Thursday, September 18, 2014

How to Pass the CFA Level 1 Exam ?

The Chartered Financial Analyst designation is one of the most highly regarded titles in the financial industry. The first in a series of three exams is, at its best difficult and at its worst, nearly impossible. Only half of all candidates that take the level one CFA exam pass it to move on to the more difficult level two exam.

Instructions Concepts

1 Know the exam breakdown. There are 10 main topics: Ethical and Professional Standards, Quantitative Methods, Economics, Financial Statement Analysis, Equity, Debt and Alternative investments, Derivatives, corporate finance and Portfolio Management.

2 Get a copy of the CFA Candidate Body of Knowledge and study the Professional Standards of Practice and the Ethical Practices sections.

3 Study Quantitative Methods. Pay close attention to the following financial concepts: time value of money, statistics, random variables, probability, probability distributions, correlation analysis, linear regression, multivariate regression, time series analysis and basic portfolio concepts.

4 Brush up on your economics. Study the concepts of both macro and microeconomics as well as international trade, international finance and how economic activity relates to investments.

5 Understand Financial Statement Analysis. Know how to analyze inventories, assets, liabilities, taxes, investments, leases and balance sheets. Become familiar with financial reporting systems and principal financial statements as well.

Investments and Derivatives

6 Learn the analysis of equity and debt investments. Study the market indexes, equity risk terms and definitions, benchmarks, investment risk, debt investments, interest rates, yield spreads, debt investment valuation and credit analysis.

7 Have a grasp on derivatives. This includes the following markets: Forward, Futures, Options and Swaps.

8 Know about Alternative Investments. Study the following alternative investment concepts and markets: real estate, hedge funds, venture capital, investment companies, commodities, distressed companies and closely held companies.

Portfolio Management

9 Study the following concepts of Portfolio Management: capital market theory, employee benefits, endowment funds, insurance companies and asset allocation.

10 Learn portfolio management theories and concepts. Know how to manage both individual and group investor portfolios.

11 Learn about portfolio construction, debt and equity portfolio management, alternative investment portfolio management, risk measurements and performance measurements.

Corporate Finance

12 Grasp the concepts of Corporate Finance. The following concepts are covered on the CFA Exam One: fundamentals of corporate finance, capital investment, long-term financial policies and mergers and acquisitions.

13 Learn about Valuation. This section also covers the concepts and implications of corporate financial valuation.

14 Study the concepts of business risk and financial risk as they related to corporate finance.

Tips & Warnings

  • Give yourself ample study time to prepare for this test. There are a lot of concepts covered, giving yourself plenty of time to study these concepts will ensure that you pass the exam.
  • Buy study guides and materials. These guides and materials will give you more detailed and comprehensive information regarding the concepts covered in this exam.
  • Don't cram. Cramming, or studying right before exam day is sure way to fail.