How to Prepare for CFA Level 1 Exam?

28 Sep 2024

All three levels of the Chartered Financial Analyst (CFA) exams need a strong dedication to sticking to a planned study schedule. Over the past ten years, the CFA Institute reports, the average annual pass percentage for the CFA Level I exam has been 44%. According to this data, only committed applicants have a chance of passing the exam, thus being ready to make the essential sacrifices and exert the necessary effort. Recall that passing Level I is simply the first of two difficult exams needed to obtain a CFA Charter.

What is CFA and its Exam Pattern?

CFA full form is Chartered Financial Analyst. CFA is among one of the most in-demand positions for investment experts around the world. CFA Institute offers a globally recognized professional credential in Financial Management & financial investment. Since it is the most honoured of all finance and investment management certifications globally, the CFA program is therefore considered to be the best one. If you wish to pursue a career in investment management that is reputable internationally, then the CFA program might be worth considering.

By pursuing this course, candidates can acquire knowledge regarding the finance and investment industry, which will enhance their skills. India has been experiencing a record rise in the demand for CFAs due to the growth of industry and international trade. Candidates who pass all three courses will receive the CFA charter holder certification from the CFA Institute. CFA exam levels are as follows:

CFA Level 1

CFA Level 2

CFA Level 3

Exams for all three levels are conducted by asking questions related to Economics, Security Analysis, Accounting, and Wealth Management. The CFA exams for all three levels are conducted in June. In addition, the CFA Level 1 exam is also held in December. The CFA course benefits people willing to pursue a career in the field of banking, corporate, or financial services. Besides, taking up independent practice also becomes an option after completing the course.

Step-by-Step Guide to Prepare for CFA Level 1 Exam

Should you be preparing for the CFA Course, you should be aware that it requires a well-organized study schedule and significant dedication. When getting ready for the Level 1 exam, you have to study for more than 350 hours. You will require additional time if the courses covered in the CFA curriculum are not part of your academic background.

Focus on the curriculum and note the CFA Level 1 exam's topic weights.

Knowing the course content is the first step toward being ready for the CFA Level 1 exam. Ten subjects are covered in the Level 1 curriculum, and each one has a different weight. Further, the curriculum is updated once a year. The three exam levels have different topic weights even if the fundamental subject areas are the same.

Examining the ten subjects and their weights on the CFA Level 1 exam:

Ethical and Professional Standards: 15-20%
Quantitative Methods: 8-12%
Economics: 8-12%
Financial Statement Analysis: 13-17%
Corporate Issuers: 8-12%
Equity Investments: 10-12%
Fixed Income: 10-12%
Derivatives: 5-8%
Alternative Investments: 8%
Portfolio Management and Wealth Planning: 5-8%

Make sure you are fully familiar with the subjects listed above if you hope to do well on this exam. Give your attention to the more important subjects, such as "Fixed Income," "Equity Investments," "Financial Statement Analysis," and "Ethical and Professional Standards." Make use of the best CFA books to learn more about the subjects and topics. Give the subjects time according to whether they are your strong or weak points. Particularly weaker parts require additional time and care.

Understand the format of the questions of the CFA Level 1 exam

After you are familiar with the CFA Level 1 exam question structure, you can better organize your strategy. By writing the exam, you will know how much time to spend on each question and how to approach the paper with direction.
Multiple-choice questions make up the CFA Level 1 test. This exam consists of two 135-minute sessions. Every subject in the syllabus is covered in the exam. You can pause between the two sessions if you so like. To be eligible for the exam score, though, you have to show up for both sessions.
The CFA Level 1 test has ninety multiple-choice questions in its first session. Topics covered include "Ethics and Professional Standards," "Economics," "Financial Reporting and Analysis," and "Quantitative Methods."
Ninety multiple-choice questions make up the second session. This session's questions came from areas including "Alternative Investments," "Fixed Income," "Derivatives," and "Portfolio Management."
A statement, a table, a question, and three possible responses make up each multiple-choice problem. Either you have to answer questions straight from the provided response alternatives or finish a statement using one of the three possibilities. After you have the hang of the question structure, you can interpret the subjects easily.

Take Mock Exams and practice thoroughly

Exams for CFAs are now computer-based, and exams at level 1 are scheduled during February, May, August, and November. Practice question papers and mock tests should be started four to six weeks before the exam date.
Doing well on the CFA Level 1 test requires taking practice exams. How to be ready for CFA Level 1 includes this in great detail. Take the mock exam at home, being sure to recreate the atmosphere of an exam. Assume the role of an actual test hall and keep an eye on the time. There is a break available in between the two 135-minute (2.25-hour) sessions. Making use of CFA classes and CFA online coaching will prepare you mentally and physically for both the two sessions of the exam.

Frequently Asked Questions (FAQs)

What is the structure of the CFA Level 1 exam?

The CFA Level 1 exam consists of 180 multiple-choice questions, split between two 135-minute sessions. There is an optional break between sessions. The first session covers "Ethical and Professional Standards," "Economics," "Financial Reporting and Analysis," and "Quantitative Methods." The second session includes questions on "Alternative Investments," "Fixed Income," "Derivatives," and "Portfolio Management".

How much study time is required for the CFA Level 1 exam?

Candidates should aim to study for more than 350 hours when preparing for the Level 1 exam. This time may increase if the candidate's academic background does not cover the courses in the CFA curriculum. It's recommended to start practice question papers and mock tests four to six weeks before the exam date.

What are the topic weights for the CFA Level 1 exam?

The CFA Level 1 exam covers ten subjects with varying weights. For example, "Ethical and Professional Standards" range from 15-20%, "Financial Statement Analysis" from 13-17%, and "Portfolio Management and Wealth Planning" from 5-8%. Candidates should allocate their study time accordingly, focusing more on subjects with higher weights and their weaker areas.

When are the CFA exams conducted?

The CFA exams for all three levels are conducted in June. Additionally, the CFA Level 1 exam is also held in December. The exams are now computer-based, with Level 1 exams scheduled for February, May, August, and November.