How to Prepare for CFA Level 1
The Chartered Financial Analyst credential, or CFA, has become as much a necessity for certain financial industry jobs as an MBA. A CFA requires three levels of mandatory exams and four years of relevant work experience, so it's not an easy undertaking. Although there are instructor-taught study courses, most candidates study on their own, so it's vital to have a good study plan in place to maximize your chance of passing. In June 2010, the pass rate for CFA Level I was 42 percent, according to a CFA Institute press release.
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Instructions
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Familiarize yourself with the format and content of the exam. Visit the CFA Institute website and download everything you can. Some subjects are tested with multiple choice questions, while others require essays.
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Recognize which areas are your weak points. Be certain to devote extra study time to the topics in which you have the least knowledge and experience. If you aren't certain how well you know a subject, read over the "Basic Concepts" section for that topic's study session. Consider purchasing the textbooks for the areas in which you need the most instruction.
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Balance your study in proportion to how important the topic is on the exam. For example, the CFA Institute states "Ethics" comprises 15 percent of the Level I exam, while "Derivatives" comprises only 5 percent.
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Make a study schedule and stick to it. Tackle the topics you are least familiar with first, so you have time to review them again before the exam. Although you may not need to study every week, you are not likely to be able to cover all the material in sufficient detail in the month before the exam, especially if you are working full time. Err on the side of over-studying.
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Purchase a reputable and recent study guide. They are absolutely worth the money, especially if you supplement your weak areas with textbooks. You can pass the exam using only the guides if you have some degree of background in the topics and you do additional practice questions. Buy the most inclusive program you can afford.
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Take as many practice tests as possible. That will familiarize you with both the topics and the format and give further insight into weak points.
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Tips & Warnings
If you do not have a business-related university degree or work experience, purchase all the textbooks for Level I, and familiarize yourself with each topic covered. Level II and III assume detailed knowledge, and you will be at a disadvantage to other candidates otherwise.
If your employer does not reimburse your for the certification, you may deduct the costs of the exam and study materials on Schedule A of your 1040 under Nonreimbursed Business Expenses.
The CFA exam and underlying knowledge and regulations change from year to year. Base your study on the most current resources as listed in the CFA Institute's Guides and Curriculum.
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