The Chartered Financial Analyst (CFA) Level 1 exam is the first of three exams required to earn the CFA designation which is one of the most acclaimed credential for finance professionals around the world. With Level 1, the focus is on building a strong foundation of knowledge in finance and investment which is why it has an extensive syllabus.
This article provides a breakdown of that syllabus i.e., the subject and the details of the topics it covers, along-with their relative weightages in the Level 1 exam.
Syllabus Breakdown:
The entire Level 1 syllabus can be broken down into 10 subject areas the details of which are:
- Ethical and Professional Standards: This portion mainly covers the CFA Institute’s Code of Ethics and Standards of Professional Conduct, which are integral to the CFA program. The emphasis here is on the importance of ethical behavior and compliance with professional standards for finance professionals.
Weightage = 15-20%.
- Quantitative Methods: This section focuses on essential mathematical tools and concepts which are required in finance. It includes topics like time value of money, probability & distributions, technical and statistical analysis etc.
Weightage = 6-9%.
- Economics: The broader economic environment tends to have a profound impact on the way financial markets behave which is why this section covers topics like macro & micro-economics, global economy etc.
Weightage = 6-9%.
- Financial Statement Analysis: This portion focusses on understanding the financial statements, including income statements, balance sheets, and cash flow statements. It also covers topics like inventories, income taxes, ratio analysis etc. all of which combined in assessing a company’s financial health.
Weightage = 11-14%.
- Fixed Income: The global market for fixed income assets is one of the biggest in terms of actual size which is why a conceptual understanding of structure of the bond market, bond valuation methods, yield measures, and the risks associated with this asset class are crucial for finance professionals.
Weightage = 11-14%.
- Equity Investments: This asset class plays a significant role in investments. By covering topics like structure of equity markets, industry and company analysis, valuation of equity securities etc. it teaches candidates how to value stocks, assess investment opportunities, and understand the equity market dynamics.
Weightage = 11-14%.
- Alternative Investments: This portion helps candidates understand investments like private equity, hedge funds, real estate, commodities which have gained prominence over the past few years due to their diversification benefits.
Weightage = 7-10%.
- Corporate Issuers: By covering topics like capital budgeting, cost of capital, corporate governance, dividends and repurchases, this subject provides candidates with principles and skills that come in handy when evaluating the management of the company under review.
Weightage = 6-9%
- Derivatives: Instruments like futures, forwards, options, and swaps are widely used for risk management and investment purposes. This subject introduces candidates to these instruments and their applications.
Weightage = 5-8%.
- Portfolio Management: This portion ties together everything and by focusing on topics like portfolio planning, behavioural biases of the individuals involved and risk management, helps candidates understand how to construct and manage investment portfolios.
Weightage = 8-12%.
Parting Thoughts
Since the CFA program is designed to ensure that charter holders have a strong foundation in finance, the Level 1 exam is a comprehensive assessment of a candidate’s knowledge in these core areas. As these topics serve as the basis for the subsequent CFA levels, candidates are expected to have a strong grasp of the fundamentals which is why The WallStreet School through its online and classroom bootcamp coaching for the CFA Level 1 exam ensures top-notch preparation for the CFA Level 1 exam to help candidates get ahead in their financial careers!
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