This blog will be
divided into 4 parts. This is first part of the blog.
I get a lot of
query on what to do in the last few weeks before the CFA Level 1 Exam.
So, i thought it
would be useful for the folks if I pen a few words highlighting suggestions, warning,
pitfalls.
No doubt that the
CFA Examination is a tough one, but the last month can be a make or break for
anybody. If you proceed methodically in the last 4 weeks then the chances are
huge that you would emerge successfully.
Let's dissect the
CFA Level 1 Examination topic wise and see where you should have thrust on.
|
Topic Areas
|
Weight
|
#
Readings
|
Difficulty
Level
|
Importance
|
|
Ethics/ Professional Standards
|
15%
|
1
|
Easy
|
High
|
|
Quantitative Methods
|
12%
|
2
|
Difficult
|
Medium to high
|
|
Economics
|
10%
|
3
|
Medium
|
Low to Medium
|
|
Financial Statements Analysis
|
20%
|
4
|
Difficult
|
High
|
|
Corporate Finance
|
8%
|
1
|
Easy
|
High
|
|
Equity Analysis
|
10%
|
2
|
Easy
|
High
|
|
Fixed Income
|
12%
|
2
|
Medium to
Difficult
|
Medium to High
|
|
Derivatives
|
5%
|
1
|
Difficult
|
Low
|
|
Alternative Investments
|
3%
|
1
|
Easy
|
Low
|
|
Portfolio Management
|
5%
|
1
|
Easy
|
Medium
|
The idea is to
ensure that you put a lot of emphasis on those topic areas which have high
importance and also the one which are easy. Following this you should be able
to easily focus on around 80% of the syllabus. You should have command on these
subjects and should be targeting marks in the area of 80% +. In all the topics,
you should be able to pluck those low hanging fruits, so it is never advisable
to leave any topic area for the exam, the discussion below follows on optimal
selection – optimizing the effort versus the marks.
We have two
topics which I have said as difficult and gave them medium to high importance
level - these are quant and fixed income. Its not that all the topic areas are
difficult, you should focus on the earlier readings for these subjects. For
quant the focus should be on Reading 5 to 8 (that is session #2) and reading
#12 - technical analysis. I am not saying that you should leave reading #9 to
reading #11, but study them from the examination point of view, that is you
should be able to successfully attempt the easier questions.
In the fixed
income, if you leave the spread concepts in the reading #58, then all of the
fixed income is quite logical and the flow of the topics in the syllabus is
also quite good. I would say that the students should have absolute command on
the readings #53, 54, 58 and 59. These are the crux of the fixed income
material and most of the questions will be asked from these topics. The
readings which I have left are the overview of the bond market, which is very
much analytical in nature and you will have to remember the types of
instruments which are there in the US (difficult for non-US students, but most
of the country has similar type of structure). In yield spread topic, please
understand the underlying theory and the equivalent tax yield of municipal bond
or after tax yield of corporate bond. In reading #57, whatever we are learning
are used elsewhere in the topic, but here they introduced 2 things – the
reinvestment return and the arbitrage profit from the bonds, make sure you know
how to compute this.
