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Cfa Level 1 Questions
Free Cfa Level 1 Questions

On average, a typical candidate takes 4–5 years to pass all three exams. Successful candidates report spending about 300 hours studying for each level, ranging from 303 hours for the CFA Level I exam to 328 for the CFA Level II exam and to 344 for the CFA Level III exam. Below, you can read a list of 60 exam issues that our specialists expect to come up in the Level 1 CFA Exam (includes QM, FRA, CF, PM, FI, DI topics). We are also waiting for you proposals of exam issues. If you have any, write in a comment below.

As an investment professional, being a Chartered Financial Analyst can open many new doors that will serve you well throughout your career. But the road to CFA charterholdership isn’t one for the uncommitted or the weak of will.

It’s a long process that will not only test you for what you know, but especially for what you’re willing to put in, your determination to succeed, and most importantly, how long you can last. Of course, this journey begins with passing the CFA Level I exam.

Setting Expectations

The first step to your success as a CFA Level I candidate is knowing what to expect during the exam. After all, this will probably be your first close encounter with the CFA Institute, which administers the exam. When you know what to expect, you can plan your review around those expectations and increase your chances of passing the test.

According to the Institute’s Head of Examination Development, Peter Mackey, the current program takes an all-encompassing approach to investment analysis, valuation and portfolio management, with a special focus on ethical and professional standards. The good news is, it is a program that can be mastered through distance self-education.

But how exactly does that translate to crucial specifics that can impact your performance as a potential CFA?

Format

Let’s start with the most basic of all – exam structure. The CFA Level I exam will be around six hours long and split into two three-hour sessions. One will be in the morning and another in the afternoon. There will be a total of 240 multiple-choice questions. Each of these must be answered within a maximum of 90 seconds.

Take note that all of the questions are standalone, which means they are independent of one another, and there will be three possible answers for each.

Of course, the questions can be tricky, with each wrong choice reflecting calculation or logic errors that examinees are known to make. Nonetheless, be sure to answer all the questions as you won’t be penalized for answering incorrectly.

Content

Even more important than knowing the structure of the CFA Level I exam is anticipating its content. After all, this is where it all comes down to. If you have the wrong content expectations, you will have little – if any – chances of passing, for then you would be studying the wrong topics. Then again, you don’t only have to know what topics to study, but also which ones to study more or less than the others.

Exam Weight Distribution

To help you with that, take note of the following weight distribution of CFA Level I exam questions according to topic:

Ethics and Professional Standards – 15%

This part is obviously about the CFA Code of Ethics and Professional Standards, and the Global Investment Performance Standards (GIPS). Keep in mind that the Institute is very, very serious about this section, which is composed of around 36 questions. So serious that even if you score low on the other topics, you may still pass the exam if you impress them enough in this section. Besides, if you master ethics by Level I, you will have one less subject to pore over when it’s time for Levels II and III.

Quantitative Methods (10%)

As you may tell, ethics is a highly situational subject that few candidates will have problems with (until they take it for granted). Quantitative methods, however, can be rather technical. Not that you need a Ph.D in mathematics to pass this section, but a good grasp of statistics will surely help.

Economics (10%)

This part is dedicated to basic micro and macroeconomic concepts, especially macroeconomics – think x and y curves reflecting market movements. A good background in economics will certainly give you an edge.

Financial Reporting and Analysis (15%)

This may well take the biggest chunk of the exam, with a good 15% of questions devoted to it. There are also about as many questions on this section in Level II, so you have to spend a lot of time studying this topic to build a strong foundation for your next two exams.

Here, you will be asked to interpret three financial statements (balance sheet, income statement and cash flow statement), determine the ratios, and apply other complex concepts like taxes and inventory analysis. But since the exam is international in scope, you won’t have to study local accounting practices. Instead, you will have to focus on globally recognized standards, such as the U.S. GAAP and IFRS.

Corporate Finance (10%)

This is a short one, taking no more than 7% of the total number of questions in the exam. Major topics in this section include agency issues arising from agency-principal relationship, leverage, capital budgeting, working capital management, and cost of capital.

Portfolio Management (6%)

This part of the test mainly covers the Modern Portfolio Theory and the Capital Asset Pricing Model, with about 17 questions essentially preparing you for the same section in Levels II and III.

Equity Investments (11%)

Equity markets and instruments are the focal points of this section, along with company valuation tools and techniques. Around 10% of the questions dwell on equities while 90% go to company analyses and valuations.

Fixed Income (11%)

In this section, your will be tested for your knowledge on different fixed income securities and methods for accurate pricing. Vital concepts like yield measures and duration are also covered, as well as structured products, like collateralized mortgage obligations and mortgage-backed securities.

Derivatives (6%)

About 14 questions will be found in this section, which tests your knowledge on the essentials of futures, swaps, and the like, as well as the hedging techniques that work with them.

Alternative Investments (6%)

Lastly, this part tackles alternative investments like real estate, venture capital, closely held companies, and commodities. About seven to eight questions are highly conceptual, with more attention given to commodity investments, so you have to be well-oriented with such concepts as contango and backwardation.

Top Tips for Passing the CFA Level I Exam

Setting the right expectations is only the beginning of effective CFA Level I exam preparation. Once you know what lies ahead, you can start taking concrete steps to ensure that you will indeed be ready for the challenge come exam day. Here are some handy tips to remember as you go along:

1. Focus on the Curriculum

Every item that appears on the CFA Level 1 exam comes right out of the curriculum provided by the CFA Institute. Therefore, focus your review on that instead of confusing yourself with too many sources. When the Institute says the test questions are based on the assigned curriculum, that means they won’t be asking you anything beyond that.

However, as the CFA exam is known to keep evolving, you have to stay up to date with any changes. In 2009, for example, the number of options for the exam’s multiple-choice items was reduced from four two three. In short, visit the Institute’s website regularly to remain in the loop.

2. Begin Early

Passing a CFA exam requires proficiency in a large, multifaceted body of knowledge. Hence, you have to give yourself enough time for each topic. Generally speaking, you should allot around six months of review before exam day, so if you’re planning to take the test in June, you should be getting started by January or at least February.

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But don’t jump in full-blast yet or you could burn yourself out long before the day of the exam. Instead, go bit by bit and gradually gather your momentum. Remember, you’ll be studying for about 300 hours t

Cfa Level 1 Questions