Calculations in the CFAI that we DON'T need to learn

I thought it might be a nice idea to start a thread of calculations/formulas and sections in the CFAI books that are NOT covered by the LOSs, so that we don’t waste our time learning them by rote for the exam.

I am labouring under the impression that if a topic is not mentionsed in the LOSs then it cannot be in the exam - if anyone disputes that then please chip in as I’m not yet 100% convinced (call it 99%) on that fact.

I’ll start:

  • Calculating Cournot equilibrium
  • Formula for sample excess kurtosis
  • Formula for sample skewness
  • Calculating the concentration ratio and HHI

I should note that you probably DO need to know the background to these formulas, but it would appear you don’t need to know how to calculate them.

Any others?

In the begining of the curriculm, it is clearly written under ‘how to use CFA program curriculm’


“every question on the cfa examination is bsed on specific page in the required readings and on one or more LOS. frequently, an examination question is also tied to a specific example highlighted within a reding or to a specific end of reading question and/or problem and its solution”


what i comprehend from this is that even if topic or formulla is not covered under LOS but is mentioned in an example or EOC problem then we need to learn it…

Interestingly, I would draw a different conclusion from that statement. The quote you gave said “every question on the cfa examination is bsed on specific page in the required readings and on one or more LOS”. Note that is not or. Surely this means if it ain’t an LOS it ain’t in the exam?

Referring now to the definitions of command words, let’s take a look at Reading 16 LOS (g): " describe the use and limitations of concentration measures in identifying market structure". The CFA Society’s definition of the command word describe is: “to portray in words”. So how can they ask us to calculate the HHI?

so you are showing

a. you are afraid of calculations.

b. you want to game the exam

c. whatever else.

go ahead and be our guest.

QED, well interpreted. indecision

This is flirting with fire. I wouldn’t do this But I do agree on the kurtosis formula though

At the end of the day, what you’re asking is “which formulas do I need to remember”. My opinion (and that’s all it is) is your actually making it harder for yourself by taking this approach because the list you’re going to come up with is still going to leave you with a LOT of formulas to learn. I’m not personally going to attempt to learn ALL the formulas.

From reading a lot of the posts, this is what I keep hearing.

  1. “do the EOC questions, these are very important”

  2. “I was shocked at how little I ended up using my calculator, I must have picked it up about a dozen times during the exam”

Based on this, if there wasn’t a question in the EOC on something and it involves calculating something, I’m not even going to attempt to memorize the formula. I’m sure there will be questions on the exam that I won’t know the formula to because of this, say 5 questions, but my thinking is that I’ll be more prepared for the other 235 questions because I didn’t waste a huge amount of time trying to memorize these.

My approach has been to determine which formulas are the VIP formulas (the formulas that are in the fat bit of a normal distribution curve I guess you could say) and really focus on memorizing those and practice lots of problem that involve those formulas (i.e. stuff like the dividend discount model, CAPM, Dupont, etc). By repetitively doing QBank exams, I’m narrowing down what those formulas are. Inevitably, I’ll always miss a few questions because there is some weird calc with a formula I can’t remember that comes up (the formulas that I think of as being in the tails). With these, I make a mental note that I’ve missed it, and if it keeps coming up in QBank exams and I keep missing it, then I make the effort to memorize these formulas.

Another approach of mine has also been to understand concepts rather than formulas and from understanding a concept be able to derive a formula. I find this condenses what you have to memorize. For example, I don’t think of Beta as a formula, I think of it as the covariance of the asset to the market to the variance of the market. This is a concept to me, not a formula, and I find it easier to memorize.

Like I said, this is only my personal approach. Happy to take criticism though.

I would avoid to skeep entire formulas for the exam, that’s a risky strategy (Are you a risk averse person ? hehe)

Nevertheless, I think you can try to write down the most important formulas (those we are all sure they are going to be on the exam day) & then, on a second sheet, write down the other formulas.

Thus, if you have 15 minutes at lunch or in the subway or whatever, you can learn the 1st sheet with essential formulas, then on the evening at home you can learn the 2nd sheet with other formulas.