. Kelly, CFA
Stephan A. Komon, CFA
Mark Kritzman, CFA
Asjeet S. Lamba, CFA
Veronique Le Sourd
Richard C. Marston, PhD
Lionel Martellini, PhD
Ron Mensink, CFA
Michael B. Miller
Benedict Peeters
Stephen C. Platt, CFA
Michael Pompian, CFA, CFP, CAIA
Ellen J. Rachlin
Bernd Scherer, PhD
Thomas Schneeweis, PhD, CAIA
Shani Shamah
Barry M. Sine, CFA
Vijay Singal, PhD, CFA
Frank E. Smudde, CFA
Robert A. Strong, CFA
Jarrod W. Wilcox, PhD
Richard Yamarone
Subject Matter Experts and Colleagues (who directly or indirectly influenced the development of this text)
Yacine Ait-Sahalia, PhD
Andrew Ang, PhD
Garry Bridgeman, CIMA
Jean Brunel, CFA
Mike Gallmeyer, PhD
Chris Geczy, PhD
Roger Gibson, CFA, CFP
John Granzow, CIMA
Mark Harbour, CFA, CIMA
Michael Kitces, MTAX, CFP
Jeff Jaffe, PhD
Richard Joyner, CPA, PFS, CFP, CIMA, CPWA
Greg LaBlanc, JD
Pierre Liang, PhD, CPA
Wai Lee, PhD
Andrew Lo, PhD
Arthur Lyons
Craig MacKinlay, PhD
Toby Moskowitz, PhD
Dede Pahl
Raghuram Rajan, PhD
Tarun Ramadorai, PhD
Doug Rogers, CFA
Geert Rouwenhorst, PhD
Shashin Shah, CFA, CFP
Ron Surz, CIMA
Jeff Thomas, JD, CIMA, CPWA
Vijay Vaidyanathan, PhD
Pietro Veronesi, PhD
Scott Welch, CIMA
Introduction
The Purpose of This Textbook
This textbook has been developed with two objectives in mind: Consolidate the key concepts, research, theories, and application that form the critical knowledge and skills of investment advisors and consultants into one volume; and offer CIMA certification candidates a comprehensive resource to help them in their studies as they proceed through their candidacy.
The Layout and Structure of This Textbook
We have leveraged works from some of the best minds in academia and industry to present a unified body of text that encompasses the CIMA Core Topics List. While the readings in the textbook follow the CIMA exam content blueprint by domain and section, not all of the (525) line items found on that list are covered in this book. That being said, you will find that most of those topics are reviewed in this text, and just as important, each is covered at a level of depth and cognitive skill as is appropriate.
In addition to following the order of the CIMA Core Topics List, we have woven readings together in a way that is logical and should be easy to follow. Some of the concepts found early in this textbook should be considered building blocks for content and application that will appear later in the text. Consequently you will see some repetition of concepts and calculations that we feel form a critical foundation for understanding more advanced application.
For the most part we were able to use complete chapters and readings to explore various topics adequately, but there are cases in which we removed sub-sections of various works as they did not directly address CIMA curriculum; thus you may notice that some readings appear to jump around a bit. Suffice it to say, we've reduced the readings down to what we believe are the most critical components for candidates studying for the CIMA exams.
It is also important to note that not all of the readings are in agreement. For example, some authors prefer passive over active investment strategies; some authors prefer extensive use of alternative investments while others do not; and many authors disagree on the level of efficiency in the markets. We thought it best to include dissenting opinions, as it should be useful for readers to learn where debate lies in our industry and to explore different analyses and conclusions.
Another reason for incorporating the work of different authors is the value that each brings based on his or her own unique communication style. By introducing different writing styles, we help ensure that numerous learning styles are addressed, which should benefit the readers of this textbook. Therefore keep in mind that some authors will be “speaking your language” while others will not.
How to Use This Text
Each chapter begins with a brief introduction highlighting key concepts as they relate to investment advisors and consultants. These short intros build a framework for the readings found in each chapter, particularly since some chapters contain readings from different authors as described earlier. A list of learning objectives that tie directly to the CIMA Core Topics List is provided for each reading in the chapter. This list of objectives should help you focus on what is most important in each reading as it pertains to CIMA content and your exams.
We recommend that you become a proactive learner. Don't just read the text but interact with it: Take notes; make a list of key concepts and calculations; make a list of topics that you'll need to come back to and review again; make a list of questions concerning things you don't understand; work through the examples, problems, and quiz questions – then go back and do them again.
You should use the CIMA Core Topics List, found in the CIMA Candidate Handbook, as your road map for what you'll be responsible for on your exams. Self-assess your own strengths and weaknesses as you work through this textbook. Review the quiz databank as you continue to assess your competency. If you struggle with any subject matter in this textbook, we recommend you pursue additional resources in those areas as you continue to study and prepare to take the exams. You might consider other university level textbooks or web content and exam prep material from qualified and reliable sources. We do not, however, recommend that you consider