AuthorTopic: How to prepare for your level 1 exam
@2006-03-03 07:52:52
Hi all:

I found this article on the Internet and hope this helps everybody:

Study effort

It is almost February end, and some candidates may be wondering how to optimize the rest of their study effort. Using an analogy from golf, think of Quant as the fairway because there are many LOSs which have a 10% weight on the exam for two sessions. Even though the fairway is defined clearly, there is less control over the ball. On the other hand, FSA has fewer LOSs and 28% weight with Corp Fin. This is like the short game where the golfer has a lot of control. While it is difficult to predict which LOS will be tested in Quant, FAS LOSs cannot be gamed in terms of probability. For the fairway, find your best irons - a 1 wood, a 3 wood and a 3 iron. In other words, know the basic concepts well. For FSA, practice every possible shot, i.e., know the LOSs well. It is the short game that wins golf, and the same is true of CFA Level 1.

Answering exam questions

You may come across questions on the exam whose correct answer differs from what you think is reasonable or plausible based on your experience and knowledge. If you remember the answer based on the CFAI readings, you should always give that answer over any other possibility. CFA exam graders are looking for the model answer based on assigned Level 1 readings. Resist the temptation to rely upon answers based on how you may do things in your job.

Save time on the exam

You will be rushed for time on the exam. The exam is a test of speed and accuracy. If there is a short cut to a problem, go for it. For example, when classifying a lease as an operating or capital lease, it has to satisfy one of four conditions, not all. Start with the easiest condition and work your way down. As soon as a condition is met stop further analysis. If a question asks you to verify a specific condition, follow the instruction.

Overcoming the high odds of failing

The steady decline in the pass rate for level 1 is an indicator of a lack of understanding of the CFA curriculum concepts and material on the average candidates' part. This conclusion should not come as a surprise to most. Every exam question has only four choices, so this should make things easy, right? No, the effect is exactly the opposite. Multiple choice questions eliminate potential points for partially correct answers. It is a swim or sink scenario. The steady decline also suggests that some candidates may be more willing to rely on guesswork when answering questions on the exam. In my experience based on mock tests given over several years, candidates who randomly answer multiple choice questions, tend to score no better than 25-30% on average, exactly what the one-in-four correct choice would predict.

In order to keep the hang-man away on the results day, study the concepts thoroughly, understand them well and try to develop as many inter-linkages between them as you can. Go over difficult LOSs several times. Do as many different kinds of problems (numbers are not important, their diversity is) as is humanly possible given the demands on your time, and DO NOT rely on a guessing game strategy for the exam. The right answer is always before your eyes, but the big question is: Which one? Unfortunately there are no short cuts. As they say, there is no free lunch either, but the CFA exam may seem to extract a steeper price than some are willing to pay. They bring down the average pass rate for the entire group. There is a silver lining though: if you have worked hard and have been disciplined in your study, the overall pass rate is irrelevant for you. Your conditional probability of passing is much higher given your effort. Work on what is under your control and forget about the overall pass rate. Maintain your sanity!

Time management

Candidates often complain that there is not enough time to answer all the questions on the exam to their satisfaction. Time crunch on the exam is deliberate. While the exam is designed to be a test of knowledge and thinking ability, it is also designed to do so in a very controlled manner - where speed and accuracy are the key to doing well overall.

A candidate should spend only the allocated time on a question. Some questions are easier than others, but they are all weighted the same. One should go for the easy points first. If a candidate has exhausted the 1.5 minute per question standard time at Level 1, (s)he should move on to the next question, after marking that question for later review. There will be some questions which will save time. Bank that saved time. After the first pass of the exam, come back to questions marked for review and spend the banked 5 or 10 minutes on such questions, starting with those questions where the return is high in terms of time spent. This time management strategy will keep the panic level low, and give the candidate an opportunity to answer the easy questions first on which he or she can score the maximum points.

Thinking outside the box

While many learning outcome statements are very narrowly focused, their sharp focus can be misleading. The CFA curriculum is not like any other academic curriculum. It draws from several areas and synthesizes that knowledge. Very few university and college programs do that. The reason for an attempt at this synthesis is how the real world functions. There are no boundaries and clear cut boxes to categorize knowledge in the real world. Decisions often need to be made on incomplete information under split second timing (specially for portfolio managers, traders and arbitrageurs). Success in the real world often depends on one's ability to take seemingly unconnected things and find a common cause or an underlying relationship. Some people call it intuition, some call it knowledge, and others may call it experience. Whatever be the nomenclature, while the CFA Institute (CFAI) wants you to know what is inside the box (hence the emphasis on LOSs), it wants you to think outside the box, to borrow from a common cliche. While this approach is more readily apparent at Levels 2 and 3, it is also prevalent as an undercurrent at Level 1. So, when you study for the Level 1 exam, keep this in mind - the CFA exam is a real world exam where things are not very well defined and you have to pull in all (knowledge) resources to prove that you have attained a level of proficiency that the CFAI wants you to achieve!
@2006-04-04 19:28:58
Great article. Thanks!
@2006-04-29 11:13:43
i am very preparing for the level 1 exam as at now which i have finish filling all my necessary information so am just only waiting for the day of the examinination
@2006-04-29 17:31:33
which is the first topic should i study.
@2006-04-30 19:28:40
The course curriculum itself, to get an overview, as well as your own calendar. Then make your own strategic choice on the of the percentage allocation for different subject areas, and plan accordingly. Apart from that, I find that the study sessions are already ordered nicely 1-18 even though you'd probably want to read #1 twice and possibly skip some of the later study sessions if you're rushed for time. Plan plenty of time for mock exams towards the end, I think that practicing on mock exams might be important to succeed since you will need not only to know the stuff itself but also know how to decode the questions fast and know how to tackle them quickly.
@2006-05-27 21:58:39
What are the major changes in June 06 Level I Vs the last Level I exam?
@2006-05-28 13:41:18
I don't know for sure but if I were to guess on one single subject area, my guess is that the Ethics section has changed the most since there has been changes to the Ethics policy in 2006 compared to 2005. All the other sections seem to cover approximately the same subject area as they did last year, and the underlying theories are what they are so my guess is there are no huge differences re the LOS in those areas.
@2006-05-30 20:57:27
@2006-06-15 11:50:03
Thanks, great article. Whats the best way to prepare for FSA?
@2006-10-02 09:09:48
Thanks, its a boosting guideline. Want some more topic on CFA level 1
@2006-10-29 11:43:21
Great comments by all specially stopperby
@2006-10-30 08:20:32
Hi All,

I have registered for CFA Level 1 June 2007 and bought CFA institute material. Do i need to refer some other material or CFA institute material is sufficient.

Please help on this and give me some tips regarding preparation.

@2006-11-01 01:02:38
Good one stopperby!

CFA june 2007! I have to make it!
@2007-01-05 08:05:39
Hi everybody! i never focus on weightings.. i always study as if all sections are of equal weightings.. once i have thoroughly studied all the relevant sections, then i am confident! well, thats me..
@2007-01-15 11:45:35
Hi All,
I am planning for L1 in June'07. Could anyone please tell me if 2006 study notes are enough or has there been some major change in the curriculum? If there have been changes, could someone let me know what are the changes?
@2007-01-18 11:49:08
ihave 2006 study notes and i just registered for L1 2007, will i still make with the material that i have at my disposal.
@2007-01-18 16:53:35
i just enrolled for the L1 june 2007 cos i got a fail in the dec 2006 L1.i knew there'r some changes of the material for the economics and corporate finance, cos they use different books this time, but i ve checked the LOS for these two topics and found that they are not much changes from the LOS for L1 dec2006, so i m abit confuse whether i needa buy the 6-book version or not!!can anyone please tell meabout dat?
also, for the equity investments and portfolio management, they use the new edition.
@2007-02-19 01:55:54
Do i need to buy the CFA institute course books or should i just use the notes for the CFA exam from this website. The books are 350 dollars. Is this sites notes a substitute for the CFA books? Please let me know ASAP.
@2007-03-06 08:38:29
hi there,
wonderful article.
members please take heed!
@2012-05-27 09:08:09
That's the worst analogy I've ever heard.... Here's an idea: spend less time in the rough and more time studying.
@2019-07-12 18:25:19
Does it make sense to completely skip/guess on a question that requires a greater number and more involved calculations and use that time for other questions - for example calculating intrinsic value based on the Gordon two step model?

CFA Discussion Topic: How to prepare for your level 1 exam

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You have a wonderful website and definitely should take some credit for your members' outstanding grades.
Colin Sampaleanu

Colin Sampaleanu