Clearing CFA Exam Level 1 – All Important Tips
Level one can be very deceptive. On one hand, you will have people telling you it’s the simplest of all 3 levels, and the finance concepts tested are all college/high school level. These are also the people that come from finance or accounting backgrounds, and you might hear stuff like,” Oh, level 1 is nothing! I passed it within a month”.
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While that is true in some ways, this kind of advice will mislead people. I have seen people who are not from core finance backgrounds fail multiple times just because of this advice. I have given and cleared level 1 myself.
That being said, I do not think level 1 is inherently any easier than the other levels. You need to give proper justice to it. If anything, it might be the most important level as this is what will set the base for all the other levels. My advice is as follows:
Clearing CFA Exam Level 1 – List of Important Tips
Listen to CFA institute when they say 300 hours: Yes you might be smart, you might have gotten straight A’s in college while studying at the last minute. But please do not take level 1 lightly. The concepts might be simple, but the syllabus is MASSIVE. There are 10 subjects, each of which is a field in itself. You might complete just the financial reporting and analysis section, and realize a month later that you remember none of it. Clearing the CFA Exam will need you to study for at least 300 hours. More if you haven’t taken accounting/finance subjects in high school or university.
Do not skip any subjects: Level one sets the base for everything that follows, so while you may study at the last minute, skip a few subjects and pass, this will only harm you in the long run.
Take a minimum of 3–4 mock exams: The CFA is a 6-hour long examination. It is arduous and grueling. Most of us are not used to giving six-hour exams. By the fifth hour, your brain stops working and you just cannot seem to fathom how the Security Market Line is actually the Capital Market Line if markets were in equilibrium.
Give as many mocks as possible: When taking mock exams, take them in controlled conditions. Take the mocks like you are taking an actual CFA exam. Find out what time your exam is going to be held, go to a place where you will be undisturbed, and solve the first 120 questions for three hours first. Take a two-hour break, and spend three hours more on the remaining 120 questions. Give mock exams exactly how you would give the real exam.
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The concept is the key: Rather than memorizing focus on the concept. CFA is all about interpretation and practical use of the concepts taught. Don’t just memorize the formula for z-score, try and understand what it is actually DOING. It is not simply an estimate – mean/standard deviation. It assumes a normal distribution and checks how many standard deviations a given observation is from its mean. Always seek to understand the concepts rather than memorizing them.
Do not practice the schweser concept checkers: I may get some slack for this, but in my opinion, the schweser concept checkers do not resemble anything even remotely close to the answers asked in the actual exam. They instill a false sense of confidence in you and are much easier than the actual questions that will be asked. While practicing questions, do the End of chapter questions from the curriculum and the online practice tests provided by the CFA Institute.
Do not underestimate ethics: A lot of people are guilty of this. “It’s just ethics! I can finish it off in a few hours. After all, I’m a good person. I don’t cheat, rob, steal, and respect people around me. Ethics shouldn’t be a problem at all. The questions asked in the Ethics section of the exam will be one of the most confusing, subjective, and challenging questions in the WHOLE EXAM.
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Ethics is also arguably the most important section because if you are just at the cusp of passing, the CFA Institute will look at your ethics score and decide whether to pass you or not. There was a candidate that got a 50% + in all other sections but managed to get a 70% + in just ethics and passed. No, that is a one-off and will mostly not happen to you. But “do not underestimate ethics”.
The CFA level one is an important, grueling, and a grossly underestimated exam that will set the tone of your CFA journey. Please do justice to it.
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