1. Put in a lot of practice time!

Because the CFA exams are so long (6 hours for each level), time management is essential. It’s one thing to absorb information; you’ll also want to put it into practice so that you can improve your recall and ensure that you’re understanding the questions. Start with the CFA Institute’s books, which contain a plethora of mock exams and practice questions. Then, identify your weakest subjects and concentrate on reviewing them. Then, at least two months before the exam, begin taking mock exams. Free mock questions can be found at the end of this blog.

2. Don’t waste time.

About 285 hours of study is recommended by the CFA Institute. However, depending on your background, time management skills, and prep course, you can make the most of each hour, reducing wasted study time significantly. For example, with The Princeton Review, you should be able to put your distractions aside and complete your Level I CFA exam preparations in under 120 hours.

3. Develop a study plan

Setting aside that time and committing to staying on track is critical. By spreading the required work out over six months, you not only establish a solid routine that allows you to digest all of the material, but you also give yourself some leeway to reschedule your study sessions if you fall behind.

4. Focus on concepts

The CFA exams are becoming more conceptual, particularly the Level I exam. Concentrate on the most important formulas for the exam and provide a formula sheet that highlights common-sense applications and how to derive any additional information you might require. Finally, you’ll want to figure out which formulas you can skip if they’re consuming too much of your time.

5. Know your financial calculator

You’ll be able to bring one of two calculator models to the tests. Practice with your chosen device ahead of time so you know exactly how to use it. Once you’ve gotten the hang of it, you should be able to rack up some quick points right away.

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5 questions will be shown from a total of 30 free practice questions to prepare you for CFA level 1 exam. Enjoy!

1 / 5

1. A portfolio manager has a tight tracking error of 50 basis points. The manager expects to be within this tracking error for a given quarter 85% of the time.

If that expectation is correct and each quarter is independent, the probability that the manager is within the tracking error for at least 7 of the next 8 quarters is closest to:

A. 35 %

B. 65 %

C. 75 %

2 / 5

2. Keisha is looking to avoid purchasing power risk as much as possible. She should consider investing in which type of security?

A. TIPS

B. Floats

C. Bullet bonds

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3. Which of the following statements relating to Z-spread, Option-adjusted spread (OAS) and option cost for callable and putable bonds is/are most likely correct?

I: For callable bonds, Z-spread is greater than OAS and option cost is greater than 0
II: For callable bonds, Z-spread is less than OAS and option cost is greater than 0
III: For putable bonds, Z-spread is less than OAS and option cost is greater than 0

A. All three statements are correct

B. Only statement I is correct

C. Only statement II is correct

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4. Haspiess Systems, Inc. and Signicomp Manufacturing enter into a netted interest rate swap, with a notional USD75M. Haspiess will pay a fixed 5%, and Signicomp will pay LIBOR + 75bp. LIBOR is 3.5%.

The first semiannual payment will be closest to:

A. Haspiess paying Signicomp USD600,000

B. Signicomp paying Haspiess USD600,000

C. Haspiess paying Signicomp USD300,000

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5. Which of the following statements regarding Internal Rate of Return (IRR) and Net Present Value (NPV) is/are most likely correct?

1: If the NPV and IRR methods give conflicting decisions for mutually exclusive projects, the IRR method should be used to select the project.
2: A project may have positive NPV even if its IRR is less than the cost of capital
3: IRR is the discount rate at which the NPV of the project is zero.
4: A project’s IRR can be positive even if the NPV is negative.

A. Statements 1 and 2 are correct

B. Statements 2, 3 and 4 are correct

C. Statements 3 and 4 are correct

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