Level I CFA® Exam Preparation offered by AnalystPrep

Career as a CFA Charterholder

Are you looking to be a financial analyst, an investment analyst, a portfolio manager, a research analyst, a credit analyst, an account manager? Those are but a few of the career opportunities that a CFA charter holder can choose from. The Chartered Financial Analyst® designation (CFA) is an unrivaled professional certification in finance and investment governed by CFA Institute. This governing body has maintained strong ethical standards well over the years. This article explores all that a candidate needs to know about the CFA exams and offers helpful tips on preparing for the CFA exams effectively.

Prerequisites to Sit the Exam

To register for the CFA exams, a candidate needs to have graduated with a bachelor’s degree or be in their final year of study. Candidates who do not have a bachelor’s degree but have worked for at least 2 years can also register for CFA exams. Despite it being a financial and investment centered exam, candidates who graduated with any other major are just as eligible to sit for CFA exams. However, candidates with a background in finance and investment-related fields will have the upper hand over their counterparts from other areas. It is important to note that the CFA designation will only be issued upon completing level 3 and providing proof of at least 4000 hours of work experience, half of which should have been spent making decisions in the investment industry.

Requirements for Registration

Registration Fee

To enroll in the CFA Program, a candidate will need to pay a one-time enrollment fee of $450. After that, a candidate will have to pay a registration fee of $700 for early registration and $1000 for standard registration for each subsequent level.

Valid International Travel Passport

Due to its global nature, the Institute requires aspiring candidates to have a valid international travel passport, one that has been issued in a candidate’s place of residence. Apart from confirming identity, the travel passport, if the need arises (for example, if local test centers are fully booked), will enable a candidate to travel and attempt the exam in an international test center. Candidates are encouraged to book their CFA exams as early as possible to secure a spot at a local test center and avoid making last-minute and unnecessary travel arrangements.

Knowledge of the English Language

CFA exam is administered in English. The whole CFA Program curriculum is, in fact, in the English language. Therefore, candidates should be able to read, write, and communicate in English to qualify to register for CFA exam.

Aspiring Candidates need to be from Countries that Participate in the CFA Program

Some countries do not participate in the CFA Program. Citizens from such countries can, therefore, not register for CFA exams.

Preparations for the CFA exam

CFA Institute recommends at least 300 hours of study time before attempting any level. For most people, 300 hours translates to at least six months, assuming twelve and a half hours a week (two hours from Monday to Saturday). Candidates who do not have to report to a 9-5 kind of job can cover the 300 hours in a shorter period. Candidates with a background in finance and investments can equally use a shorter time to go through the curriculum as they have already covered some of the concepts tested in the CFA exam.

To ensure that they get the most out of the allocated study time, candidates should split the 300 hours into reading time, practice time, and mock exams time. We encourage candidates to use the first 150 hours (50%) to go through the whole curriculum, giving more attention to the most challenging topics and the topics that carry the most weight, as we will see below.

You may also register for AnalystPrep’s Learn + Practice Package that includes study notes and video lessons summarizing the whole curriculum to speed up your reading time: 

CFA Level I Complete Course offered by AnalystPrep

One hundred fifty hours are enough to go through all of our summarized notes, which are a fraction of the over 3000 pages provided by the Institute. The questions at the end of every learning objective are there to test a candidate’s knowledge of that particular learning objective and should, therefore, not be ignored. Candidates should use them to gauge their understanding.

Candidates should then use 90 hours (30%) to go through the practice questions. These can be found in AnalystPrep’s question bank for the Level I CFA® Exam. They are arranged per topic, and the right answer is provided for every problem. Practice questions increase candidates’ chance of passing the exams on their first attempts as the questions help students know their strengths and weaknesses.

The last 60 hours should then be used to attempt mock exams. These can also be found in AnalystPrep’s Preparation Packages for the Level I CFA® Exam. Candidates are encouraged to attempt the mock exams in an exam like environment. CFA exams are attempted in two 2 and a quarter-hour sessions (starting Feb 2021). For the 2021 computer-based exams, candidates will attempt 180 questions (90 in each session). The reduction in the number of questions from 2020 should not be confused for a more straightforward exam. The Institute is committed to retaining its prestigious status by maintaining the CFA exams’ level of difficulty. This website’s mock exams are tailored to meet and even supersede the real exam’s level of difficulty. Attempting at least three mock exams will ease tension and train candidates to use the allocated time to effectively ensure good results.

Remember, you need to (1) read (at least 150 hours); (2) practice and gauge your understanding of the various topics (at least 90 hours), and (3) attempt mock exams (at least 60 hours).

Level I Topics

Level I comprises six volumes of study materials, ten topics, 19 study sessions, and 57 readings.

Level I Exam Weights

The table below summarizes the minimum and maximum weights, in descending order, of the 10 Level I topics. The weights have been used to calculate the maximum and the minimum number of questions that can be set.

The average number of questions (average weight) is slightly higher than 240 (100%) because not all topics will have the said average number of questions (this is just an approximate).

The following bar graph below represents the average topic weightings.

As seen above, the topics that carry the most weight in the CFA exams are Ethics and Financial Reporting Analysis. The ones that take the least weight are Alternative Investments, Derivative Investments, and Portfolio Management, the three last chapters.

Candidates are advised to allocate their 150 hours of study, as aforementioned, wisely. More time should be spent on topics that carry more weight. For instance, a candidate should not sacrifice Ethics for Portfolio Management.

Ethics is considered a borderline determinant. Having a good score in ethics can quickly move a candidate at the borderline to a pass.  On the other hand, having a low score can impact a candidate at the borderline to fail.

Topic Difficulty Levels

The level of difficulty of the various CFA exam topics will vary from person to person. Some people prefer mathematical topics to descriptive topics and will, as a result, find the topics with more mathematical objectives easier.

However, based on research done by CFA Institute, CFA Program candidates and aspiring charterholders have cited the following topics as the most challenging topics:

• Financial reporting and Analysis,
• Fixed Income, and
• Derivative Investments.

The following topics have been regarded as easy topics:

• Equity Investments,
• Corporate Finance,
• Alternative Investments, and
• Portfolio Management.

Ethics, Economics, and Quantitative Methods were cited by most as average topics, not so easy, not so difficult. If you, as a candidate, agree with this research’s outcomes, then, in addition to giving the topics with more weight more time, you should equally give the most difficult topics more time and the less challenging topics less time. If you disagree with this research, allocate more time to your most challenging topics and less time to your less challenging topics.

CFA Exam Tips

To ensure that CFA Program candidates maximumly benefit from the allocated preparation time, we have collected some pointers from some of our candidates who passed their Level 1 exams on their first attempts.

Not Underestimating Ethics

Candidates tend to view Ethics as an easy topic. They tend to think that they can easily “apply” ethical concepts; this is not true. One needs in-depth knowledge and understanding of the CFA Program curriculum to be able to correctly tackle ethical questions that are, in fact, very challenging and tricky. For this reason, and for the fact that Ethics is a borderline determinant, candidates are advised to thoroughly go through and understand the topic.

Mastery of the Financial Calculator

Since its level 1 of the exam, candidates must ensure that they have mastered their financial calculators. If possible, candidates should acquire the financial calculator at least two months before their exam date. They should use the calculator even when reading and revising for the exams. That way, they will be comfortable using the calculators during the exam.

Failure to master the financial calculator, especially for the candidates using the financial calculator for their first time, may cost candidates valuable time and lead to incorrect answers, but most likely, will make candidates lose a lot of time that they could have allocated to solving other questions. The only two calculators that can be used when sitting any level of the CFA exam are:

• Texas Instrument BA II Plus or BA II Plus Professional, and
• Howlett Packard 12C (This includes: HP 12C Platinum, 12 C Platinum 25^th anniversary edition, 12C 30^th-anniversary edition, HP 12C Prestige)

End of Reading Questions

Candidates are advised not to ignore the problems at the end of every reading. These questions help a candidate to gauge their understanding of the learning objective. By attempting these questions, a candidate will know whether to redo that reading or not.

Time Management

Candidates are encouraged to practice answering questions in the shortest time possible. Based on the two and a quarter-hours exam, a candidate can only spend a maximum of one minute and 30 seconds on one question. Candidates should practice spending the shortest time possible on queries to ensure that they do not run out of time on the exam day.

Study Partner/groups

A study partner holds a person liable for his or her actions. By having a study partner or joining a study group, candidates will remain focused and determined. Through discussion, candidates will be able to share knowledge and collectively tackle challenging questions.

Conclusion

Candidates who are yet to finish going through the study materials should not feel discouraged. With AnalystPrep’s well-summarized study materials (study notes, video lessons, question bank, mock exams, formula sheet, etc.), candidates can still adequately prepare for the exams:

CFA Level I Complete Course offered by AnalystPrep