About Me
Chartered Financial Analyst (CFA)
1 Ethical and Professional Standards
1-1 Code of Ethics
1-2 Standards of Professional Conduct
1-3 Guidance for Standards I-VII
1-4 Introduction to the Global Investment Performance Standards (GIPS)
1-5 Application of the Code and Standards
2 Quantitative Methods
2-1 Time Value of Money
2-2 Discounted Cash Flow Applications
2-3 Statistical Concepts and Market Returns
2-4 Probability Concepts
2-5 Common Probability Distributions
2-6 Sampling and Estimation
2-7 Hypothesis Testing
2-8 Technical Analysis
3 Economics
3-1 Topics in Demand and Supply Analysis
3-2 The Firm and Market Structures
3-3 Aggregate Output, Prices, and Economic Growth
3-4 Understanding Business Cycles
3-5 Monetary and Fiscal Policy
3-6 International Trade and Capital Flows
3-7 Currency Exchange Rates
4 Financial Statement Analysis
4-1 Financial Reporting Mechanism
4-2 Income Statements, Balance Sheets, and Cash Flow Statements
4-3 Financial Reporting Standards
4-4 Analysis of Financial Statements
4-5 Inventories
4-6 Long-Lived Assets
4-7 Income Taxes
4-8 Non-Current (Long-term) Liabilities
4-9 Financial Reporting Quality
4-10 Financial Analysis Techniques
4-11 Evaluating Financial Reporting Quality
5 Corporate Finance
5-1 Capital Budgeting
5-2 Cost of Capital
5-3 Measures of Leverage
5-4 Dividends and Share Repurchases
5-5 Corporate Governance and ESG Considerations
6 Equity Investments
6-1 Market Organization and Structure
6-2 Security Market Indices
6-3 Overview of Equity Securities
6-4 Industry and Company Analysis
6-5 Equity Valuation: Concepts and Basic Tools
6-6 Equity Valuation: Applications and Processes
7 Fixed Income
7-1 Fixed-Income Securities: Defining Elements
7-2 Fixed-Income Markets: Issuance, Trading, and Funding
7-3 Introduction to the Valuation of Fixed-Income Securities
7-4 Understanding Yield Spreads
7-5 Fundamentals of Credit Analysis
8 Derivatives
8-1 Derivative Markets and Instruments
8-2 Pricing and Valuation of Forward Commitments
8-3 Valuation of Contingent Claims
9 Alternative Investments
9-1 Alternative Investments Overview
9-2 Risk Management Applications of Alternative Investments
9-3 Private Equity Investments
9-4 Real Estate Investments
9-5 Commodities
9-6 Infrastructure Investments
9-7 Hedge Funds
10 Portfolio Management and Wealth Planning
10-1 Portfolio Management: An Overview
10-2 Investment Policy Statement (IPS)
10-3 Asset Allocation
10-4 Basics of Portfolio Planning and Construction
10-5 Risk Management in the Portfolio Context
10-6 Monitoring and Rebalancing
10-7 Global Investment Performance Standards (GIPS)
10-8 Introduction to the Wealth Management Process
3.2 The Firm and Market Structures

3.2 The Firm and Market Structures - 3.2 The Firm and Market Structures

Key Concepts

Perfect Competition

Perfect Competition is a market structure where many firms sell identical products, and no single firm has market power to set prices. Firms are price takers, meaning they must accept the market price determined by supply and demand. Entry and exit into the market are relatively easy, leading to minimal barriers to competition.

Example: A market for agricultural products like wheat. Many farmers produce wheat, and no single farmer can influence the market price. The price of wheat is determined by the aggregate supply and demand in the market.

Monopoly

Monopoly is a market structure where a single firm is the sole producer of a product or service with no close substitutes. The monopolist has significant market power and can set prices above marginal cost. Barriers to entry are high, often due to legal restrictions, economies of scale, or exclusive control over essential resources.

Example: A local utility company that provides electricity to a city. The company has exclusive rights to distribute electricity, allowing it to set prices and control the market.

Oligopoly

Oligopoly is a market structure where a small number of firms dominate the market. These firms have significant market power and can influence prices, but they must consider the actions of their competitors. Oligopolies often result in strategic behavior, such as price wars, collusion, or product differentiation.

Example: The market for smartphones, where a few large companies like Apple, Samsung, and Huawei dominate. These firms compete intensely, often differentiating their products to capture market share.

Monopolistic Competition

Monopolistic Competition is a market structure where many firms sell similar but differentiated products. Each firm has some market power to set prices due to product differentiation, but entry and exit are relatively easy. Firms compete on product features, quality, and marketing rather than price alone.

Example: The market for restaurants in a city. Each restaurant offers a unique dining experience, but there are many restaurants to choose from. Firms compete on cuisine, ambiance, and service to attract customers.

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