“ I had signed up for the Level I exam of the CFA program in December. Late one night, a few days later, UPS delivered a HEAVY, neatly packaged box. To say that I was stunned on opening the box to see six volumes of books would be an understatement. As someone who had left grad school long time ago, it was a mixed bag of emotions.
How long is the exam for, and what is its format: multiple choice, essay?
Are some topics more important than the others?
What materials to use to prepare for the exam?
Are these books the only material available to prepare for the exam?
How many weeks of preparation is ideally necessary?
How does one practice to mimic the real exam?
A deluge of questions overwhelmed me. I looked for answers in forums and blogs with no answers in sight.” wrote a student to us about his experience six years ago wishing there was one place that had all the answers.
Things have changed with more prep providers now, awareness about the program, information on blogs, forums etc. The more things change, the more they stay the same. And, one thing remains a constant here: the complexity of the program.
Let’s face it.
The CFA program is an intensive one. It takes several months of preparation for each Level, and is even more rigorous for students with no background in finance. A fact that can be seen in the dismal pass rates.
Ready to take one step at a time? In this three-part series, I will talk about all you ever needed to know about the Level I exam of the CFA program. Specifically, in the first part of this series, let us understand how the exam is structured, what topics constitute the exam, and how many questions should you expect from each topic.
All You Needed to Know About the Level I Exam
How long is the exam for, and what is its format: multiple choice, essay?
When is it held? The Level I exam is conducted two times a year: the first Saturday of June and December every year.
Exam timing : The Level I exam spans two 3-hour sessions:
Morning session: usually held between 9 a.m. and noon;
Afternoon session: usually held between 2 p.m. and 5 p.m.
Both the sessions are held on the same day, and cover all topics.
Structure: Each 3-hour session of the Level I exam consists of 120 multiple choice questions, which gives you roughly 1.5 minutes per question. The number of questions you get per topic varies. The various topics and their respective weights are given below:
|
Topic
|
Weight (in %)
|
|
Ethics
|
15
|
|
Quantitative Methods
|
12
|
|
Economics
|
10
|
|
Financial Reporting and Analysis
|
20
|
|
Corporate Finance
|
7
|
|
Portfolio Management
|
7
|
|
Equity
|
10
|
|
Fixed Income
|
10
|
|
Derivatives
|
5
|
|
Alternative Investments
|
4
|
Are some topics more important than the others?
Yes. FRA has the highest exam weight and it is important to do well in this topic to pass the exam as 48 questions will be from this topic. The weightage implies that economics has 24 questions in all spread over the two sessions. Another equally important topic is Quantitative Methods as the application of the concepts can be seen in several other topics.
What materials to use to prepare for the Level I exam?
Materials from CFA Institute:
When you sign up for the Level I exam, you get the following materials from CFA Institute:
· Curriculum: by default, you get access to the eBook – a version that can be downloaded to your computer. By paying extra, you can get the physical (hard copy) books; there are six volumes that cover these 10 topics.
· Interactive Study Planner: when you register for an exam, CFA Institute gives you access to an interactive study planner that helps you allocate time to different topics based on the time available before the exam.
· Topic Tests: these tests for the 10 topics are available free of cost for students registered for the exam. Topic tests are short and have no time limit. Each topic such as Economics, for instance, consists of several readings. Once you complete studying a topic, you may take the relevant test to assess your understanding of the topic.
· Mock Exams: CFA Institute also provides a free mock exam that consists of one morning session and one afternoon session. The mock exam is usually published just weeks before the exam and aims to mimic the actual exam in terms of length and topic weights. It is important that you take the mock exam before the actual exam; taking it a week before the exam will ensure you have enough time to review your performance in the mock and identify weak areas.
Are these books the only material available to prepare for the exam?
No. There are other prep providers and forums that help you in preparing for the exam.
Forums:
No discussion about the CFA Program is complete without mentioning the Analyst Forum. This forum, designed exclusively for CFA candidates and Charterholders, is integral and perhaps the most important in a student’s journey to complete the program. The strong global community of candidates and charterholders support each other by voluntarily answering questions round the clock. In the end, it’s nice to know there are thousands like you rocking the same boat of self-doubt, fear, uncertainty, and overwhelming knowledge before the exam. And, if you’re the confident sorts, then sharing your knowledge and helping others selflessly just deepens your understanding.
Oh! I am sure there are still dozens of questions swimming in your head. Go ahead, ask your question in the comments section below and I will be more than happy to answer your query.
Arif Irfanullah, CFA