CFA Exam Level 1: What to Expect of CFA Level 1?

CFA Level 1 exam serves as an introduction to the CFA program. In this article, we have explained what an aspirant should expect of the CFA level 1 exam. Read below to know more.

CFA Level 1 Exam

CFA Level 1 exam serves as an introduction to the Chartered Financial Analyst (CFA) Program and evaluates candidates' understanding of fundamental concepts in finance and investment.  Candidates aspiring to acquire the CFA certification need to pass in all three levels of the CFA exam and must meet certain work requirements set by the CFA institute. 

The Chartered Financial Analyst Program (CFA) is one of the most sought-after designations for investment and finance professionals across the globe. The CFA program is a professional three-level programme which tests the candidate’s skills and knowledge in the field of finance and investment. CFA is regarded as one of the most reputed career options for finance professionals but to gain the certification is not a cakewalk. There are three levels- Level 1, 2 and 3 that the students must clear in order to gain the CFA certification. Read the article below to know what should the students expect of CFA level 1 exam.

The CFA exam focuses on the knowledge and comprehension of tools and concepts of investment and portfolio management. The exam covers a broad range of topics including ethics and professional standards, quantitative methods, financial reporting, etc. The CFA syllabus for Level 1 consists of the following topics. Check below the CFA level 1 curriculum along with the weightage:

The questions in the CFA level 1 exam are designed in a way that it tests candidates' comprehension of concepts and their ability to apply them in real-world scenarios rather than rote memorization. Here is a detailed overview of the CFA important topics: 

• Ethics and Professional Standards: This section of the Level 1 CFA exam focuses on, as the name suggests, ethics, related challenges to ethical behaviour and the role ethics and professionalism play in the finance and investment industry. There are about 27 to 36 questions on this topic in the CFA question paper.
• Quantitative Methods: This topic can be a little intimidating for the candidates appearing for the CFA exam. The questions on this topic explore the quantitative concepts and techniques used in the field of investment and financial analysis. This section also considers the probability theory and its application in quantifying risk for investment decision-making. There are about 15 to 22 questions on this topic and key sub-topics covered under this include the time value of money and discounted cash flow analysis, descriptive statistics, characteristics of the return distribution, etc.
• Economics: This section tests the knowledge of the candidates of basic micro and macroeconomic concepts. The key topics include supply and demand analysis, market structures, aggregate output, economic growth, etc.
• Financial Reporting and Analysis: This section holds a good amount of weightage in the CFA Level 1 exam. The topic is all about the financial reporting procedures and the standards that govern the reporting disclosures. The weightage of this section decreases in the next level hence it is important to study well for this section to build the foundation for the upcoming exam.
• Corporate Issuers: This section talks about corporate governance as well as investing and financing decisions. This section also highlights the growing impact of environmental and social considerations in investing. The key topics under this section include cost of capital, leverage and working capital management.
• Equity Investments: The Equity Investments section explores equity investments, security markets, and indexes. It also explains and analysis industries, companies and equity securities as well as tools and techniques for valuing the firms. The majority of the questions in this section are focused on valuing and analyzing the companies and industries.
• Fixed Income: The topic describes the fixed income securities and their markets. It talks about the yielding measures, risks involved and valuation measures and drivers. Aspirants should understand the characteristics of various fixed-income securities and how to price them. Some key concepts are the yield measures and duration and convexity. This section also highlights knowledge about structured products, such as mortgage-backed securities and collateralized mortgage obligations, etc.
• Derivatives: This section builds the conceptual framework to understand derivatives and derivatives markets. Students will be tested on the basics of futures, options, forwards, hedging techniques and swaps using derivatives.
• Portfolio Management and Wealth Planning: This section explains the fundamentals of portfolio and risk management. The important topics of this section include Modern Portfolio Theory, Capital Asset Pricing Model, Return and Risk Management, and Portfolio Construction and Management. There are about 8 to 12 questions on this topic in the CFA exam.
• Alternative Investments: This section focuses on topics such as real estate, hedge funds, private equity, commodities and infrastructures. There may be 9 to 15 questions on this topic in the CFA question paper.

How to Prepare for CFA Level 1 Exam?

Check below to know a few preparation tips for CFA exam level 1:

• Preparing for the CFA Level 1 exam demands a structured and disciplined approach to cover the CFA syllabus comprehensively. Understanding the CFA exam pattern, duration, and weightage of each topic is crucial for formulating a strategic study plan. The CFA curriculum issued by the CFA Institute serves as the primary study resource, offering in-depth coverage of all exam topics. Supplementing this with additional study materials such as third-party study guides and online resources can reinforce understanding and provide extra practice questions. 
• Practice is paramount in CFA Level 1 preparation. Solving previous years’ CFA question papers and CFA mock tests will help the candidates familiarize themselves with the CFA exam pattern and also hone problem-solving skills, and assess preparedness. Ethical and professional standards, emphasized in the CFA curriculum, warrant special attention due to their significance in the exam and the finance industry's ethical framework.
• Time management is crucial, and aspirants should practice pacing themselves to complete the CFA exam sections within the allotted time. Seeking clarification on difficult concepts and engaging in study groups or online forums can enhance understanding and provide support during CFA preparation.
• Staying updated on any changes to the CFA exam format, CFA syllabus, or study materials provided by the CFA Institute is essential. Candidates should adhere to important deadlines and exam-related announcements. Overall, preparing for the CFA Level 1 exam requires dedication, consistency, and confidence in one's abilities. By following a structured study plan, practicing diligently, and staying focused, candidates can enhance their chances of success in this rigorous examination.

The CFA level 1 exam tests the students on ten different topics. The CFA pass rate for Level 1 is 40% on average. Aspirants should expect a rigorous and comprehensive examination that requires diligent preparation and a solid understanding of core financial concepts. To excel in the CFA level 1 exam, students should have a strategic study plan and follow it religiously.

CFA Level 1 Practical Skills Module

Candidates who appear for the CFA Level 1 exam also have to complete the CFA Practical Skills Module (PSM) in order to view CFA results. Candidates can choose their preferred module at each level. They cannot choose the same module at each level of the CFA exam. 

Read More: 

• CFA Program Deferral Policy
• CFA Application Form 2025
• CFA dates 2025-26