Ever wondered what the letters “CFA” mean after investment professionals’ names? They indicate that the investment professional has earned his or herChartered Financial Analyst (CFA) designation by passing three difficult examinations administered by CFA Institute testing their broad knowledge of finance. Each level of the exam tests different skills. Level I measures candidates’ knowledge and understanding of the CFA Program’s concepts.
Like all CFA exams, Level I takes six hours split into two sessions, a morning and an afternoon session. There are 240 multiple-choice questions on the Level I exam. Though the pass rate is around 42%, there are no trick questions. Instead, all questions come straight from the curriculum that candidates receive at the time of their registration for the program.
The study materials include over 3,000 pages on ten investment-related topics. This broad base of information accounts for much of the difficulty in passing the Level I exam. More specifically, enrollees are expected to master 549 different “Learning Outcome Statements” (LOS). Each LOS represents a critical area of knowledge needed to perform as a qualified investment professional.
Exam writer Peter Mackey, CFA, recommends that candidates prepare for Level I in the following ways:
- Be prepared to demonstrate your knowledge of a concept by responding to a variety of approaches in the design and structure of exam questions.
- Focus on learning to respond directly to the command words in each curriculum LOS, such as describe, calculate, and interpret;exam questions are designed to test those command words.
- Read the entire question, along with all of the answer options, before deciding on the best answer choice.
- Focus on understanding the concepts instead of just rote memorization of formulas.
“These questions take about ten months to fully formulate,” Mackey adds. “We think very carefully about them.”