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 %

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2. Joyce Price issues weekly investment reports. Joyce looks for trends and commonalities within the research community. She then presents the findings as her own research and doesn’t cite any sources. Joyce gives them to her boss, Soojung Yu, CFA. Soojung peer-reviews the reports and does not mention anything about citing sources.

Has Soojung most likely violated the Standards?

A. Yes, if Joyce is a CFA member, charterholder, or candidate

B. Yes

C. No

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3. Which of the following statements is/are most likely correct?

I: The demand for a country’s currency is a downward-sloping function of its exchange rate.
II: Purchasing power parity refers to the relation between interest rates for two currencies and changes in their exchange rates.
III: Interest rate parity refers to the relation between countries’ inflation rates and exchange rates of their currencies.

A. Only statement I is correct

B. All statements are correct

C. Both statements II and III are correct

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4. Company XYZ purchases land for USD5,000,000. XYZ intends to hold the land for a long term (20 years) and rent the land out to generate income. Under IFRS, at which price is the company allowed to use on its financial reports for the value of the land:

I. USD5,000,000
II. The current market price

A. II only

B. I only

C. Either I or II

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5. The market values of a firm’s capital are given below:

Total debt: USD7 million
Outstanding preferred stock: USD2 million
Outstanding common stock: USD12 million
Before-tax cost of debt: 8%
Before-tax cost of common equity: 12%
Before-tax cost of preferred stock: 9%

Assuming company’s marginal tax rate is 35%, what is the weighted average cost of capital (WACC) for the firm?

A. 10.4 %

B. 10.0 %

C. 9.5 %

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