I’m a qualified chartered accountant and thinking about starting my CFA next year. Very little maths since high school and I want to dive straight into level 1. Is it absolutely necessary that I brush up on my maths skills e.g. algebra, probability, etc or can I just dive straight in and see how I do from there? I obviously understand that it would be useful to brush up on these skills but I would like to know if it is an absolute pre-requisite or if I could get by spending a bit longer on the quanty material within the CFA level 1 schweser notes (which I am now using)?
It’s basic math, you should be able to pick it up from the study notes. However, be prepared to dedicate more time to these areas. I however, would suggest brushing up on algebra, as it will make many of the formulas easier to understand.
Do you know the order of operations (aka bodmas or pemdas)? If yes, then Cfa Maths would not be a problem, at least for level 1. Stats at level 2 require more attention but if you have already taken a Stats course in college, then it would come naturally to you.
Algebra used in Cfa is middle school algebra not Linear Algebra.
Probability is a difficult concept for some people so it depends upon your Stats aptitude. You can brush up on them if it is your weak area but it is not an absolute pre-requisite. (the probability used in Cfa is also very simple, it is not the probability you do through Integration)
I would advise you to jump right in and see if you can handle that. If you find them hard, you can always go and refer some books.
P.S. You already have a huge advantage coming into the Cfa program as you have an Accounting background. Accounts has a weight of 20% on level 1 and 15%-25% on level 2. Good luck
I’m also very much in the same ship. What I would advise is studying Quantitative Methods as one of the first topic, and make sure you study it from the actual CFAI guide rather than Schweser Notes or something. The CFAI book explains every concept in detail, and this may take quite a while, but it’s worth it. I think the not-having-done-Maths will be more of an issue for CFA 2… but that’s something to focus on when level 1 is actually passed!
I think Statistics might be the most challenging topic for you. But dont’ worry too much if you really want to go for this route, in a way stat is more about understanding, it’s not pure math - after you understand it, just memorize the formula and apply it. repeat many times then you are good
Does everyone else agree on studying quant methods from the CFAI and not the Schweser notes as a guidance point? I’m very much keen to get through the syllabus and start doing questions ASAP
Definitely use CFAI material for quants. Your intuition about doing questions is correct - the key is to work questions as much as possible. Work the end-of-chapter questions/problems from CFAI after each reading.
Also - don’t forget to dedicate some time each week for reviewing readings previously done - maybe 1 day out of 7. Revisit each section a few times after the first reaading - maybe after a week or two after initial reading, and then after a month and a half. This will held drive it home, and minimize the “oh, crap” factor that people experience when they finish the curriculum and then go back over earlier material and realize that they’ve forgotten most of it.
@ danny- your math concern is completely misplaced and all above comments are wrong. I am sure in your CA course you would have done basic Stats at some level. Infact considering your background Stats is of least concern to you. I wouldn’t worry about any specific material within CFA. Btw, there is no algebra in cfa (it’s not a maths undergraduate program- aside from the fact that the term algebra is very very wide). For your information the quant contain - TVM, DCF, Corr, Regres and Probability concepts. I am suprised by what these cfa candidates above are talking about. Generally candidates in a program tend to ‘talk up’ about what they are learning to an ‘outsider’ like you. Don’t worry. Once you’r ‘in’ you will be wondering what these guys were smoking. Welcome to cfa and I am sure you will ace the course.
Pure math is probably my weakest area but I was able to master the concepts after much practice and patience. The quant side is overwheming if you have been out of math for a while, but it’s not really that bad. Everything you need to know is somewhere in the text. Give it a lot of attention, patience, and try to understand the concepts if you’re rusty, then practice the EOCs.
The actual math itself is not difficult, it’s understanding when to apply which concept to which situation that was my biggest hurdle.
I don’t know what you’re smoking. The math involved at L2 in equities, pension, derivatives, etc. can overwhelm any L1 n00bie who thinks the math in the CFA program is a walk in the park (assuming you haven’t seen math, in general, in a long time). And I’m not even talking about quant here. There’s a reason why stats and generic algebra are separate topics. Maybe once you practice and understand what is going on, you can claim it is not involved. But that’s math in general - with enough practice, anyone can master the topics.
No, the math used in CFA is basic arithmetic, put in the form linear equations (single-degree !). Of course you will find usage of continuous compouding (e) and log form (in derivatives). Those are very few compared to the entire weight of the CFA course. Fundamental price of a stock is the present value of future dividends. Now, you don’t need to use calculus to compute sum of dividends to infinity. CFA course gives a simplified equation of D/P (you have to believe that, that is the condensed form of the long equation).
Of course, you need to be inclined to arithmetic and numbers in general. You don’t need to be math loving geek. I was answering in specific context to @Danny. If you are aware of what a chartered accountancy course involves, they have a lot of math and stats at some level. Because they too learn investment concepts like gorden model, beta, CAPM etc. They also learn how to value financial instruments (including options) as part of GAAP. Just that in CFA the focus is only on investments. So his concern on math I find hard to believe.
To add, I don’t know what Log does in pure maths. I haven’t maths studied beyond high school. But I can understand what Log is conceptually and why its used in a Black-Sholes model. Digging deeper into Log and deriving Black Scholes backward etc is not asked for by CFA. If you do it is good for you. I personally didn’t see myself making a career in derivates. I just know what is B-S is when a derivative trader talks to me.
A CQF is a math intensive program. You need to have strong background in maths (which is an entry level requirement). I checked out the CQF course and I knew I wouldn’t survive there. The discussions here appeared to me like we are discussing a CQF course.
I guess we disagree because you are talking of some random guy walking in the park thinking he can clear cfa (even assuming he has cleared cfa l1). I am talking of someone has a finance background and some industry experience in investments and serious on getting a CFA credential.
PS: A single-line math expression containing just a few terms can be extremely complex and most people would never solve it in their lifetime whereas a page full of equations can be actually simple, just that it’s taxing on memory and the eyes. Let’s distinguish these two.
Be calm young warrior. I can honestly say that I struggled a bit with Quant Methods given that I haven’t done Maths in the past 8 years or so… And I expect I’ll struggle more in Level 2. It is possible if you practice, and initially the CFAI books for Quant Methods do a good job of explaining concepts. Some stuff I’ve had to look up, such as logartihms etc, but for others it hasn’t been too bad. Let’s see how I get on with the rest of the syllabus. Hopefully it won’t be too big of an issue…
