Wednesday, September 12, 2012

CFA Level I Preparation by Topic

 The CFA level I preparation will teach you the crucial points and important topics to be ready for the examination and will also improve your skills for the rest of the CFA curriculum. You will find here a detailed review of the topics included in the CFA level I examination, with the importance and weights of the topics.


  • Corporate Finance is a major part of the Chartered Financial Analyst program, indeed you need a good understanding of the time value of money which you can study in the quantitative part, that's why I highly recommend to study the quantitative methods before starting the corporate finance, on average 5 to 10% of the CFA level I will be on Corporate finance. The level I will also  cover the "WACC"  Weighted Average Cost of Capital, valuation, leverage and dividen which were before in the CFA level II only. The questions on this topic are not tricky so do the exercises at home and you will be 100% ready for the exam day.

    •  Ethics is the only topic of the CFA that remains the same for the three levels, don't get it wrong if you think you have some ethical knowledge it won't help you to score high on this topic of the CFA, this topic is as important as the other topics. Morevover the Schweser notes won't be enough for this, you must read the CFA book and read it several times and then practice the exercises as much as you can. Ethics are boring but it can help you to get the few points to pass the examination.
    • Economics is in my opinion a tough topic, the question are not straight-forward and it will really help if you have already studied Macroeconomics and Microeconomics at university. You will have to learn all about the demand and supply curves, effects of monetary and fiscal policies. I really get confused after reading about economics for many hours so try to think about applying to real situations to understand the concepts. (about 10% of the CFA level I is about economics).
    • Fixed Income is pretty basic for the CFA level I, there won't be any surprise in this topic if you understand the bond valuation, duration, and the financial calculator is making it way more simple. Moreover you have to understand the fixed income jargon in order to be ready for the level II and III when things start to get tough.

  •  Equity Investment is one of the most interesting in the CFA program, everybody likes it so scoring well on this topic is mandatory,  it will teach you the basic of investment analysis. To prepare for this topic you must read the CFA books and understand the concepts of investment,  10 to 15% of the level I exam will be on this topic.

    •  Derivatives is a very important topic, a lot opportunities are available for people who understands derivatives, the CFA level I teaches you only the basics of derivatives but many of the candidates score low on this topic as it can be quite difficult to understand for non-finance major students, spend time on that topic beyond the scope of the CFA, knowing about derivatives will definitely be an asset for your career in finance.
    •   Financial Reporting is one of the topic that will make you pass or fail the CFA level I exam, the CFA is puting a lot of weight on this topic, you can't run away from it, you will need to learn the basics of accounting and how it is implemented with the latest international standards. Study it as much you can and master it.
    The level I of the Chartered Financial analyst certification has the objective of teaching you the basics of the investment world, the typical candidate who passes the test is the one who has a global understanding of all the concepts and topics above. -->


    Gautam kumar said...

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