The Chartered Financial Analyst (CFA) program offers three different levels of certification, each of which requires a passing grade in a six-hour exam. Many candidates find the Level 1 exam very challenging as they have to handle an extremely large amount of information. The success rates for the first attempt at the level 1 exam are only 40 to 50%. Do not be discouraged by this figure. After preparation using CFA study material and exam tips, you can significantly improve your score in the exam and increase your chances of passing.
1) Do not leave the practice questions until the end
Pupils who work through the exercise questions while reading the syllabus are prone to the test on the day. The most effective way to prepare yourself is to review your mastery of the material by completing the practice questions at the end of each reading section. This will give you a good idea of how well you master the material, and it will also get you used to the types of questions you will encounter in the actual exam.
2) Work through the exam in several exams
The CFA institute that composes the exams easily adjusts the minimum score from year to year, but in the past 70% or more of the questions answered pass the exam correctly. The important thing is to determine the exact answers for as many questions as you can, rather than making sure you answer every single question. Do not waste valuable time answering the toughest questions. They could have spent that time finding the right answers to a larger number of simpler questions.
A good way to maximize the number of correct answers is to complete the exam in multiple passes. Just answer the questions you find most easily the first time, the ones you can be most certain that your answers are correct. Then go through the exam again to address some of the challenging questions, but skip the exams that you find most difficult. Finally, go through the remaining difficult questions, answering as many as you can as best you can in the time scheduled for the exam.
3) Answer the questions based on the CFA curriculum material
One of the things that invites students to answer is questions that are based on knowledge they have received elsewhere and that deviate from the CFA syllabus. Regardless of how much financial knowledge you have acquired prior to the CFA exam, make sure you understand the material and concepts of the CFA curriculum. Do not use definitions of financial terms that differ from those in the CFA study materials. Instead, adopt the definitions as they are in the CFA curriculum.
4) You do not have to study the material of the presented order.
The curriculum study material for the exam may not be presented in the order in which it is best to learn and master the material. Study the material in a logical way, starting with basic material and then on larger topics. Begin by studying basic quantitative methods and accounting, followed by financial reporting and analysis. Leave broader issues such as ethics and macroeconomics for later, but do not overlook them. Ethics, for example, is an increasingly important part of the Level 1 exam and can account for as much as 10-15% of the questions.
5) Familiarize yourself with the CFA Official Calculator
The exam requires many calculations. Familiarize yourself with the official calculator of the CFA Institute, the Texas Instruments BA II Plus. Also, familiarize yourself with the various features available on the calculator, such as: For example, with the ICONV function for calculating the effective yield and the NPV and IRR functions for use in capital budget calculations.
