CMA Securities & Investment study guide
CMA Securities & Investment · Work through your exam, one topic at a time.
The CMA Securities & Investment credential is a professional certification for people working in, or moving into, securities sales, trading, advisory and investment operations roles. It signals that a candidate understands how regulated markets function end to end: the rules firms and individuals must follow, the ethical standards expected of staff, how equity and fixed income instruments are priced and traded, how derivatives and structured products are used, and how portfolios are constructed and analysed. The CMA Securities & Investment study guide has 9 sections and about 2,088 words.
01Regulatory Environment and Compliance
Securities regulation rests on three pillars: licensing (only authorised firms and registered representatives may deal, advise or manage money), conduct-of-business rules, and prudential supervision (capital adequacy and client-money segregation). The regulator publishes rules and codes; the firm's compliance function converts them into policies, monitoring, training and testing.
241 words, about 1 min02Ethics and Professional Standards
The code of ethics sits above the legal minimum: integrity, objectivity, competence, confidentiality, professionalism and fair dealing. Where law and code differ, apply the stricter standard.
248 words, about 1 min03Equity Markets and Instruments
Ordinary shares carry residual claims on profit and assets plus voting rights; preference shares rank ahead for dividends and liquidation but usually lack votes. Also tested: depositary receipts, REITs, ETFs, convertible preference shares and warrants.
238 words, about 1 min04Fixed Income Markets and Instruments
A bond's price is the present value of coupons and principal, so price and yield move inversely. Yield measures: current yield (coupon divided by price), yield to maturity (all cash flows reinvested at YTM), and yield to call for callables.
218 words, about 1 min05Derivatives and Structured Products
Forwards and futures fix a price today for future delivery; futures are standardised, exchange-traded, margined and marked to market daily, with a clearing house using novation to remove counterparty risk. Options confer rights, not obligations: the buyer pays a premium, the writer carries the obligation.
230 words, about 1 min06Portfolio Management and Investment Analysis
Expected return is probability-weighted; risk is variance or standard deviation. Combining assets with correlation below +1 lowers portfolio volatility without necessarily lowering expected return.
221 words, about 1 min07Financial Statement Analysis and Valuation
The income statement, balance sheet and cash-flow statement interlock: net income flows into retained earnings, while non-cash charges and working-capital movements reconcile profit to operating cash flow. Watch revenue-recognition timing, capitalised versus expensed costs, provisions and off-balance-sheet obligations - the usual levers of earnings management.
243 words, about 1 min08Securities Trading, Settlement and Operations
Order capture, execution, confirmation, clearing, settlement, then custody and asset servicing. Most equities settle T+2, though conventions vary by market and instrument.
212 words, about 1 min09Investment Advice, Client Suitability and Sales Conduct
Suitability requires collecting financial situation, investment objectives, knowledge and experience, risk tolerance, time horizon and liquidity needs. Risk profiling must be evidence-based rather than one questionnaire score.
237 words, about 1 min