The CFA exam is an extensive series of tests hosted by the CFA institute that measure the competency of individuals wishing to acquire the charter granted by passing the exam in its entirety. As a result of the vast information required for ambitious people wishing to become a charter holder, the material is too in depth to be tested on all at once. The exam is divided between three levels of study, CFA level 1, 2, and 3, each requiring you to be evaluated by taking a rigorous test that challenges you on topics such as investment management, financial analysis, portfolio management, stocks and bonds. Economics and ethics are also focused heavily over the course of the series of exams.
The first in the battery of tests involved on the exams is CFA level 1. This is an introduction to the material that will be expected of you throughout the entirety of the CFA’s, and focuses on concepts and principles. It is essential to make sure you have mastered this material to achieve a good score and have a good foundation of knowledge that you’ll need for the remainder of the exam.
The first test is separated into a morning and evening session. Each session allows you an allotted time of three hours. You can expect 120 multiple choice questions per session. A good strategy to ensure you have a reasonable amount of time to complete the exam is to allow yourself approximately 90 seconds per multiple choice question. Less time may be warranted per question depending on your own personal mastery of the material, or more if it is quizzing you on a category you are less prepared for than other sections.
Unlike many standardized tests, the CFA exam only has three different multiple choice answers for you to choose from. This is beneficial to the test taker because it reduces the chances of you getting the question incorrect. However, points are not deducted for incorrect answers. There are two basic formulas used for the multiple choice questions in the CFA level 1 exam. You can expect either a sentence completion type question that will require you to finish a prompt provided, or a general question that will provide you with a problem, and three choices that the answer will lie.
There are a variety of categories that will be expected of you to master for the CFA level 1 exam. Financial reporting and analysis is the heaviest priority on the first test, carrying a 20 percent weight of your total grade. Ethical and professional standards as well as quantitative methods are also topics that should be focused on during your studies, as they carry a 12 to 15 percent weight on the exam. Other topics you can expect to find are economics, equity finance, fixed income, portfolio management, investments, corporate finance, and derivatives.
There are several tips that you should keep in mind while taking the CFA level 1 exam that may boost your score to a grade you prefer. The first tip is that you should be comfortable with using a calculator. Only two kinds of calculators are authorized for use on the CFA’s, and those include the “Texas Instruments BA II Plus” and the “Hewlett Packard 12C.” Make sure you know how to use all the features included in either of these computing devices, especially those used to address the learning outcome statements. In addition to your preferred calculator mastery, you should keep in mind that the exam questions used on the CFA level 1 exam referring to Financial Reporting and Analysis are based on Institutional Financial Reporting Standards. If a question is based on U.S. GAAP, you will be notified on the question.
More tips and study material are available in many different sources online, however some may be more reliable than others. Finding a credible and extensive source of information online is essential for going into the testing center with confidence in acing the exam. Although there are many different outlets available online, it can be difficult to find a website with complete notes and study guides that will ensure excellence on the CFA level 1 exam. AnalystPrep is one of the worlds most trusted CFA preparation programs and is complete with mock exams, CFA notes, and performance statistics to track your progress from the beginning of your preparation to the end. Understanding what the CFA institute will expect of you will give you an edge on the competition and is the first step in success for passing the CFA level 1 exam.