Hey all. For those who have expereince with CFA level 1, can you please tell me what portion (in percentage) of the exam is about testing you pure definitions (theories, concepts, whatever) versus actually doing calculations. I was going through the videos, and I found that oftentimes they (referring to the lecturers) just mention a couple defintions and move on to the next. I wonder whether it’s worth the time to kill myself memorizing defintions. Your thoughts would be appreciated.
Thanks
From what I’ve gathered from friends and this board, gaining the CONCEPTUAL knowledge is what is most beneficial. Sure there will be certain formulas here and there that they will certainly ask, but obviously, every single formula won’t be test for plug n chug memory.
Many of my Level I candidates have told me after the exam that they were surprised at how little they used their calculators.
You’ll do some calculations, to be sure, but expect that many of the sections you thought would have a lot of calculations end up having more conceptual questions: if you make this sort of change in this, what effect will it have on that?
An example might be: Company A has a current ratio of 1.2. If they pay off $100 in accounts payable with cash, their current ratio will most likely:
a. increase
b. decrease
c. stay the same
(The answer is a: it’ll increase.)
Best of luck!
This is spot on. I was told how little I’d need my calculator prior to the exam and was still surprised to see how true that was. I suspect I could have passed without the calculator (used it maybe 10-12 times across all 240 questions).
I hope this is the case! I’d hate to waste my time cramming formulas when I could be doing practice problems and really hammering home the concepts.
At L1, none of the formulae are so complicated that you can’t apply logic to figure out how to arrive at the answer. Understand why the formulae are the way they are - why they use certain inputs. This is a much better approach to L1 than simply memorizing ratios and formulae. Using this method, you can easily answer questions like the example above or pure plug-and-chug questions.
Just throwing this out there, but I’m 90% certain that discussing the proportion of calculated vs. definition questions is a violation of the COE…
It’s not - candidates can’t discuss specific details of the questions, broad topical areas covered, or specific formulas tested or not tested. For example, if I were discussing how many derivatives questions were in the June 2013 L2 exam, I’d be in violation. But if I were to mention to a friend that L2 has item-set questions and required more calculations than L1, I’d be all good.