Unquestionably one of the most difficult and highly regarded financial tests, the CFA® Exam is made to assist professionals in developing sophisticated financial analysis and investment management skills and talents. Because of their experience and in-depth understanding of financial analysis and associated ideas, CFA experts are highly sought after in many different subdomains of finance. Top financial institutions and leading industry employers around the world recognise this qualification, which is given by the CFA Institute in the United States. It is a thorough certification programme with three levels, each of which focuses on a different knowledge area to aid in the development of a thorough understanding of the concepts and their real-world applications.
On the road to becoming a CFA Charterholder, each CFA level is a significant step. It must be aware that completing the certification programme and earning the CFA Charter validates professionals’ financial knowledge, abilities, and skills and demonstrates their capacity to work patiently and put forth determined, focused effort to succeed in the field of their professional pursuit. The CFA Level I Exam is the first and most crucial step towards earning the CFA Charter, thus we will concentrate on it in this post.
CFA level 1 Topics
The primary goal of CFA Level I is to become familiar with fundamental financial principles. It would be crucial to comprehend how the exam is organised by subject. Ten knowledge areas are covered by CFA, and they are divided into four modules of varying difficulty, from CFA Part I to Part II and III. The four CFA knowledge modules are asset classes, portfolio management, ethics and professional standards, investment instruments, and wealth planning.
We give a table of the knowledge domains and their relative weights for the Level I exam here.
|Topic Area||Level I|
|Ethical and Professional Standards (total)||15|
|Investment Tools (total)||50|
|Financial Reporting and Analysis||20|
|Asset Classes (total)||30|
|Portfolio Management and Wealth Planning (total)||7|
CFA Level I Exam Details
The CFA Level I Exam lasts a total of six hours, broken up into morning and afternoon sessions of three hours each. There are 240 questions total in the two sessions, with 120 multiple-choice questions in each session. It should be kept in mind that each question has three possible answers, and the majority of the questions are irrelevant. It aids in evaluating a test participant’s abilities and knowledge over a larger range of subject areas.
CFA Level I Results & Pass Rates:
Results for the CFA Level I Exam are typically made public 60 days following the exam date. Exam participants are also notified through email in addition to being able to read the results on the CFA Institute website.
It is important to know that the CFA Level I exam is given twice a year, in June and December, before going into depth about the pass rates.
CFA Level I Exam 10-year average pass rates:
- The average pass rates for the CFA Level I exam during the past ten years, from 2007 to 2016, have been around 39.65%.
- For the June CFA Level I test, the 10-year average pass percentage is 40.5%.
- For the December CFA Level I test, the 10-year average pass percentage is about 38.8%.
CFA Level 1 Pass Rates in 2015-16:
- The CFA Level I exam pass percentage in June 2015 was 42%.
- The CFA Level I exam pass percentage in December 2015 was 43%.
- The CFA Level I exam pass percentage in June 2016 was 43%.
Declining Pass Rates for CFA Level I Exam:
- It has been noted repeatedly that pass rates for this exam have been dropping for the past few years, and it could be helpful for candidates to understand the potential causes.
- It is regarded as the outcome of widespread requirements for the Level I exam, which leads to a large number of test takers.
- However, the pass rates are decreased because only those with a high level of preparation succeed.
- It sends a strong message to those without a history in accounting or finance that getting a CFA may take a lot of extra work on their part, therefore it would not be wise to choose it just because you are qualified to take the exam.
CFA Level I Study Plan Exam
As we’ve already seen, only about 37% to 40% of candidates pass the CFA Part I exam. It demonstrates that only a small percentage of applicants pass the exam, and you must work hard to pass and obtain the coveted CFA Charter. The same is true for Part I as well, however right now we are concentrating on CFA Part I. Only that the difficulty keeps becoming harder with each CFA level.
Developing A CFA Study Plan: 300 Hours
Generally speaking, it takes 300 hours of organised study to successfully pass CFA Level I. Those who have a strong foundation in any CFA topic may need less time to prepare. It would be beneficial to keep in mind that there are 60 readings, 18 study sessions, and 10 topics on the CFA Level I exam. Every study session should be given a separate review to determine how well-versed you are in the material.
There are a variety of study strategies available to adequately cover the CFA curriculum. But one of the most widely used strategies is to use 300 hours of study time as the benchmark and spread it out over four months (or 120 days) before the test.
If you followed this schedule, you would need to spend at least 12 hours per week studying multiple subjects in order to cover the exam’s curriculum. The best strategy is to devote more time to subjects that are more important and have a range of levels of complexity.
Here is a sample general study schedule that can be modified later to fit individual needs and other considerations. It is offered in tabular style.
|Topic Area||Weight||Hours based on 300-Hour schedule||Days to allocate|
|Ethical and Professional Standards||15||45||20 days|
|Quantitative Methods||12||36||14 days|
|Financial Reporting and Analysis||20||60||23 days|
|Corporate Finance||7||21||Eight days|
|Equity Investments||10||30||12 days|
|Fixed Income||10||30||12 days|
|Alternative Investments||4||12||Five days|
|Portfolio Management and Wealth Planning||7||21||Eight days|
- This indicates that one should begin studying at least 5–6 months before the exam date, finish the required coursework on time, and use the final month to review the exam material.
- Because the study material is extensive and one may not be able to pass the exam without a thorough review of the complete curriculum, it can be essential to success.
- The easiest method to make sure you have covered all crucial exam ideas is to start with WallStreetMojo CFA Tutorials and go on to Schweser notes.
- The CFA® Blue Box Examples (covered in the chapters) and End of Chapter (EOC) Questions should then be examined, in that order. It might take an additional 80–100 hours.
- However, it is usually advised to finish exam preparation at least a month prior to the exam.
If you have 100-120 hours, Exam Preparation Time?
You are aware of your time constraints, but I believe you have enough to give it your best effort. In light of this, I suggest that
- The CFA® Curriculum Books should be forgotten (sorry, you can’t look at your books right now). The CFA Curriculum books take about 200 hours or more to complete on average. (of which you are lacking)
- Review the WallStreetMojo CFA Video Tutorials. These hours are a fantastic place to start if you have a maximum of 40 to 50 to spend getting ready for the test.
- After watching the films, carefully read the Schweser remarks. Despite the fact that they are merely summaries of the CFA® books, I believe they are adequate to guarantee your success on the test. Approximately 50–60 hours will be required to read the Schweser notes.
- The remaining time (if any) must be used for concept revision and attempting as many Mock Papers as you can.
- Please allot some time to practise 2-3 practice tests. It is quite useful, I assure you.
- I utilised this approach to pass the CFA® level 1 exam despite having only 100–110 hours to prepare.
If you have 200-250 hours for exam preparation?
- If you can devote 200–250 hours to exam practice, you can be faced with the decision of whether to read the entire CFA® programme or not.
- My recommendation is to only focus on the CFA curriculum book when necessary.
- Look at the CFA Blue Box Examples (covered in the chapters) and End of Chapter (EOC) Questions in the CFA Level 1 Curriculum books.
CFA® Level I Exam Tips
Map Your Study Progress:
- Using Excel, Outlook, or another programme, make a study timetable and track your progress as you finish each study component.
- It would make it easier to finish the course material at least a month before the test.
- Making and following a study programme is advised for last month’s review.
Do Not Leave Practice Questions for Later:
- It is strongly advised to answer all practise questions at the conclusion of each segment rather than delaying them till later.
- It will assist you in evaluating your progress and highlight any areas where you are poor and may need to put in more time and effort to improve.
- Answering practice questions can boost your confidence in what you have learnt and give you a sense of what to expect on the exam.
Go by the Definitions of CFA Curriculum:
- As per the CFA curriculum, it would be crucial to become familiar with financial principles and the numerous sophisticated phrases that go along with them.
- The curriculum covers a number of intricate financial concepts, and terminology have several definitions. In contrast, it’s possible that terms were defined somewhat differently elsewhere.
- To avoid misunderstanding and a lack of clarity while studying for the exam, it is advised that you constantly refer to the curriculum.
Prepare Well with a Mock Test:
- It is typically advised to practise additional questions and take a mock exam provided by CFA Institute during the month-long curriculum review period before the exam.
- You would have to take an exam that would last three hours in the morning, two hours of break time, and then another three hours in the afternoon.
- In addition to helping you gauge your performance in general, it is likely to assist you psychologically prepare effectively for the exam.
Master All Learning Outcome Statements (LOS):
- LOS is precisely defined by CFA Institute as “knowledge, skills, and capabilities that you should be able to apply after completing each reading and all associated exercises and problems.”
- You can jot down the key ideas, definitions, and formulas for the LOS to help you recall them more easily.
Additional Learning Techniques:
- Instead of bringing around extensive material, you may create flashcards to quickly review important curricular elements.
- It will facilitate learning and revisiting the subject during the briefest breaks possible.
- Using mnemonic devices and other memory tricks could be a useful strategy.
Decide What to Study First:
- To ensure that you don’t miss any of the ideas and their intricacies covered in the CFA Curriculum, it would be crucial to design an organised study strategy.
- Studying topics in the manner in which they are presented is not necessary. Instead, it might be preferable to begin with the foundational elements before moving on to more complicated subjects while studying.
- Before going on to financial reporting and analysis, it would make sense to first concentrate on quantitative approaches that might find wider applicability in other fields, leaving more difficult and sophisticated subjects like macroeconomics and ethics for later.
- Another strategy may be to concentrate on quantitative topics, grasp the concepts, and solve the problems that are given, and then study qualitative material, such as ethical theory and behavioural finance, before tackling problems that are related.
- My own strategy was as follows: Quantitative Analysis followed by Financial Reporting, Ethics, Corporate Finance, Fixed Income, Economics, Equity Investments, Derivatives, Alternative Investments, Portfolio, and finally, Ethics (repeat).
Practice with a CFA-Approved Calculator:
- It would be advisable to practise with a CFA-approved calculator, which will be very helpful during the exam and ensuring that you don’t lose any time.
- The Texas Instruments BA II Plus is the sole calculator that CFA has authorised. It would be helpful to be aware of the functions that can be used to compute effective yield, capital budgeting, and other relevant computations.