CFA® Level I Exam Format

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Overview and Topics:

When approaching any exam, it’s reasonable to have some angst about it. One thing that helps is getting to know the “lay of the land,” meaning the CFA Level 1 exam format. What are the primary test areas? How will my current education and experience help in these areas? Do these areas translate well to my future career plans? 

We want to clear this up for you and provide you all the information you need to answer these questions and more.

First up, there are ten sections in the exam – that are all weighted. These weights can change year to year, so make sure and keep up with these changes. And even if a section is weighted less, it doesn’t necessarily mean spending less time on it. Some sections were rated hardest, but that will depend more on your background current competencies. Let’s talk about each of these sections at a very high level:

Section Weighting Ranking

  1. Financial Reporting and Analysis (FRA) 15% Hardest
  2. Ethical and Professional Standards (Ethics) 15% Hardest
  3. Fixed Income (FI) 11% Hardest
  4. Equity Investments (EI) 11% Harder
  5. Quantitative Methods (QM) 10% Hard
  6. Corporate Finance (CF) 10% Hard
  7. Economics (ECO) 10% Hard
  8. Portfolio Management (PM) 6% Hard
  9. Derivative Investments (DI) 6% Hardest
  10. Alternative Investments (AI) 6% Harder

Let’s take a quick look at each of these:

Ethics and Professional Standards

Start with something the CFA Institute takes seriously, which covers the professional standards, Global Investment Performance Standards (GIPS), and code of ethics. This is a section that makes up approximately 36 questions. Most find this section difficult because it’s not common knowledge or focused heavily on by standard college curriculum. Also, if your scores are low on the exam, this section could determine whether you pass or fail.

Quantitative Methods

This is a section you don’t want to take lightly. It covers about 28-30 questions and having some experience in statistics will help. Your topics covered are geared toward providing knowledge of find in this section, focusing on equities, fixed income, and portfolio management. According to the CFA Institute, the key topics covered are the time value of money, performance measurement, statistics and probability basics, sampling and hypothesis testing, correlation, and linear regression analysis. 


The economics section tests knowledge of essential macroeconomic and microeconomic concepts. If you are not a whiz in Economics, you will probably spend a lot of time here. Students have found that macroeconomics, which employs graphs and x and y curves to illustrate concepts related to the economy, can be difficult. 

Financial Reporting and Analysis

This is another one of the larger sections of the exam. You will be asked to interpret three financial statements (income statement, balance sheet, and cash flow statement). This will require you to advanced concepts such as taxes, long-term assets, revenue recognition, and even inventory analysis. 

Corporate Finance

This is one of the shorter sections comprised of topics including agency problems related to capital budgeting, cost of capital, capital budgeting agency-principal relationship, capital budgeting, and managing working capital. 

Portfolio Management

Portfolio management involves selecting and prioritizing a diversified approach aligned with its strategic plans and ability to deliver. The CFA Institute wants to make sure you can fully understand “the needs of your client and preparing an investment policy statement to represent the first steps of the portfolio management process.” 

Equity Investments

This is on equities covering equity markets and instruments and tools and techniques for valuing companies. We found that a majority of the questions are on investments focused on assessing and examining corporations. 

Fixed Income

In this section, candidates will be required to comprehend various fixed income securities’ characteristics and how to price them. In the world today, fixed-income markets are by far the largest asset class in financial markets. So think of any investments where investors are loaning the money for a fixed, scheduled repayment. Examples would be debenture, fixed-income investments include bonds, mortgage-backed securities, and government debt. 


This section ha sone of the lower weightings, and will cover items like the basics of swaps, forwards, options, futures, and hedging techniques using these derivatives. 

Alternative Investments

Last but certainly not least is Alternative derivatives. This section will focus on alternative investments, including real estate, private equity, venture capital, hedge funds, closely-held corporations, distressed securities, and commodities. 

So, tackling these topics is not easy, but many have done it with the right dedication and study plan. Remember, your current knowledge will dictate what sections you need to focus on, which could be different from other candidates.
Source: CFA Institute

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