Browse CFA Level 1

Chapter 12: Applications of Economic Factors in the Investment Process

Chapter 12: Applications of Economic Factors in the Investment Process (CFA Level 1): Key concepts explained with clear definitions, formulas, and exam-focused examples.

In this section

  • Linking Macroeconomic Data to Asset Valuation
    Linking Macroeconomic Data to Asset Valuation (CFA Level 1): Role of Macroeconomic Indicators in Valuation, GDP Growth, and Inflation and Price Stability. Key definitions, formulas, and exam tips.
  • Sector Rotation and Cyclical Indicators
    Sector Rotation and Cyclical Indicators (CFA Level 1): Understanding the Concept of Sector Rotation, Key Cyclical Indicators, and Purchasing Managers’ Index (PMI). Key definitions, formulas, and exam tips.
  • Monetary/Fiscal Policy Turning Points and Portfolio Decisions
    Monetary/Fiscal Policy Turning Points and Portfolio Decisions (CFA Level 1): Monitoring Central Bank Signals (Monetary Policy) and Tools for Recognizing Monetary Policy Turning Points. Key definitions, formulas, and exam tips.
  • Using Macroeconomic Indicators for Tactical Asset Allocation
    Using Macroeconomic Indicators for Tactical Asset Allocation (CFA Level 1): Understanding Tactical Asset Allocation, Role of Macroeconomic Indicators, and Interdependency Among Asset Classes. Key definitions, formulas, and exam tips.
  • Diversification and Economic Cycles
    Diversification and Economic Cycles (CFA Level 1): Economic Cycles and Correlation Patterns, Why Correlations Increase in Downturns, and Sectors and the Business Cycle. Key definitions, formulas, and exam tips.
  • Scenario Analysis and Managing Economic Risks
    Scenario Analysis and Managing Economic Risks (CFA Level 1): Core Ideas Behind Scenario Analysis, Constructing Plausible Scenarios, and Identifying Macroeconomic Drivers. Key definitions, formulas, and exam tips.
  • Macroeconomic Surprises and Asset Performance
    Macroeconomic Surprises and Asset Performance (CFA Level 1): Measuring Surprises: Economic Surprise Indices, Expectations and Knee-Jerk Reactions, and Short-Term vs. Longer-Term Shifts. Key definitions, formulas, and exam tips.
  • Business Sentiment Surveys and Market Expectations
    Business Sentiment Surveys and Market Expectations (CFA Level 1): Importance of Business Sentiment in Economic and Investment and Key Types of Business Sentiment Surveys. Key definitions, formulas, and exam tips.
  • Nowcasting and Real-Time Indicators
    Nowcasting and Real-Time Indicators (CFA Level 1): Key Concepts and Benefits, Defining Nowcasting, and High-Frequency Data. Key definitions, formulas, and exam tips.

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Chapter 11: Effects of Geopolitics on Economies and Investment Markets