How to Do Topic-Wise Preparation for CFA Level 1
Putting in the 300 hours of study prep is not a guarantee of passing your level 1 exam on the first attempt. The study techniques and study material you use will play a significant part in your success or failure. It is therefore of vital importance that you employ the tried and tested study methods and use the best study notes to pass this tough exam.
5 Key Tips That Will Help You Pass Your CFA Level 1 Exam
1. Get the Best Study Material, Practice Questions and Mock Exams
Having the best study materials, including books, study guides, prep books and videos will give you a competitive edge over other candidates when trying to pass the CFA level 1 exam. There are many CFA prep providers, including analystprep.com.
2. Be Familiar with the Exam Format
Knowing the exact format of the exam will ensure that there are no surprises and that there is no chance of panic setting in which can happen if you’re surprised with something unexpected.
3. Revise the Material 3 to 4 weeks before the Exam
You cannot revise enough – in fact, the more you revise and the more practice questions and exams you do the more confident you will become for tackling the exam not to mention being more comfortable and proficient with the core principles.
4. Read and Understand each Question Carefully
Due to the time constraints and the pressure of sitting the exam, a common mistake is to misunderstand a question and, therefore, opt for the wrong answer. Time management is very important – wasting too much time on time-consuming questions could mean missing easier questions and wasting easy marks.
5. There Is Only One Correct Answer
Be precise even if you have to sacrifice a bit of time to get your calculation right. Do not rush it as you could end up using valuable time as well as missing out on getting a relatively easy question right.
There are various units to cover which include:
Corporate finance, in my opinion, can be one of the most scoring topics of the CFA level one exam. You can expect between 5-10 percent of the questions being asked from this section. To start with corporate finance, you need to first understand the time value of money from the quantitative section very well. If you haven’t done that, please go and finish that first and then come back to this section.
Economics, contradictory to the popular myth, is in my opinion the most interesting and among the toughest topics in the curriculum. The CFA level one curriculum attempts to start from the basics and wants to make you an economist in some right by the time you are through reading all sections of the curriculum. The entire section of economics includes demand and supply analysis, microeconomics, monetary policy and macroeconomics. My advice would be to try and read through all the concepts and think about all the concepts as you see being applied in the real world. However, there is one whole book dedicated to economics so you really need to think deep to understand these concepts well to be able to answer them right in the exam.
For preparation, read your concepts first and practice as much as you can. It is a pretty straight forward topic. About a 10-15 percent of the questions come from this topic in the CFA level 1 exam, so it can help you score if you understand this topic well.
Fixed Income Securities:
Again, the CFA level one covers the basics aspects of fixed income securities, which include the basics of valuation, duration and convexity. A lot of terminologies about the fixed income markets will be there. It can be a bit painful but you have to take it none the less. It builds a strong foundation for level 2 and level 3 where it becomes increasingly more complex. There are a lot of basics with technical jargons that the students would have to remember but valuations concepts may not be too difficult.
The CFA level 1 Derivatives section is pretty basic. However, if you are new to finance then you may find this topic to be very confusing. Ensure that that you understand the concepts very well. Certain derivations in the derivatives may seem to be occult when you are reading it in the beginning so refer to the videos and question banks for a good preparation provided for this regard. The derivative is a weak section for a lot of students especially for the students who has no experience in finance. Go right from the basics, understand it step by step and take your time on this section. There is need to hurry up!
Financial Reporting and Analysis:
Financial reporting and analysis the most important chapter in the CFA level 1 exam. It can make the difference between passing and failing. If you are not good with derivatives or alternative investments you may still get away with it, you cannot pass the CFA level 1 exam is you don’t have a good understanding of financial reporting. There is no running away from it; it’s about a lot of accounting and understanding of how accounting is done by the global standards in today’s world. It’s not very difficult, but students sometimes have a phobia of this topic. Don’t be hesitant and scared; devote as much time as you can on this as it will make a difference between passing and failing.