CFA Level 1 exam serves as an introduction to the CFA program. In this article, we have explained what an aspirant should expect of the CFA level 1 exam. Read below to know more.
CFA Level 1 Exam
The Chartered Financial Analyst Program (CFA) is one of the most sought-after designations for investment and finance professionals across the globe. The CFA program is a professional three-level programme which tests the candidate’s skills and knowledge in the field of finance and investment. CFA is regarded as one of the most reputed career options for finance professionals but to gain the certification is not a cakewalk.
The CFA Level 1 exam serves as an introduction to the Chartered Financial Analyst (CFA) Program and evaluates candidates' understanding of fundamental concepts in finance and investment. Candidates aspiring to acquire the CFA certification need to pass in all three levels of the CFA exam and must meet certain work requirements set by the CFA institute. Read the article below to know what should the students expect of CFA level 1 exam.
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CFA Level 1 Exam Pattern
Refer to the table below to know the CFA Level 1 exam pattern:
| Features |
Details |
|---|---|
| Exam mode |
Computer-based test mode |
| Test duration |
Morning Session: 135 minutes Evening Session: 135 minutes |
| Total number of questions |
180 (90 questions per section) |
| Type of questions |
Multiple-choice questions (MCQs) |
| Choices per question |
3 choices per question |
| Negative Marking |
No |
CFA Level 1 Curriculum: Syllabus and Important Topics
The CFA exam focuses on the knowledge and comprehension of tools and concepts of investment and portfolio management. The exam covers a broad range of topics including ethics and professional standards, quantitative methods, financial reporting, etc. The CFA syllabus for Level 1 consists of the following topics. Check below the CFA level 1 curriculum along with the weightage:
Q: How tough is the CFA exam? What are important preparation tips for the CFA exam?
Q: Can I self-study for the CFA exam?
Yes, of course you can self-study for the CFA exam. Many students prefer to choose this option for preparation because of the flexibility it offers. The CFA insitute provides an official curriculum for each level of the exam. It serves as a comprehensive guide and primary source of study material. You can follow the curriculum independently and study at your own pace.
Besides the CFA Institute curriculum, there are number of other resources available for the CFA study material. These may include guides, sample papers, video lectures, tutorials, etc. You can utilize these resources to supplement your self study efforts and reinforce your understanding of the important topics of the CFA syllabus.
Create an effective study plan that outlines your study schedule, goals and progress. This will help you stay organised and improve time management. You can also engage with online forums and communities and various social media groups dedicated to CFA preparation. These platforms provide the opportunity to connect with fellow candidates, seek clarification, share insights and access additional study resources.
While self-studying is a viable option, keep in mind that the CFA exams are rigorous and the material can be complex. Ensure that you allocate sufficient time, maintain discipline and monitor your progress regularly.
Q: What is the mode of CFA exam?
The CFA (Chartered Financial Analyst) exams are conducted in a computer-based testing (CBT) format. The transition from paper-based exams to computer-based exams was implemented by CFA Institute to provide a more efficient and secure testing experience for candidates.
Under the CBT format, candidates take the exams on a computer at designated testing centers. The exams are administered over multiple sessions, with each session focusing on specific topics. The CFA Level I exam consists of multiple-choice questions, while the Level II and Level III exams include item-set questions (also known as vignettes) and constructed response (essay) questions.
The CBT format offers several advantages, such as immediate exam results, standardized navigation tools, the ability to mark and review questions, and an enhanced exam security system. Additionally, candidates have the flexibility to choose their preferred exam date within the available testing window.
It's important to note that while the CFA exams are computer-based, they still maintain the same level of rigor and depth in assessing candidates' knowledge and skills in finance and investment management.
| Topics |
Weightage |
|---|---|
| Ethics and Professional Standards |
15%- 20% |
| Quantitative Methods |
6%- 9% |
| Economics |
6%- 9% |
| Financial Reporting and Analysis |
11%- 14% |
| Corporate Finance |
6%- 9% |
| Portfolio Management |
8%- 12% |
| Equity Investment |
11%- 14% |
| Fixed Income |
11%- 14% |
| Derivatives |
5%- 8% |
| Alternative Investments |
7%- 10% |
The questions in the CFA level 1 exam are designed in a way that it tests candidates' comprehension of concepts and their ability to apply them in real-world scenarios rather than rote memorization. Here is a detailed overview of the CFA important topics:
- Ethics and Professional Standards: This section of the Level 1 CFA exam focuses on, as the name suggests, ethics, related challenges to ethical behaviour and the role ethics and professionalism play in the finance and investment industry. There are about 27 to 36 questions on this topic in the CFA question paper.
- Quantitative Methods: This topic can be a little intimidating for the candidates appearing for the CFA exam. The questions on this topic explore the quantitative concepts and techniques used in the field of investment and financial analysis. This section also considers the probability theory and its application in quantifying risk for investment decision making. There are about 15 to 22 questions on this topic and key sub-topics covered under this include the time value of money and discounted cash flow analysis, descriptive statistics, characteristics of the return distribution, etc.
- Economics: This section tests the knowledge of the candidates of basic micro and macroeconomic concepts. The key topics include supply and demand analysis, market structures, aggregate output, economic growth, etc.
- Financial Reporting and Analysis: This section holds a good amount of weightage in the CFA Level 1 exam. The topic is all about the financial reporting procedures and the standards that govern the reporting disclosures. The weightage of this section decreases in the next level hence it is important to study well for this section to build the foundation for the upcoming exam.
- Corporate Issuers: This section talks about corporate governance as well as investing and financing decisions. This section also highlights the growing impact of environmental and social considerations in investing. The key topics under this section include cost of capital, leverage and working capital management.
- Equity Investments: The Equity Investments section explores equity investments, security markets, and indexes. It also explains and analysis industries, companies and equity securities as well as tools and techniques for valuing the firms. The majority of the questions in this section are focused on valuing and analyzing the companies and industries.
- Fixed Income: The topic describes the fixed income securities and their markets. It talks about the yielding measures, risks involved and valuation measures and drivers. Aspirants should understand the characteristics of various fixed-income securities and how to price them. Some key concepts are the yield measures and duration and convexity. This section also highlights knowledge about structured products, such as mortgage-backed securities and collateralized mortgage obligations, etc.
- Derivatives: This section builds the conceptual framework to understand derivatives and derivatives markets. Students will be tested on the basics of futures, options, forwards, hedging techniques and swaps using derivatives.
- Portfolio Management and Wealth Planning: This section explains the fundamentals of portfolio and risk management. The important topics of this section include Modern Portfolio Theory, Capital Asset Pricing Model, Return and Risk Management, and Portfolio Construction and Management. There are about 8 to 12 questions on this topic in the CFA exam.
- Alternative Investments: This section focuses on topics such as real estate, hedge funds, private equity, commodities and infrastructures. There may be 9 to 15 questions on this topic in the CFA question paper.
How to Prepare for CFA Level 1 Exam?
- Preparing for the CFA Level 1 exam demands a structured and disciplined approach to cover the CFA syllabus comprehensively. Understanding the CFA exam pattern, duration, and weightage of each topic is crucial for formulating a strategic study plan. The CFA curriculum issued by the CFA Institute serves as the primary study resource, offering in-depth coverage of all exam topics. Supplementing this with additional study materials such as third-party study guides and online resources can reinforce understanding and provide extra practice questions.
- Practice is paramount in CFA Level 1 preparation. Solving previous years’ CFA question papers and CFA mock tests will help the candidates familiarize themselves with the CFA exam pattern and also hone problem-solving skills, and assess preparedness. Ethical and professional standards, emphasized in the CFA curriculum, warrant special attention due to their significance in the exam and the finance industry's ethical framework.
- Time management is crucial, and aspirants should practice pacing themselves to complete the CFA exam sections within the allotted time. Seeking clarification on difficult concepts and engaging in study groups or online forums can enhance understanding and provide support during CFA preparation.
- Staying updated on any changes to the CFA exam format, CFA syllabus, or study materials provided by the CFA Institute is essential. Candidates should adhere to important deadlines and exam-related announcements. Overall, preparing for the CFA Level 1 exam requires dedication, consistency, and confidence in one's abilities. By following a structured study plan, practicing diligently, and staying focused, candidates can enhance their chances of success in this rigorous examination.
The CFA level 1 exam tests the students on ten different topics. The CFA pass rate for Level 1 is 41% on average. Aspirants should expect a rigorous and comprehensive examination that requires diligent preparation and a solid understanding of core financial concepts. To excel in the CFA level 1 exam, students should have a strategic study plan and follow it religiously.
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Q: How can I prepare for CFA?
Preparing for the CFA (Chartered Financial Analyst) exam requires a systematic and disciplined approach. Here are some steps to help you with your preparation:
Familiarize yourself with the exam structure, including the number of levels, topic areas, and the weightage assigned to each topic.
Develop a comprehensive study plan that covers all the topics and allows for sufficient time for review and practice. Set realistic goals and create a schedule that works for you, taking into account your other commitments.
The CFA Institute provides official curriculum materials that cover all the exam topics in detail. Make sure to study from these materials as they are comprehensive and aligned with the exam content.
Practice is crucial for success in the CFA exam. Solve mock exams and practice questions to get familiar with the exam format and to assess your understanding of the topics. Review your performance and identify areas that require further study.
Engage with other CFA candidates through study groups or online communities. Discussing and exchanging ideas can enhance your understanding of complex topics and provide additional support during your preparation journey.
The CFA exam is concept-driven, so it's essential to develop a strong understanding of the underlying principles and theories. Avoid rote memorization and strive for a deeper comprehension of the material.
Regularly review the topics you have studied to reinforce your knowledge. Create concise notes or flashcards to summarize key concepts, formulas, and important details.
- The CFA curriculum undergoes periodic updates. Stay informed about any changes or updates to the syllabus and adjust your study plan accordingly.
Remember, the CFA exam requires dedicated effort and perseverance. It is essential to stay disciplined, motivated, and consistent in your study routine. Good luck with your CFA preparation!
Q: Which are the most important topics to focus for CFA preparation?
Q: What is a "passing score" for the CFA exam?
The "passing score" for the CFA (Chartered Financial Analyst) exam is the Minimum Passing Score (MPS), which is set by the CFA Institute Board of Governors after each exam. The purpose of this approach is to ensure fairness to candidates across administrations, as the difficulty of each exam is taken into account when setting the MPS. The MPS is not made public, and only the candidates who passed the exam will receive an email with their results.
It's important to note that the CFA Institute does not release individual candidate scores or detailed exam scores and responses to exam questions. The results are only available online for approximately one year after the exam date, and candidates who do not pass the exam will be given a detailed summary of their performance.
Q: Is 65 score enough for passing the CFA exam?
Each level of the CFA exam has its own criteria and passing score. CFA institute sets a MPS which changes with each cycle for the newly registered candidates. Some years test takers will receive an overall CFA score of 65% and fail, and in some years they may receieve a score of 62% and pass. The scoring plays a role in deciding the overall pass score in CFA exam. In general, an overall score of 70% and above will help you pass the CFA exam.
Q: Which is the easiest pathway in CFA exam Level 3?
No pathway will be easier than the other. Each pathway is designed in a way that they are at par with each other. This does not mean that the CFA pass rate will be also be the same between each as many factors influence pass rate such as quality of the cohort, mix of the cohort, difficulty of the given set of questions in a given window, demographic factors, etc.
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Student Forum
Anything you would want to ask experts?Answered 2 months ago
Here are some practical tips to help you perform your best on the CFA exam.
- Financial Statement Analysis: Questions on this topic are based on International Financial Reporting Standards (IFRS) unless otherwise noted. If a question references U.S. GAAP, this will be explicitly stated.
- No penalty for g
A
Contributor-Level 10
Answered 2 months ago
Follow the steps mentioned below to learn how to fill out the CFA application form
- Visit the official website of the CFA institute
- Click on the application link or copy https://login.cfainstitute.org/LoginApplication.
- Create a login account with the candidate’s email ID.
- The candidate will be asked to e
A
Contributor-Level 10
Answered 2 months ago
CFA Charter Holders have the distinct advantage of applying their skills in several professional roles. They can work in areas like wealth management, hedge funds, fixed income, insurance and equity research.
A
Contributor-Level 10
Can you share some tips to prepare for CFA exam?