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Financial Exam Academy

December 2015 CFA© Level I Study Guide

More CFA Level 1 exam help at www.FinancialExamAcademy.com1




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ABOUT 5

QUESTION PRACTICE IS KEY 5

YOU NEED A STRUCTURED APPROACH 5

THE 3 MUST DOS: 6

STRATEGY NOT CONCEPTS 6

OVERVIEW 7

MAKE EVERY HOUR COUNT 7

COMMITMENT TRUMPS EVERYTHING ELSE 8

WHY STUDY FOR THE CFA CHARTER? 8

KEY BENEFITS OF THE CFA DESIGNATION 9

OTHER THINGS TO CONSIDER 10

FEA ELITE 11

WHAT DOES THE CFA PROGRAM COST? 11

WHAT CAN YOU LEARN FROM THE JUNE 2014 CFA CANDIDATE SURVEY 12

SUMMARY 13

STUDY HARDER THAN AVERAGE 14

ARE YOU AN ABOVE AVERAGE CANDIDATE? 14

HOW MANY HOURS DO I HAVE? 14

SO HOW MANY HOURS DO I NEED THEN? 16

2015 CHANGES TO THE CFA LEVEL 1 CURRICULUM 18

SUMMARY 20

STUDY SMARTER THAN AVERAGE 21

1. USE A STUDY GUIDE 21

2. FOCUS ON ETHICS 25

3. CREATE FLASHCARDS 26

4. REVISE EOC QUESTIONS IN DETAIL 30

5. CREATE A WEEKLY STUDY PLAN AND MAKE SURE YOU DON'T SLIP BEHIND. 31

STUDY APPROACH 32

THE FEA ELITE STUDY APPROACH 32

DOES IS MATTER IF I AM STUDYING IN THE CURRICULUM OR AN ABBREVIATED STUDY GUIDE? 33

HOW TO PRIORITIZE THE TOPICS 33

A 21 WEEK STUDY SCHEDULE 35

WHICH STUDY ACTIVITIES SHOULD YOU PRIORITIZE 36

SO WHAT ARE THE ALTERNATIVES? 37

EXAMPLE: 38




SUMMARY: 38

THE 3 PHASES 40

PHASE 1 - FOR EACH READING (15 WEEKS) 40

PHASE 2 – (5 WEEKS) 40

PHASE 3 – (THE VERY LAST WEEK) 44

EXAM DAY STRATEGY (CFA LEVEL I) 45

STUDY SCHEDULE 47

SUMMARY: ERROR! BOOKMARK NOT DEFINED.

TIPS AND TRICKS 50

PLAN YOUR EXAM DAY 50

SHOW UP EARLY 50

FIGURE OUT WHERE YOU CAN LEAVE YOUR BELONGINGS 50

FOOD 50

EARPLUGS 50

HOLD YOU HEAD DOWN 50

BRING YOUR FLASH CARDS EVERYWHERE 50

ACRONYMS 51

CFA WEBSITE 51

CALCULATOR APP 51

CALCULATOR GUIDE 51

MAINTAIN MORALE 52

TAKE OFF THE LAST WEEK BEFORE THE EXAM 52

HOW TO USE THE WEBSITE 53

NEW TO THE CFA 53

FEA ELITE 53

TOPICS 53

BLOG 53

WHAT TO EXPECT FROM THE EMAIL LIST? 53

FEA ELITE 54

SETTING YOURSELF UP FOR THE 21 WEEK STUDY PROGRAM: 54

THE 21 WEEK STUDY PLAN 54

WHY DO YOU NEED AN ACCOUNTABILITY PARTNER FOR CFA LEVEL 1? 54

THANK YOU! 55




About

When I started studying for the CFA charter I had absolutely no idea what I was getting myself into. I

asked a few colleges who had been through the drill, and thus armed with a few well-intentioned

pieces of advice and directions I got busy. I managed to pass the CFA level 1 test at my first attempt,

but I wasted a lot of time preparing through ineffective study technique.

I know many bright candidates who have failed the CFA level 1 exam, not because they did not have

the intellectual capabilities, but usually either because they applied an ineffective study technique or

did not allocate enough time to study. Having gone through the process and earned my CFA charter,

I thought it would be a good idea to put my experience into words and pass it on. So if you are

considering or have already decided to pursue the CFA charter, I am dedicating this guide to you.

Presumably you have at least got a rough idea about what you are potentially getting yourself into.

The dual obstacle for most CFA candidates is the immense size of the curriculum coupled with the

limited time available to study in between other commitments. This study guide is designed to give

you a clearer idea about what the CFA program is all about, and if you have already decided to take

the plunge, this guide will help you map out an effective prioritization of your efforts with your limited

time budget in mind.

We are also running an accountability partner program called FEA Elite, for candidates serious about

passing the December 2015 test. If you are keen to study harder and smarter than the average

candidate to pass the upcoming test I would be very happy to welcome you on board, just send us an

email at [email protected]. You will find a lot more information about FEA Elite later

in the guide.

Question practice is key

Before we begin I would like to personally thank you for downloading this study guide, and if you

decide to take on the challenge I wish you all the best of luck on your journey towards earning the

CFA charter. The key purpose behind this guide is to encourage you to take targeted action! You can

have all the study aides in the world, but unless you are using them effectively you are still likely to

fail the CFA level 1 exam.

The CFA level 1 test carries an extremely objective success criteria, in that your exam result depends

on your ability to answer the same 240 multiple choice questions that everyone else are facing on

exam day. It only makes sense then that your exam preparation should therefore be focused around

question practice. You clearly do need to read the curriculum, or at least an abbreviated study guide,

but the default approach of mind-numbingly racing through the curriculum trying to memorize

everything is not the most efficient use of your time.

You need a structured approach

The Financial Exam Academy is all about breaking the path to exam success into meaningful and

manageable action steps, and most importantly ensuring that you stick to it. A common experience

for too many candidates at the end of a crammed study session, is the satisfaction/frustration

www.financialexamacademy.com/fea-elite




depending if they have managed to read the 25 or whatever many pages that they set out to cram

through on the day, coupled with an unnerving afterthought that you cannot actually really recall the

majority of the content that you just whipped through.

If you are like many other candidates, you will be studying in the little time slots left over in between

your otherwise busy schedule, being able to focus at these times despite fatigue from work and other

commitments calls for a very structured approach. In an ideal world you should be able to recall all of

the information that you have studied at will, but no matter how focused you are you are obviously

never going to have 100% retention. Thankfully the CFA test is constructed for human beings not

machines (although some candidates may leave that impression) so the criteria is not to be perfect.

There are a few basic ground rules here at Financial Exam Academy that you need to follow if you

want to maximize your success using this study method. The rules are really basic, but they are

violated by many candidates while studying for the test (This is good news for you if you are

disciplined, as adhering to these should therefore provide you with an edge).

If you manage to follow these 3 basic rules consistently, as you progress through your studies, you

will have an edge over the many candidates who either fail to put the necessary hours in or use their

allocated hours inefficiently because they become distracted or lack strategy.

The 3 must dos:

1. Designate your study time: Be slightly militant about this point. Treat your study “appointments” with the

same level of respect you would treat a meeting with a client at work or similar. It is very important that

you communicate this commitment to the people in your life, particularly if you are sharing your roof

with anyone.

2. Designate a quiet comfortable study area: This could be a meeting room at work, an office/desk at

home (if you are fortunate enough to have one in a room with no distractions) or a desk in a designated

study room in a library/university or similar.

3. Use targeted questions to keep your brain focused: The end of chapter questions in the curriculum

form a much underutilized and readily available source of targeted questions (Only about 53% of

candidates made use of the end of chapter questions according to the June 2014 CFA Program

Candidate Survey Report). Attempting to answer the questions prompted by the Learning Outcome

Statements at the beginning of each reading probably form an even less utilized source. In addition

various traditional and online study guides (some of them free) provide practice questions. I would

however encourage you to focus on mastering the curriculum questions first, most candidates won’t put

in the effort to master all of these.

Strategy not concepts

Whether you are just coming out of university, or you are a seasoned professional, studying for the

CFA exam requires a significant commitment of time and effort. While you may already be familiar

with parts of the curriculum, the sheer volume of content, and the time pressured exam style means

that learning how to make the best use of your limited time during the preparation period is likely to

be a deciding factor.

http://www.cfainstitute.org/about/research/surveys/Pages/candidate_survey.aspx




The Financial Exam Academy Study Guide has been created to help structure your studies. I am not

going to elaborate on every esoteric distinction in the curriculum; there are plenty of guides out there

that will do this for you. But when it comes to this, there is no replacement for reading the underlying

CFA curriculum; this is after all the material that you will be tested on. Instead we have spent a ton of

time analyzing and breaking down the CFA curriculum, to provide you with a clear path explaining

exactly what it is that you have to learn each and every week as you progress towards the CFA level

1 exam.

Overview

First I will briefly introduce you to the CFA program, what it means to earn your charter and what you

need to think about before signing up. Then I will provide some input to analyze how many hours you

will need in order to study for the test. The following chapter describes how to prioritize the various

topics (as some provide a better trade-off for time spent than others, in terms of the materials

likelihood to be featured on the exam). Then we will focus on our suggested study approach (this is a

flexible study approach that can be applied across all topic areas in the curriculum as you work to

improve comprehension). The technique may feel a little bit difficult at first, but if you stick with this

technique it will become second nature, and it will ensure that you practice each and every end of

chapter question in the curriculum for exactly as long as you need until you have mastered it. The

next chapter contains a model study schedule that you can adjust and apply to your own situation.

This way you will never be wondering what to do next. The study guide is rounded off by two

chapters covering activities to do the last month leading up to the exam and a final chapter about the

actual exam day.

At the end of the guide you will find some bonus material including tips and tricks, what to expect

from the Financial Exam Academy email list, how to use the Financial Exam Academy website and

encouragement to reach out to us with any question you may have related to your CFA level studies.

Make every hour count

This guide alone is clearly not going to bring you success on exam day. What this study guide

provides is a roadmap for how best to tackle the curriculum. This guide will therefore work the best as

a companion to your preferred medium of study (be it the actual curriculum or one of the many

abbreviated study guides available).

Lastly, as I am sure you are aware there are many other CFA level 1 exam guides out there, many of

which are well written and helpful, and many of which provide a detailed account of the curriculum.

With the Financial Exam Academy Study Guide, I hope you find that it stands out as one that is

focused on saving you time by being straight to the point. The intention is for this guide to help you

make every hour count in studying for the CFA level 1 exam. And I want you to feel like you have a

tutor during you journey. If at any time you have a question or concern, please feel free to reach out

at [email protected]. We are here to help, and we are only an email away. I really

hope that you apply the strategies discussed in this guide, and manage to put the hours in to pass

the exam.




Commitment trumps everything else

Are you committed to pass the December 2015 CFA level 1 test? If so, you might want to have a lookat the FEA Elite class of December 2015, a progress group of like-minded candidates committed tohold each other up to a higher standard than the average candidate and pass the test.

This is the first in a series of 3 key steps that serve as the foundation for creating a successful studyplan to pass the December 2015 CFA level 1 test.

As a very first step before you commit any time or capital to pursue the CFA program stop for aminute to consider if attaining the 3 letters is really worth the effort for you? I do not mean todiscourage you from attaining the charter, but there is no hiding that it is a lot of work. If you are oneof the less than 10% of candidates that complete all 3 exams at your first attempt, you are still likelygoing to invest more than 1,000 hours of your life into the program. The CFA Institute publishes theamount of time invested by the average candidate for each level: 283 for level 1, 313 for level 2 and324 for level 3 (June 2014). Now the average candidate is not going to pass any of the levels letalone all 3 in a row. Unless you are a speed reader, or have a brain like a sponge, you need to studyharder than the average candidate to pull this off, which means you are definitely going to need morethan 1,000 hours of study time distributed over 2-3 years. A more likely scenario for the vast majorityof candidates that eventually become charterholders is that they fail at least one exam. I am sorry tosay so, but it is pretty simple maths when you consider you have to pass through 3 exams wheremore than half of the participating candidates get weeded out at each level. If you just need to do oneretake the total amount of hours is likely to get closer to 1,500. When framed this way you have to beextremely committed to sign up for this. Imagine what else you could do with 1,000+ hours (whichrepresents the hard to attain best case scenario).

Why study for the CFA charter?

So why are you doing this? If you are not able to write down a list of compelling reasons whybecoming a CFA charterholder is going to transform your life for the better, I will recommend that youdo not apply, seriously!

In my mind there are a lot of good reasons to become a CFA charterholder. If you are aiming for acareer in the investment industry this is the gold standard and does command a lot of respect, partlybecause other charterholders in key positions in the industry have experienced the same sacrificesthat you are going through to obtain the charter. It is an exclusive group of people offering equalaccess to anyone purely based on your ability to commit and stay the course learning the tools of thetrade.

You can probably skip this chapter if you have already signed up for the CFA program, as it is

designed to help you carry out a more informed decision for or against. Let's first look at some of the

good reasons why you should study for the CFA designation:

Studying for the CFA charter requires an immense commitment of time and energy. You are likely tospend more than 1,000 hours preparing for the 3 exams even if you are one of the few that passevery level at your first attempt. The low pass rates at each level means that despite all of your hardwork, the odds are stacked heavily against your ultimate success. The ratio of professionals thathave obtained the charter (127,505), to the cumulative number of enrolled level 1 candidates since1963 (1,186,577) stood at a mere 10.7% as of December 2014. Only less than 10% of candidates

http://www.cfainstitute.org/about/research/surveys/Pages/candidate_survey.aspx




pass through the program without failing at least one exam, and each retake will add 100s of hours toyour tally. I know candidates that have attempted the dreaded level II 2, 3 and 4 times. Once you arein this deep it is nearly impossible to quit as you have already invested years of your life with verylittle to show for it.

There are many good reasons to study for the CFA charter, but with the above in mind you need tomake sure that these reasons are compelling enough for you personally before you commit.

Some typical motivations include a pure desire for learning the material (if you are not passionateabout the subject you are facing an uphill battle), pressure/encouragement from your boss/mentors atwork (this might work to give you a gentle push in the right direction, but if your heart is not in it, thisis going to be excruciating), a personal profit motive (if you think the CFA program is going to provideyou the holy grail to outperform the markets I am sorry to puncture that daydream. The program willsupport your journey to become a better-rounded investor and to stop looking for short cuts toinvestment riches).

According to the June 2014 CFA candidate survey the primary motivation for most candidates is toimprove their career prospects. If this is the case for you also, do you have a clear idea about yourdesired career track and have you got compelling reasons to believe that the CFA will improve yourprospects? If your ultimate career goal is to become a portfolio manager or career analyst with afocus on fundamental analysis, and you are relatively early in your career, I can all but guarantee youthat the CFA charter is going to boost your career prospects. If your chosen career track is somewhatrelated the designation might still prove useful. If you are pursuing a career as a trader, investmentbanker or in alternative asset classes (private equity/ hedge funds), the designation might still beuseful (depending on your exact path) but look out for more specialized alternatives recognized inyour niche of the industry. The CFA charter is very relevant for many career paths on the sell side aswell as the buy side, but do have a look at the topics taught at each level to confirm how many ofthese bear any resemblances to what you are doing on a day to day basis.

The main point I want to leave you with is this. Do not underestimate the task ahead, when signing upfor the CFA program, and do not commit to studying for the CFA charter unless you have got verycompelling reasons to do so. It is a massive time suck that will cripple your social life for years. Itrequires a significant investment of money and more importantly time to earn the charter, and it ismuch easier to decide against ever starting than it is to let go once you have invested your time andeffort studying for one or more tests.

On that cheery note let’s have a look at some of the reasons why you might want to study for thecharter anyway.

Key benefits of the CFA designation

The CFA designation is recognized around the globe as one of the most respected designations for

analysts and portfolio managers and other participants in the investment management industry. The

signaling effect from completing this 3 level challenging self-study program successfully is very strong.

Obtaining the CFA designation will often give your CV the edge over non-CFA charter holders that

otherwise have a similar background.

The fact that it is a self-study program makes it extremely flexible. You decide when you want to study

and how much effort you want to put into it at each level. (There is obviously a lower limit as to how

much effort you need to put in, in order to avoid a retake). You can also study towards the CFA




program while you build your practical investment skills in your day time job. This combination of on the

job and “academic” learning is very effective. At the same time completing the CFA program is also

relatively cheap compared to most master’s degrees and MBA programs.

Often overlooked but equally importantly, becoming a candidate in the program will enable you to

become a member of your local CFA society, providing you some of the best continued learning and

networking opportunities in the industry.

The CFA curriculum is tailored specifically to teach the key skillset and knowledge required in

managing investments and depending on your background it will refresh and/or expand your

knowledge about portfolio management and related topics. The designation will ensure that you have

an all-round foundational understanding of the products and the general functioning of the financial

market place.

The CFA is not a guaranteed ticket to become a successful asset manager, but not having one could

set you back in competition with the increasing number of CFA charter holders out there. Also the CFA

designation can be used as a lever in persuading your employer to help you transitioning into a new

role that better fits your skills and interests, e.g. if you want to move from a back office to a front office

role. The fact that you have completed the CFA program adds to your credibility and credibility and

trust is everything in the asset management industry.

Other things to consider

As you can see there are plenty of good reasons to study towards the CFA designation. However,

given the tremendous commitment of time and effort necessary to complete the program

successfully, you should definitely do a bit of soul searching to get clear about your motives before

you dive in. In order to lend a helping hand we have collated a few key things to consider before

entering the CFA program below:

Have you got the required time available to be successful? The CFA Institute reports an average

of roughly 300 hours’ worth of prep time for successful candidates at each of the 3 levels, and some

candidates may need even more time. Can you realistically find 300 hours in your current schedule in

the months preceding each exam?

What are your career aspirations? The CFA program is ideally suited for a buy-side investment

career in listed markets, whereas other qualifications might be better suited if you are pursuing

traditional investment banking roles or if you are pursuing a career in alternative investment strategies

(private equity, quantitative hedge funds etc.).

Have you got the determination and drive to push through even if you happen to fail a test once

or twice? The level 3 pass rate is typically around 50% and the level 1 and 2 pass rates significantly

lower, only a small fraction of the people that sign up for the level 1 exam will pass straight through the

program. Unless you are one of these select few, your study period is not unlikely to extend to 3, 4

years or beyond.

What are your motivations for studying the CFA program? You will have to call on these when the

going gets tough, and if they don’t convince you now, they definitely won’t when you are forced to




spend your Saturday mornings reading about SWAP contracts and pension liabilities in order to keep

up with your study plan.

Have you checked if you meet the entry requirements? Most importantly you need to hold a

bachelor’s degree, or at least be in your final year (you need to complete your degree before you can

enroll for level 2). You also need to be prepared to take the exams in English language, and hold an

international passport. Lastly many people overlook the aspect that you need to complete 4 years of

relevant work experience in the investment industry before obtaining the CFA charter. So if you are

counting on the CFA title to land you an investment job you may be facing a catch-22

Hopefully there is some food for thought if you have not yet made up your mind for or against signing

up for the CFA program. If you have got any burning questions that would help make this decision

easier for you, please feel free to reach out at [email protected]

FEA Elite

If you have already committed to sign up for the CFA level 1, we are running a progress group. Weare looking for candidates that are committed to become CFA charterholders and are willing tocommit an effort beyond the average candidate to get the result. If this is you, I will commit to coachyou leading up to the December 2015 exam. I will check in with all of you on a weekly basis withweekly tasks required to keep up with the 21 week FEA Elite study guide. We will also enable you tobenchmark your own progress against the rest of the group by sharing your own progress stats. Witha solid strategy and a bit of friendly competition this creates an environment where we are allchallenging each other to a higher standard than the average candidate, which is exactly what isrequired to pass the first level of this challenging program.

If this sounds like something you would be interested in, all that is required is that you spend a coupleof minutes answering the below two questions in an email to [email protected]:

Question 1. Are you prepared to start your study program at least 21 weeks in advance of the test(11 July 2015) to follow the program?

Question 2. Are you willing and able to commit to a study program requiring 15 hours a week for thefirst 15 weeks and 25 hours a week for the remaining 6 weeks of revision leading up to the test?Please consider other commitments (work, studies, family, social life etc.) to ensure this is realistic?

I am looking forward to welcome you in the group.

What does the CFA program cost?

While the CFA program doesn't exactly come cheap the exam fees are peanuts, compared to thefees charged per semester at most graduate schools.

This is not necessarily a fair comparison as the CFA program is a self-study program, but in terms ofvalue for money, holding the CFA charter is recognized as a hallmark of achievement globally to anextent that only the very best graduate schools can match. If you are pursuing a career in theinvestment industry there really is no better way to sharpen & document your skills.




But how much does it really cost to obtain the CFA charter? First of all there are exam fees to bepaid. If you sign up for early bird pricing and sail through all 3 exams with no hiccups you will pay a$450 enrolment fee plus $630 for each level for a grand total of $2,340 (at current rates). If you sign-up at the late enrolment price and fail two exams on the way, your total bill will be $6,500. The realityfor most candidates is usually somewhere in between these two. Please do look out for the earlyenrolment deadlines. They lapse very early (18 March 2015 for the December 2015 exam), but if youhave made up your mind well in advance you can save a lot of money.

Now most candidates would sign up for some sort of a study guide at each level. Using our preferredchoice Wiley as an example, you would pay $1,245 a level 1 for the all singing, all dancing platinumpackage. ($1,120.5 applying our 10% FEA discount code). We generally do not recommend using astudy guide for level 2 and 3. Wiley offer you a pass guarantee, so should you fail the test you will stillhave updated online materials from Wiley until you pass at no extra cost. Now, if you are a self-starter you might not need anything but the study guide itself. You can obtain this as a standalone fora mere $225 ($202.5 after the discount). So even if you splash out on top of the range study aids, failtwo exams and pay up because you forget to register for each exam until the last minute you will stillcomplete your designation at below $8000, less than you would pay for a single semester of full timeeducation at a top graduate school.

There is one slight catch however. Once you earn your charter you will be on the hook for annualmembership fees in order to use the title (currently $275/year). Some investment firms will coverthese fees as part of your salary packet, but still if you include 30 years of active service, and assumemembership fees are going to increase with the discount rate over time. The present value of thispayment stream will add another $8250 to your total bill.

Lastly some might suggest that you should factor in the opportunity cost for the time spend studying,as presumably you could have spent the same hours working. This calculation would depend on yourcurrent salary, and it presupposes that you are being paid by the hour, which is rarely the case in theinvestment industry. The closest most of us get to overtime payment is the prospect of a discretionarybonus at the end of the year. But your pay-package is hopefully linked to your impact at the firm,rather than the number of hours you spend in the office.

Not insignificant, but still at somewhere between $10,590 and $16000 spread over a hopefullysuccessful 30 year career. Becoming a CFA charterholder remains one of the best value careerinvestments out there.

What can you learn from the June 2014 CFA Candidate Survey

The CFA Candidate Survey is produced every year. You can find the latest version here. The reportwas produced based on a random sample of thousands of June 2014 CFA program candidates.

The survey revealed that the primary motivation for registering for the June 2014 exam was careeradvancement (37%), followed by higher levels of knowledge (20%), credibility (11%), job prospects(10%), challenge (8%), joining a community of globally respected financial professionals (6%) andother (9%). I suppose career advancement and improved job prospects is roughly the same so if youcombine the scores the primary motivation for nearly half of the surveyed candidates is to further theircareer.

The average numbers of hours spent amongst candidates was 283 for level 1. I do not want toemphasise this number too much, as most candidates submitting their numbers probably only have a




loose idea about how many hours they actually spent. But it is worth noting that the 283 hoursrepresents and estimate provided by the average candidate (including those that did not pass thetest). Since less than half of candidates passed the test, this should give you some indication that youare well advised to put in more than 283 hours if you want to stay ahead of the pack. Somecandidates may need 400 hours, some might need 300. You may have heard tales of candidates thatspend significantly less than 300 hours and passed. They either had prior knowledge of very similarmaterial, got lucky or underreported the numbers of hours used. There are definitely gains to be hadfrom studying smart, and your prior experience might help you, but please don't rely on a strategywith less than 300 hours allocated. The odds are against you. The FEA Elite study program aims foraround 375 hours to have a "safety buffer".

Interestingly 58% of candidates used third party study notes and prep materials and 89% said itprepared them well or very well for the exam, versus “just” 81% for the CFA curriculum. This dataseems to support our recommendation that using a study guide is a good idea for level 1.

Only 56% used non-CFA Institute practice exams, and only 53% reported that they attempted any ofthe CFA program end of reading questions (let alone all of them). These numbers are very goodnews if you commit to the FEA Elite program as you will outdo nearly 50% of the competitioncompleting these steps.

A third of candidates thought the exam questions were more difficult than expected, only 7% thoughtthey were less difficult. This may be skewed to some extent by level II and level III candidates,although especially level III candidates expectations should be better attuned. Either way don’t beone of the 33% that underestimate the difficulty of the test.

Interestingly fixed income was rated as the most difficult topic with 75% of candidates finding itdifficult or very difficult. Quants was the easiest at 54%. While Ethics (63%) and FRA (65%) weresomewhere in the middle.

27% of candidates received some kind of reimbursement from their employer. 35% of thoseemployed received some sort of pay/reimbursement for enrolment and or registration fee, 26%offered paid study leave, 6% offered a bonus payment if passing the test, 5% offered a bonuspayment for earning the charter. If your company is not offering you anything it might be helpful toshare some of these stats.

Summary

Reasons to study for the CFA level 1 exam:

Globally recognized designation, flexible self-study program, relatively inexpensive, CFA society

membership, refreshes and/or expands your technical knowledge, potential career boost.

Things to consider:

Does the CFA designation match your career aspirations? Have you got the drive and determination to

push through if you fail a test? What are your motivations? Do you meet the entry requirements?




Study harder than average

The second big question that you need to answer in order to create an effective CFA level 1 studyplan is how much time are you able to commit to your studies? This is not a program that rewardsaverage performance. More than half of the candidates that sit each test fail, and less than 10% ofcandidates pass all three tests in their first attempt as we covered in the previous chapter. Whenfaced with these odds it should be obvious that you need to put forward more than an average effortto have a good chance of passing the test.

There is really only three ways to get an edge on the competition: (1) study harder, (2) study smarterand/or (3) be more qualified to begin with.

The peer pressure from joining FEA Elite for the December 2015 exam will challenge you to studyharder, the tailored guidance will help you to study smarter. The last point we can't do much about,but it is very important that you realize if you are at an advantage or disadvantage to other candidateswhen you set out, so you can adjust your approach accordingly. E.g. if English is not your firstlanguage, you have next to no industry experience and you studied history at university, yoursuccess will require a lot more grit than a native English speaking finance postgraduate with a fewyears relevant work experience. Remember you are not studying to reach an absolute grade, you arestudying to significantly outperform the average competing candidate. And if you are at adisadvantage from the start compared to the average candidate, it stands to reason that you need towork harder/smarter to make up for it and increase your chances of success.

Are you an above average candidate?

1. Is English your native language? If so give yourself 2 points.2. Look through the list of 10 topics covered at the level 1 test. Give yourself 1 point for each

topic that you studied at postgraduate level in university and feel confident that you have a legup on the average candidate.

3. Lastly add 1 point per topic if you feel your work experience in that topic area is going todistinguish you from other candidates.

If you have got less than 2 points you will need to make up for this with extra wit and grit. If you havegot at least 4 points you have likely got a bit of a head start on the average candidate, but don'toverestimate the impact. Professional experience will rarely cover more than one or two topic areasin enough depth to provide you a measurable edge. Overlapping university studies are going to helpprovide context and perhaps a few easy points, but you are going to be tested on every corner of thecurriculum. The language advantage is again primarily an issue if you don't have it. As you will takelonger time to process and answer questions.

You will probably have heard people comment that you need about 300 hours to pass level 1. A lot ofcandidates anchor in on the 300 hours, because it is so widely quoted. As a matter of fact one of thebest free CFA resources out there is named 300hours. If you want to ensure that you are workingharder than average you will therefore need to aim beyond 300. The FEA Elite program is organizedto aim for 375 hours, but if you are starting out from a disadvantaged position compared to theaverage candidate you may need even more.

How Many Hours do I Have?


http://www.300hours.com/




There are many factors that impact how much time you need to spend on your studies. Most

importantly: What are you planning to read? How quickly do you read? The answer to these two

questions will help support your understanding about how much time you really need.

The printed curriculum is roughly 3,000 pages long, 1,400 if using VitalSource (it is the same content,

but there is more content fitted on each page in the online version). So if your strategy includes

reading through the entire curriculum, you will clearly need to read more than 10 pages per hour (5

pages in VitalSource) just to get through the curriculum within the 300 hour guideline, and don’t forget

you will still need to factor in time for question practice, revision and mock exams.

I am in no doubt that some people will be able to read a lot quicker. Try it out for yourself and see

how quickly you are getting through the material. The chart below illustrates the trade-off between

reading speed and time spent working your way through the curriculum (based on the print version).

Source: Financial Exam Academy (Based on the December 2015 CFA level 1 curriculum)

What if I don’t have the time needed to complete my study plan?

I think there is a pretty broad consensus amongst passing candidates that you should aim to get

through the curriculum at least 1 month in advance of the test, and spend the remaining time revising

and doing questions. If are signed up for FEA Elite we have divided the study period up into 3

phases. You will spend about 15 weeks getting through the curriculum, 5 weeks revising/answering

questions and the very last week doing mock exams. So if you take this advice, the number of hours

estimated above need to be completed during the first phase of your studies, and you are likely going

to need nearly 1.5 times as many hours in total to prepare for the test, as we recommend that you

ramp up the level of effort in the last 6 weeks. If there is a mismatch between the number of hours

you are able to dedicate and the number of hours required to get through the curriculum, don’t

despair, hopefully you have still got time to adjust your approach.

One of the most popular routes to address this issue is purchasing a set of abbreviated study notes

from one of the study note providers. We recommend the Wiley CFA Exam Review Products





(previously called Elan Guides). If you have the budget but lack time, purchasing a set of good quality

study notes might just be the solution that makes ends meet for you.

Relying on the study notes on their own will obviously cut your preparation time substantially, as you

are focusing only on the details that the study note provider deems the most relevant. Skipping the

underlying curriculum is not without risk however, particularly in more "wordy" topic areas like ethics

that are known for carrying extra significance, if you are a borderline pass. If you are signed up for

FEA Elite and following the 21 week study program you will find that I sometimes stress that you use

the underlying curriculum for a certain week's readings (Ethics) even if you have purchased a set of

additional study notes. The Wiley Study Notes are condensed to just about 1,100 pages (only slightly

above a 3rd the size of the underlying curriculum), so you should be able to get through the Wiley

Study Notes in the following amount of hours, depending on your reading speed:


As you can see from the chart above, relying on the abbreviated study notes from Wiley will

significantly shorten the amount of time needed to get through the curriculum. Using the study guide

will enable you to go over difficult passages several times and spend more time on question practice.

We will cover the pros and cons of buying a set of study notes in more details in a later chapter.

So how many hours do I need then?

To sum up, there is no easy answer concerning how many hours you will need to dedicate to your

studies. But if you measure your reading speed, and decide what material you are going to read, you

should be able to get a pretty good estimate on how much work is required for phase 1 (the first 15

weeks), a good rule of thumb for phase 2 and 3 (the last 6 weeks) is more than half the number of

hours you allocated during phase 1 as you ramp up the intensity the last 6 weeks. We recommend

spending 225 hours on phase 1 (15 hours a week) and 150 on phase 2 and 3 combined (25 hours a

week).




How many hours do you have available for your studies?

Apart from differences in study habits and personality, the amount of time that you are able to

allocate to test preparation is another big differentiating factor. Are you in a relationship? Do you have

a busy social schedule? Do you work 70 hour weeks? Do you have kids or other people depending

on you? The answer to these questions varies for all of us, and they clearly have a profound impact

on our strategy for success come exam day.

If you are time constrained and attempt to pursue an ambitious study plan, you are likely to get

stressed out and fall behind schedule. It seems obvious, but the first questions to ask yourself is

therefore:

How much time you can realistically commit to reading the CFA level 1 curriculum each week?

How many weeks in advance are you planning to begin your studies?

Think about a typical week:

When are you planning to study?

o During your commute? (not ideal for your level of concentration)

o Mornings?

o Lunch breaks?

o Evenings?

o Weekends?

o All of the above?

Add up the amount of hours you can reasonably commit to during a standard week (then probably

deduct a few hours for unanticipated distractions).

As we have discussed we recommend that you complete the curriculum 6 weeks prior to the exam,

so if you are planning to follow this advice, you should obviously exclude these 6 weeks from your

calculation. When you have your weekly number (e.g. 15 hours), simply multiply with the number of

weeks minus 6 (If you are studying for 21 weeks as we recommend our FEA Elite members that

would be (21-6)*15 = 225 hours for phase one). For FEA Elite we recommend that you ramp up the

effort to 25 hours a week for the last 6 weeks if at all possible for a total of 225 hours + 6*25 hours =

375 hours throughout the 21 weeks. For some people this may seem like a blatantly obvious thing to

do, but I think a lot of people never really run through this kind of calculation to see how much time

they are really committing. By the way the 375 hours is not a hard and fast rule. If you are better

qualified than the average candidate to begin with you might be able to get away with less effort, but

for most candidates this should be sufficient, granted that you study in an efficient manner (We are

going to get into the meat of the study approach in later chapters).




Do you have time enough?

The 375 hours are clearly well in excess of the CFA’s reported average of 283 hours spent for all

candidates. How many hours you actually need to get through the curriculum clearly depends on your

reading speed and study approach, as covered above.

You can also reverse engineer the process. Using the same numbers if you know that you have got

15 weeks to study before you turn to question practice, and you estimate that you need to complete

225 hours of studying to have a reasonable chance of getting through the curriculum thoroughly

using a study guide, then you will need to study 225/15 = 15 hours every week. It may or may not be

realistic for you to commit this kind of study time on top of everything else. If you are working 70

hours a week and have other commitments something clearly has to give in.

2015 changes to the CFA Level 1 Curriculum

The curriculum is updated every year for the June test which makes it super important that you arenot relying on dated study aids. This year the changes to the CFA level 1 curriculum are moredramatic than usual as the number of readings has been reduced and the guideline exam weights forthe individual topics have been adjusted for the first time in years. You can find an updates list ofstudy sessions and LOS from the CFA Institute at this location.

We have analyzed and compared the December 2014 and June 2015 curriculum to provide you anupdate on the exact changes to topics, readings and Learning Objective Statements (LOS) if you arecontemplating using last years’ materials (don't do it) or re-sitting the test.

To my knowledge the CFA Institute has never publicly declared if the newly added material is morelikely to be tested, but it would not be surprising if the institute was keen to test new material,otherwise why put it in the curriculum in the first place? In my mind this is reason enough to pay extraattention to the new readings and LOS added for the June 2015 exam.

Changes to Readings

So, what did in fact change?

1. The Ethical and Professional Standards readings have been updated to reflect the latestStandards of Practice Handbook.

2. Two readings from the dreaded Financial Reporting & Analysis topic area have been removed(Financial Reporting Quality: Red Flags and Accounting Warning Signs & AccountingShenanigans on the Cash Flow Statement) and replaced by a single reading (FinancialReporting Quality).

3. A new reading has been added to Fixed Income again this year (Introduction to Asset-Backed Securities).

4. Four Derivatives readings have been removed (Forward Markets and Contracts, FuturesMarkets and Contracts, Option Markets and Contracts & SWAP Markets and Contracts)and replaced by a single reading (Basics of Derivative Pricing and Valuation).

http://www.cfainstitute.org/programs/cfaprogram/courseofstudy/Pages/study_sessions.aspx




Changes to Learning Objective Statements (LOS):

In terms of LOS 38 new LOS have been added, 6 have been amended and 39 have been removed.So on balance you need to learn one less LOS than last year (who said the CFA institute does nothave your back?). These changes to the LOS affect 10 out of the 18 Study Sessions in thecurriculum. Again no guarantee that the new LOS are going to be tested this year, but there isnothing to be lost from paying a bit of extra attention to these

Changes to Guideline Exam Weights:

Last but not least, the CFA institute has decided to alter the guideline exam weights marginallyaffecting four of the ten topic areas. This is interesting as these weights had otherwise remained fixedfor many years. The changes are not massive, but Portfolio Management and AlternativeInvestments have been bumped up by 2% and 1% respectively, while Fixed Income and CorporateFinance have been reduced by 2% and 1% respectively. It is interesting that the PortfolioManagement exam weight has increased by 2% without any changes to the underlying readings andLOS. This would imply that studying the Portfolio Management segment in detail does (everythingelse held constant) provide a better pay off than it used to. Conversely for fixed income a newreading and 8 new LOS have been added while the guideline exam weight has been reduced by 2%.I would still recommend that you study the new reading in detail, but the overall payoff from focusingon Fixed Income has reduced in relative terms.

2015 curriculum:

You can see the new guideline exam weights in the second column of the table below. We have alsocross-examined the curriculum and worked out the percentage of words, LOS and end of chapterquestions in each topic area. This should give you a rough idea about the relationship between eachtopic area's size in the curriculum compared to the guideline exam weight. As you can see Ethics isemphasized very strongly in terms of its guideline exam weight compared to its size in the underlyingcurriculum. On the flip side of this relationship Economics takes up roughly 17.5% of the curriculumpages, while the guidelines exam weight is only 10%. So there is a clear incentive to spend moretime investigating each page in the Ethics topic area compared to Economics.

Source: Financial Exam Academy (Based on the CFA® level 1 curriculum – December 2015 Exam)




Which Topics Should I Prioritize?

The chart below provides a more visual representation of the same relationship (the curriculumweight is based on word count). As you can see Economics stands out taking up way more space inthe curriculum compared to what is warranted based on its guideline exam weight, while the oppositeholds true for Ethics. You will also notice that Financial Reporting and Analysis (FRA) takes up a full20% of the curriculum as well as the guideline exam weight. You cannot afford to lose too manypoints in this topic area as it will have the highest impact on your final score.

Source: Financial Exam Academy (Based on the CFA® level 1 curriculum – December 2015 Exam)

Summary

Things to consider:

Did you work out roughly how many hours it will take you to get through the curriculum?

Did you work out how many hours you have likely got at your disposal?

Are you committing to join FEA Elite and implement our free 21 week study program for the December

2015 exam starting July 11, 2015? If so send us an email at [email protected] to sign

up. We would be happy to welcome you on board.




Study smarter than average

You have decided that you are (1) committed to obtain the CFA charter, and that you are (2) notafraid to put in the hours to make it happen.

Now it is time to discuss exactly what to do with your time to increase your chances of success.

There are 5 very simple steps that if implemented will make a massive difference in yourperformance: (1) use a study guide (2) focus on ethics (3) create flashcards (4) revise EOC questionsin detail (5) create a weekly study plan and make sure you don't slip behind. We are going to covereach of these points briefly below before we dive in to more detail.

1. Use a study guide

Now this one is probably the most controversial. Let's set one thing straight: You can definitely passthe test just using the underlying curriculum without buying an abbreviated study guide, if you workhard enough. The CFA Institute will only test you in material covered in the curriculum. So in theoryall you need to do is to learn the curriculum inside out and you will be well prepared for the test.There is however no guarantee that reading the entire curriculum cover to cover is the best way tolearn its contents. The printed curriculum contains more than 3,000 pages worth of text, so you willhave to spend literally 100s of hours just getting through the curriculum once, unless you are a speedreader. Have you ever read a text book once and remembered every single concept? Unless yourbrain is like a sponge I assume the answer is no. Well then fat chance memorizing everything inthese 6 oversized text books by just glancing at the information once. It just won't happen. Most studynote providers offer a set of abbreviated study notes that will cut your reading time in half or less byremoving all of the "fluff".

Now, I do have to warn you that the study note providers will inevitably cut out testable details aswell, so you are running a risk that you have never come across certain details tested on the exam.That said there is no guarantee that you would be able to remember these obscure details even ifyou had glanced over them once when reading through the entire curriculum. On the contrary theabbreviated study notes will highlight the most testable areas of the curriculum allowing you to getthrough the curriculum much quicker and potentially cover difficult passages several times to improvecomprehension. If you are looking for a study guide we recommend Wiley CFA Exam ReviewProducts. You can find more information about why here. Please note that Wiley offers a 10%discount on CFA products for Financial Exam Academy readers. You can obtain this discount byapplying FEA as your coupon code (Please note that this coupon code cannot be combined with anyother offers/coupons).

If you decide you want the all singing all dancing platinum package from Wiley the list price is $1,245at the time of writing. Their packages are however flexible, and you can trim it down to exactly whatyou need. Wiley's current level 1 study guide as a stand-alone is just $225, and they offer a passguarantee, which means that should you fail (unlikely I know...) you will have access to any onlineproducts purchased until you pass.

Why do you need a study guide?

So, why do we recommend using a study guide? First of all, if you do not believe earning the CFAcharter quickly is going to pay for the study guide many times over in terms of the resulting career


www.financialexamacademy.com/wiley




boost, then you probably shouldn't be in the program in the first place. Some people lose sight of thispoint, but your time is valuable (especially if you work in the investment industry...) If a study guidehelps cut your preparation time and helps you pass where you otherwise wouldn't, then it was moneywell invested.

There is obviously a trade-off. The study guide will not cover every corner of the curriculum in thesame level of detail (this is of course the point of having a study guide in the first place).

I do however believe that the benefits far outweigh this potential issue. The study guide provider willhave removed what they consider the least testable material and summarized everything so that it iseasy to digest. Wiley are experts at doing this with very little loss of meaning, but all study guides arenot created equal, so be careful which one you pick. Schweser is another safe pick that I would haveno problem recommending. Abbreviated materials are a lot less daunting to get through whichreduces your risk of falling behind your study schedule and increases your ability to really focus onthe material that is most likely to actually matter on the test.

What's common for quality study guides is that they capture the majority of the testable information,but in half the pages or less. As a result you will be able to get through the most important informationmuch quicker or potentially twice in the same time, so while you run the risk that you have never seenthe information relevant for a couple of questions, the extra question practice and revision of difficultpassages will ensure that you are much more confident about the vast majority of questions.

I am not sure if you have signed up for FEA Elite? As discussed elsewhere in this guide werecommend a 21 week study program divided up into 3 phases. In the first phase we spend 15 weeksabsorbing the content from a study guide. Every candidate will be able to get through the material atleast once in 15 weeks using a study guide, granted that you just have a minimal level ofcommitment. If you work hard you will be able differentiate yourself by covering difficult passagesmultiple times. This is a much better outcome than putting in a mammoth effort to barely cover theunderlying curriculum once. If you don't manage to cover the entire material in the first 15 weeks youwill invade the last 6 weeks that should otherwise be used for revision time. I cannot tell you howmany times I have been contacted by candidates relying on the underlying curriculum, that havefallen way behind their study plan and wonder what to do next. Don't let this be you!

Should I completely ignore the curriculum then?

No, the underlying curriculum does serve a purpose.

I recommend studying ethics in the underlying curriculum as it is relatively brief (9.2% of thecurriculum), but carries a 15% guideline exam weight. The majority of the Ethics material willbe repeated at all 3 levels, so it pays to learn it in details from the start. Lastly, the CFAInstitute will pay special attention to your ethics score if you are a borderline pass. So it reallypays to study this topic in detail in the underlying curriculum.

I also recommend that you solve all of the end of chapter questions in the curriculum booksand revise the answers until you are comfortable with all of them. I will explain the process fordoing so in a later chapter.

If you are using a quality study guide like Wiley. The information will be structured around thecurriculum Learning Outcome Statements (LOS). If you are using another study guide andthese are not covered in detail, make sure that you have obtained the required level ofunderstand defined by the command words in each LOS. Again we will cover this in moredetail later in this guide.





Also, if you feel the explanation of a certain concept is a bit fuzzy in your study guide of choiceyou can always revert back to the curriculum for another perspective.

Last but not least if you are one of the "rare individuals" that actually want to learn theunderlying topics in depth. This is often overlooked, as the primary motivation for mostcandidates is to earn the right to stick the 3 letters on the business card. But if you genuinelyare studying the CFA to obtain an in-depth understanding of the topics learned, then there isobviously no better place to go than the underlying curriculum.

The almost perfect CFA level 1 study guide

My own choice of CFA level 1 study guide was heavily influenced by the people around me. Itseemed that most candidates that I spoke to used SchweserNotes™, and as such it seemed toomuch of a risk trying anything else.

Before I say anything else, I have to say that I was really happy with my choice at the time, but nowthat I have more time to do proper due diligence I wanted to figure out if there is anything better outthere in the market place.

So far, I have managed to find one program that I believe is a serious contender. They used to becalled Elan Guides, but they have now become part of Wiley, and their study packages havechanged their name to Wiley CFA Exam Review Products.

Wiley Platinum Course

Earlier this year I took Wiley's new platinum course for a spin, and I will try and explain to you why Ithink it is a nearly perfect complement to our 21 week study program. They basically spoon feed youthe information and one of the strengths of the program is that it is actually pretty enjoyable (or atleast just about as enjoyable as I can imagine studying for the CFA will ever be). You can purchase aprinted study guide from them but the "fun" only begins when you study through their integratedbrowser dashboard.

Create your own tailored CFA level 1 study plan

The dashboard enables you to create your very own tailored study plan. This may not seem like sucha big deal, but I think this one feature is possibly the most important of all. You will be asked a coupleof questions, including:

When you are planning to sit the test, When you are planning to start studying and Which weekdays you are planning to study.

The tool will then auto-generate a study plan for you in an online calendar. In this way it is laid out foryou exactly which lessons you should study each day, and you can click through to the relevantlessons directly from the calendar all within the same browser window. I believe having a timeline likethis is crucial. This is part of the reason why I send out weekly emails to everyone signed up for FEAElite, to gently (or not so gently) nudge you guys to stick to the plan. Unless you have got a detailedplan, you will discover it too late if you are falling behind.

The tool will also provide a range for how many hours you should expect to spend on each lessonand each week given the amount of time left before the exam, this provides a useful tip off if your





study plan is realistic or not. If your study plan informs you that you need to spend 30-40 hours aweek to keep up, and at the same time you have got a demanding full time job requiring 50 hours+ aweek, then you are clearly running low on hours in the week. All of these features supports yourability to organize your 21 week plan, and to correct if you are lacking behind the schedule.

LOS Hunting

Separating the content into small manageable pieces is a great idea. It is really the only way to keepyour focus when faced with the task of absorbing roughly 3,000 pages worth of content. The Wileycourse takes this one step further dividing each reading into 1 to 7 lessons centred on the LOS(Learning Outcome Statements).

As explained elsewhere in this guide I recommend that you create flash cards with every single LOSin the curriculum and "hunt" for the answer to the LOS and write it on the flip side including book-,reading-, LOS- and page number. Wiley provide you a big leg up in accomplishing this with their so-called LOS Tracker feature. Rather than having to sift through each reading to try and find the answerto the LOS, it is served up on a plate straight in front of your face. Each lesson in the Wiley studyguide is centred on explaining the answer to the individual LOS and if you would like to go to thesource document, each LOS is labelled with the book and page numbers where you can find theexplanation in the underlying curriculum. This is a massive time saver and very helpful in keepingyour focus on what really matters on exam day.

Formula flash cards

Wiley offer a set of formula sheets with all of their packages. It's plain and simple, but imagine howmuch time you are going to save, creating flash cards based on this document rather than siftingthrough the entire curriculum to pick out every individual formula. Also revising the formula sheet is agreat way to uncover areas of the curriculum that you might not yet understand in depth.

Practice Questions

The Wiley program is designed to help you constantly test and asses your comprehension as youmove through the curriculum. As you might know, I promote thorough use of the end of chapterquestions to improve your comprehension and pick out weak spots. Wiley again take this one stepfurther, enabling you to generate targeted mini-tests related to each lesson and/or broader studysession that you are focusing on (using the Wiley Quiz builder). This feature helps ensure you coverall of your weak spots before moving on. There are more than 1100 so-called lesson assessmentquestions (similar to the end of chapter questions in the curriculum) and more than 400 additional testbank questions that you can use to generate your own bespoke tests.

Review

I believe that ideally the last 6 weeks leading up to the exam should be dedicated to revision. TheWiley Platinum course contains the so-called 11th hour review course. You don't have to buy themost expensive package to get this guide however, you will be able to purchase it as a standaloneproduct leading up to the test. It is a "nice to have", but with all of the other study aides available Idon't think it is absolutely crucial. All Wiley packages contain mock exams. The platinum course evenprovides a mock exam seminar.

The Pass guarantee




The pass guarantee really sets Wiley apart from many of the other study providers. We all know thatthe CFA level 1 exam has got a very low pass rate, and that the curriculum is updated every year.With many study providers you will have to fork out again if you are going to re-sit the exam thefollowing year. You might get a discount the second time around, but still money out of the pocket.With Wiley there is no expiration date, you can use the online version of the course until you pass theexam. All content updates and software upgrades are free, simple as that.

Cost

At the time of writing, the Wiley products are priced in a range from $75 for the 11th hour revisionguide or $225 for the study guide alone all the way up to $1,245 for the full platinum package with allthe "bells and whistles". Also please note that as a Financial Exam Academy reader you will obtain a10% discount on any purchases of Wiley CFA Exam Review Products if you use the voucher codeFEA. (Please note that this discount cannot be combined with any other offers/vouchers). The self-study or silver course will be sufficient for a lot of candidates, especially if you are the self-motivatedtype. The more expensive packages contain more personal attention through seminars andclassroom based learning + additional materials and support for the final month of revision.

Things I don't like

Right, so that was a lot of positive chat about the Wiley CFA Exam Review Products. But I don't wantanybody to get big headed and as I pointed out in the title this is only an almost perfect CFA level 1study guide. So here are a couple of points that I think could be improved.

They use a weird fluorescent green color for highlights and headings in the printed studyguide.

You get the following statement on their video page (at the time of writing). This is perhaps nota big deal, but life is all about first impressions:

o "We have ensured that the following lecture content is applicable for the 2015curriculum. However, reading numbers, LOS numbers and curriculum page referencesembedded in some of the videos refers to the 2014 curriculum. The Reading numberprovided in the playlist is accurate for 2015".

They currently only provide level 1 and level 2 packages. Rumor has it that level 3 material isin the works, so fingers crossed if you are sitting level 1 this year it will be on the market by thetime you get to level 3. Even if not, I am not sure it is such a big deal. In my experience youare better served relying on the underlying curriculum for levels 2 and 3 as the questions tendto cover more obscure corners of the curriculum that are easier missed by the study guideproviders.

The Wiley CFA Exam Review Products really do come close to being the perfect CFA level 1 studyguide. And if I was doing CFA all over again they would be my preferred companion.

2. Focus on ethics

Ethics is arguably the most important of the 10 topics to master for a couple of reasons:

It is retested at every level of the CFA program, so you might as well get it down for level 1. It provides the best exam weight to curriculum size pay-off out of any of the 10 topics. It makes

up 15% of the exam, but the ethics readings only represents 9.2% of the total curriculum.







If your performance is a borderline pass, the CFA Institute may look at your ethics score as thedefining factor to decide whether or not to let you through.

For these reasons I would recommend that you study Ethics at source in the underlying curriculum,even if you are studying the rest of the curriculum using a study guide. And I would recommend thatyou revise the ethics material continuously throughout your study program.

3. Create flashcards

Learning Outcome Statements

Every reading in the curriculum starts with a list of so-called Learning Outcome Statements (LOS).These statements describe exactly what it is that you need to learn for the test, so ignore them atyour own peril.

The LOS are structured around one or several command words. These are verbs that describe theextent to which you are expected to learn the material at hand. This is a very subtle distinction that alot of candidates may not notice. There are 30 command words in total, 3 of them (critique, discussand prepare) are reserved for CFA level III, so you can ignore these as a level 1 candidate. The CFAInstitute© explains the command words in this PDF.

If you spend a little bit of time learning how to interpret these before you start studying for the test,you can save yourself a lot of time and headache. E.g. if the LOS does not ask you to, there is noneed to waste precious time learning how to mathematically derive a certain formula. On the otherhand reading the LOS in detail will also give you a heads up if there are areas of the curriculum thatrequire more scrutiny than others.

A little trick that can make a massive difference is if you do your own flashcards. I recommend thatyou create flashcards with every single LOS (Learning Outcome Statement) as well as key conceptsand formulas that you come across as you read through the curriculum. If you are joining FEA Eliteand follow along with our 21 week study program one of the key elements is that you create andrevise flashcards covering every single LOS. As you write down the LOS pay special attention to thecommand words, and as you study the reading seek out the answer for each of the LOS (to therelevant level of detail) and write it on the flipside of the relevant flashcards.

I was using "old-school" cardboard flashcards when sitting the tests, but in this day and age I wouldrecommend using an app on your smartphone. There is a continuous stream of new apps beinglaunched and several great ones available at the time of writing this. Have a look at Quizlet if youwant a simple no frills solution without a learning curve. AnkiDroid is a much more flexible solutionthat provides a lot more options, but it is less straight forward to use.

Why use flashcards?

Why should you use flashcards when studying for the CFA level 1 exam? Most of us can find morefun things to do with our time than writing and revising flashcards, but they are very efficient whenattempting to drill the most important concepts into our brain and even more importantly enabling ourbrain to recall the information at will exactly when we need it.

I am sure you have had the experience of your thoughts running astray while attempting to readsomething. This phenomenon is particularly common when whatever you are reading doesn’t really

http://www.cfainstitute.org/programs/Documents/cfa_and_cipm_los_command_words.pdf




capture your interest. The mind has this wonderful ability to selectively block out "boring" informationand fill in the space with more entertaining thoughts... While this may work brilliantly in saving youfrom having to listen to boring conversation, it is a two-edged sword as it unfortunately also works tohelp you not remember boring CFA material as well.

Our best weapon in keeping our mind engaged with the material is to ask ourselves questions. Ourbrains love questions and it is nearly impossible for our brain to wander off if we have just asked it aquestion. This is why you will find me constantly promoting question practice. E.g. I really believe thatpracticing end of chapter questions is one of the keys to efficiently learning and recalling the CFAlevel 1 curriculum with the smallest investment of time and effort. Creating and revising flashcards isanother means of forcing your brain to ask and answer questions. Most of us are able to learnenough information to pass the exam (unless we don't put in the hours), but for many of us theproblem is not if you are learning enough, it is being able to recall the relevant information at will andquickly when prompted to do so during the exam. Creating and revising flashcards will help improveyour ability to recall the relevant information at will in a targeted way.

Pre-made or DIY flashcards.

There are several different ways for you to obtain flashcards. The easiest is probably to purchase aset of ready-made flashcards from one of the study guide providers. While this is time-efficient it hastwo disadvantages.

1. You do not get to decide what is going to be on the flashcards, and the study provider maywell have left out some important concepts, formulas, LOS etc. that you would otherwise havecovered.

2. You will feel a more intimate connection with the material if you create them yourself. It is avery important step in the learning process that you rob yourself of if you purchase a pre-madedeck of cards. The time you spend creating flashcards is not wasted, it could be argued thatthe process of creating flashcards is one of the most efficient ways to study the curriculum. Itforces you to define questions (to put at the front of the cards) and answers (to put at the backof the cards), and engages your mind to really pay attention to the most important informationat hand.

As a result when I sat the level 1 test I went through the painstaking process of creating my ownflashcards for each reading, and I think these flashcards were one of the most important steps in mepassing the test.

How to use flashcards efficiently

Here is my approach to using flashcards. It really lifted my game, and I hope you will get the samebenefit from implementing it in your study routine.

1. As I progressed through the curriculum I would write the relevant LOS (Learning OutcomeStatements) on the front of individual flashcards before starting any of the 60 readings (Thereis 529 LOS so we are talking about a lot of cardboard if you don’t use a flashcard app).

2. Now irrespective if you are studying the reading in the underlying curriculum or using a studyguide by Wiley or similar, I would look out for answers to my LOS as I progressed through thereading. I would then pause and write the answer on the flip side, I would also note the booknumber, page number, reading number and LOS number for ease of reference when getting to




the revision process. All of this is a lot easier when using Wiley as the information is prettymuch offered on a silver plate.

3. I would then look out for any key concepts, formulas and/or lists not covered by the LOS andcreate individual flashcards for these also with the name on the front and the definition,formula, list etc. on the back. I would also make sure to include the book number, pagenumber and reading number on these cards and keep them in a separate pile from the LOSflashcards (separate deck in your flashcard app). Maybe if you can get cards in various colorsit will make the process of separation easier.

4. Now on the following day having completed a reading I would attempt to answer the relevantflashcards created and revise my answers. I would note down the flashcards that I wasstruggling with in my question log or mark them in the relevant flashcard app on my phone forfuture revision. I would then give it a rest for a day and return to attempt only the difficultflashcards the following day. I would continue this process for as many days as required until Ihad mastered all of the flashcards relevant to that reading. Now the brilliant thing withflashcards is that they are portable (whether cardboard or smartphone based). Now as I wentthrough my day I would always carry the stack of flashcards relevant to the current reading Iwas studying, and I would use any spare moment to revise the cards. I particularly found this aproductive use of my time during my daily commute and during lunch time (Yeah, you do notreally have a life while studying for the CFA). As discussed at the beginning of this post, theact of having to search your mental databank for an answer before flipping the flashcard trainsyour brain to be able to quickly retrieve the core concepts of the CFA program at will, whenthey would otherwise have been buried under 3000 pages worth of content.

5. If you are signed up for FEA Elite you will know that I promote scheduling the last 6 weeks forrevision before the exam after you have completed the curriculum. It is during the revision timethat your flashcards are really going to pay their dividends. Granted you have gone throughthe process of creating flashcards for all LOS, key concepts, formulas and lists in thecurriculum, you have now got a very powerful revision tool that will help refresh and focus yourmemory on the most important information out of the 3,000 pages worth of content. At thisstage of the process more than ever you need to train your ability to recall the most importantinformation quickly. During my revision process I would split the stacks of flashcards into 5piles covering roughly 12 readings each, and work my way through these piles again duringeach of the first 5 weeks of my revision process (phase 2 of the FEA Elite study program). Atthis stage it is very helpful to have the challenging flashcards marked out (and with pagenumbers) so you can focus your attention spending a bit of extra time revising the informationthat you personally find most challenging.

Cardboard or smartphone?

Now, if you are on board with using flashcards, you are still left with the choice if you are going tocreate the flashcards in the traditional way on individual pieces of cardboard, or if you are going touse one of the literally 100s of smartphone apps that offer you the ability to do the same on yourphone.

My biggest hang-up with the smartphone apps at the time I sat the test, was that I found it difficult tofind a flashcard app on my phone supporting formulas with ease. In hindsight the benefit of havingthe flashcards on your phone should far outweigh this concern however. Your phone is always withyou, and you can revise your flashcards at any moment (standing in the supermarket queue, on yourcommute or whenever you have got a spare moment) without looking like a total geek.




I hope I have convinced you why you should use flashcards as a vital part of your study plan for theCFA level 1, and that you should use a smartphone app, next let’s have a look at a few suggestionsfor apps to use.

Which CFA flashcard app to use?

When I was studying for the CFA level 1 test I took the advice of a senior colleague of mine to createstack upon stack of "old school" card board flash cards with all of the LOS, formulas and keyconcepts as I progressed through the readings.

This turned out to be great advice, and really helped me throughout the program. But as previouslydiscussed, if I was to do my exams all over again, I would definitely use a smartphone app for theflashcards. Besides making you look like a social outcast from the 80s, shuffling through cardboardflashcards in the supermarket queue is pretty impractical. Your smartphone is always with you, and itwill enable you to make good use of every idle moment, during your commute, while waiting to meetsomeone etc. If you have signed up for FEA Elite, flashcards will form part of the back-bone of yourstrategy.

There is an overwhelming amount of free flashcard apps available in the iOS and Android app stores.I have tested a handful of the most popular ones and I would currently recommend Quizlet orAnkiDroid.

Quizlet

Quizlet would be my suggested option if you just want a no-frills intuitive solution that enables you todo basic digital flashcards without any learning curve. As soon as you have downloaded the app youcan start creating decks of flashcards. I would recommend that you create individual decks containingthe LOS, formulas and key concepts for each reading. You can then quiz yourself going through anyof the decks that you have created to see if you can remember what's on the flipside. Once you aredone with a deck you will have the option to redo only the flashcards that you could not remember toimprove comprehension.

AnkiDroid

If you would like a bit more flexibility AnkiDroid might be a better option for you. The app embraces ascientific approach to memorization based on the twin concepts of (1) active recall testing and (2)spaced repetition. These are in essence just fancy-pants ways of saying, (1) flashcard revision (2)repeated at the ideal time interval determined by your level of difficulty in answering each card.

In combination these two concepts work as a very effective memory hack improving your ability tolearn and recall new material quickly. The same methods can be applied to learning just aboutanything including the LOS, formulas and other key concepts that will be tested on the CFA level 1test.

There is an entire science to this, and you can easily spend hours going through the documentation ifyou really get into it. I wouldn't recommend spending too much time, but granted that you have thepatience to get AnkiDroid up and running on your smart phone, it is going to be extremely helpful as amemorization tool.

https://play.google.com/store/apps/details?id=com.quizlet.quizletandroid&hl=en

https://play.google.com/store/apps/details?id=com.ichi2.anki&hl=en_GB




A common problem for all of the flashcard apps that I have come across is that they do not deal verywell with formulas. It is e.g. a bit tedious and hard to interpret complex fractional formulas whencreated using basic keyboard entries. If you do come across a user friendly smartphone app thatsupports formulas, I would be very grateful if you reach out at [email protected].

4. Revise EOC questions in detail

The CFA level 1 test is organized as a gruelling 6 hour multiple choice test. Every single candidate isfacing the same 240 multiple choice questions on exam day. It therefore makes sense that examstyle multiple choice question practice should make up a significant part of your test preparation. Youmight be able to read and understand the entire curriculum, but if you are not able to quickly recallthe necessary information at will in a stressful environment you will not pass. The test objective ispure and simply your ability to answer 240 multiple choice questions covering the curriculum materialquickly and accurately.

Another side benefit from doing a lot of questions is that it helps pinpoint areas of the curriculumwhere you are weak. I recommend that you keep a question log, containing every single question thatyou answer incorrectly. You can do this on a basic scrap of paper or preferably in a cloud based textfile accessible from your phone/computer (Evernote or similar). You will treasure this log file when weget closer to the exam, as it will help you focus on revising your weakest areas.

If you have signed up for FEA Elite you will receive a weekly email with a breakdown of the LOS andend of chapter questions you need to learn each week to keep up with the 21 week program leadingup to the exam.

The Question Log:

Before you even start studying for the test create a document (preferably a cloud based text fileaccessible from both your smartphone and computer). Save this document as your question log(Evernote is a perfect platform to do this). Set this document up with a heading for each of the 60readings in the curriculum + any practice tests and additional question banks you might expect to useduring your exam preparation. Now the first time you answer a batch of questions note down thequestion number for the specific questions that you answered inaccurately and a score for thesegment as a whole. E.g. if you were doing the 40 end of chapter questions in reading 2, and got 30accurate you would note down the question numbers for the 10 questions you were struggling withand the score 75%. This list is going to be invaluable come revision time, as it will help highlight yourweakest areas and pinpoint exactly the questions that you need to focus on to improve your score.

If you have signed up for FEA Elite we will provide templates for all of this, that you can fill out andshare with the group as you progress through the material. We will then distribute a regularanonymized progress report enabling you to compare your progress and course correct if you arelacking behind.

Question practice approach:

Now let’s turn our attention to the FEA Elite approach to question practice. Once you have completeda reading using Wiley, the curriculum or your study guide of choice it is time to complete the end ofchapter questions from the underlying curriculum. Note down the result of your first attempt and anyquestions you struggled with in your question log (as previously discussed) and revise the answers tothose questions in detail. The following day attempt only the questions you answered incorrectly on





your first attempt. Revise your answers again and if any errors repeat the same process for as manydays as required until you have mastered every single question. This process ensures that youcontinue to focus your attention on those areas of the curriculum that are the most challenging foryou personally until you have learned them.

5. Create a weekly study plan and make sure you don't slip behind.

This step seems pretty obvious, yet I receive email upon email from candidates that have eitherdrifted behind a too ambitious study plan or do not have a structured plan in the first place.

We have taken the guess work out of creating a study plan here at the financial exam academy. Ifyou have signed up for our newsletter you will receive a weekly email for the 21 weeks leading up tothe test telling you exactly what you need to do. If you do commit to following this weekly study plan Iwill highly recommend that you join FEA Elite as well. This is an exclusive accountability partnergroup for highly committed candidates determined to pass the December 2015 level 1 CFA test. Theintention is to create an atmosphere of friendly competition within the group to motivate each other tostay the course and improve our chances of passing the test. We are targeting a 100% pass rate forFEA Elite members that stick to the plan throughout, and I will personally reach out to memberslacking behind to provide guidance and encourage them to get back on track. If you join FEA Eliteand show the required commitment, I will make it a personal mission to be on your case, and helpcoach you towards your desired result. Also, since this is the first FEA Elite group I have decided towaive any enrolment fees for the December 2015 test.





Study Approach

The following study approach can be applied across all of the different readings in the curriculum.

You may have to work your way through a few readings before you get used to the approach, and it

may feel slightly tedious at first. But if you stick with it, it will soon become second nature.

This approach ensures that whenever you sit down to study, you know exactly what you need to

accomplish that day. You may or may not fully appreciate the impact a structured approach can have

on your studies upfront, but think about the alternative for a second. If you don’t have a clear and

structured plan for studying the CFA level 1 curriculum, chances are that you will waste precious time

switching between different study approaches, without a clear focus on the key areas that you need

to master each week. E.g. one thing I see time and time again is candidates switching back and forth

between the curriculum and a study guide, or worse, attempting to get through the entire curriculum

in both. The impact of this lack of focus accumulates over time week after week. Imagine the

difference in confidence you will experience in the final weeks leading up to the exam, when you

know that you have spent your time systematically mastering all of the most difficult areas throughout

the entire curriculum.

The FEA Elite Study Approach

If you don't read anything else in this guide, but just read and apply the 3 steps below while studying

each of the 60 readings in the curriculum, you are on the right path:

1. Before you even begin each the reading please ensure that you write down all of the LOS on the front

side of individual flashcards (cardboard or digital), and as you progress through the reading (using

Wiley, the curriculum or another study guide) seek out the answers as best you can and write your

responses down on the back of each flash card. You can further extend on this approach by creating

flash cards for any additional formulas and/or key concepts that you come across as you progress

through each reading. These flash cards will prove invaluable during the revision process. For both

LOS flash cards and other flash cards it is crucial that you reference the relevant book-, reading- and

page number on the back of the flash card (make a note of the LOS number on the LOS flashcards as

well). This will make your life much easier when you are revising the flashcards later.

2. As you wrap the reading up ensure that you attempt all of the end of chapter questions from the

curriculum. When you are done with the questions, review your answers thoroughly (particularly those

that you got wrong) and add the questions that you struggled with to your question log (described in the

previous chapter). The combined effort of question practice and LOS statement “hunting” will ensure

that you are focused on seeking out the most important information as you progress through each

reading, and it beats random note-taking hands down. If the end of chapter questions are pretty light

for a particular reading you can supplement with question banks from Wiley, or one of the other study

providers.

3. Lastly to drill home the most difficult parts of the reading redo the LOS and end of chapter questions

that you found difficult the following day. Make a note of those LOS and questions that you are still

struggling with and answer those the following day etc. Continue this process until you are confident

that you have mastered all of the LOS and end of chapter questions in the reading.




Does is matter if I am studying in the curriculum or an abbreviated study guide?

You can apply the exact same approach irrespective if you are studying the curriculum or utilizing a

study guide like the Wiley Study Notes. Most study guides are structured by curriculum readings, so if

you are using a study guide carry out step 2 with the curriculum end of chapter questions, but study

each reading in the study guide. Create flash-cards with the LOS, formulas and key concepts as you

work your way through the reading in the study guide and finally carry out step 3 based on a

combination of the two. As previously discussed we recommend that you study Ethics in the

curriculum, even if you are relying on a study guide for the rest.

How to Prioritize the Topics

You cannot afford to neglect any part of the curriculum when studying for the test, but it is still

valuable to have an idea about how much effort is required for each topic, compared to the weighting

on exam day.

The table below illustrates the guideline exam weight, the number of pages that you need to read, the

number of Learning Outcome Statements (LOS) that you need to master, and the number of End of

Chapter Questions (EOC Questions) that are provided for each topic in the underlying curriculum.

Clearly if you have decided to rely on a study guide instead of the curriculum the number of pages

would typically be less, but we are basing this analysis on the curriculum as the preferred study

material. The CFA level 1 curriculum is heavily skewed towards investment tools (quants, economics,

financial reporting and analysis and corporate finance). This area of the curriculum carries a guideline

50% exam weighting at level 1. The focus gradually shifts towards portfolio management in the later

stages of the program, but for level 1 portfolio management carries only a guideline 7% weighting.

Table 1: Curriculum Topics Overview

Topic Exam weight Words LOS EOC Questions

Ethical & Professional Standards 15% 123,230 13 43

Quantitative Methods 12% 178,537 88 162

Economics 10% 234,346 103 218

Financial Reporting and Analysis 20% 267,189 112 249

Corporate Finance 7% 88,508 43 93

Portfolio Management 7% 79,518 28 115

Equity Investments 10% 122,939 60 188

Fixed Income Investments 10% 147,054 53 143

Derivatives 5% 66,308 22 59

Alternative Investments 4% 29,551 7 14Source: Financial Exam Academy (Based on the December 2015 CFA level 1 curriculum)

As should quickly become apparent from observing table 1 there is a fairly strong relationship

between the guideline topic weight for the exam, and the topic weight in the curriculum (as

represented by the word count, LOS and EOC Questions) for most topic areas. There are a few

exceptions to this relationship though. Ethics & Professional Standards clearly carries a higher




guideline exam weight than what would be justified based on its moderate size in the curriculum,

conversely Economics clearly carries a higher topic weight in the curriculum than what is justified

based on its exam weighting. Table 2 illustrates the same information but with each column

calculated as a percentage of the total (for ease of comparison). The CFA Institute informs that the

“actual exam weights may vary slightly from year to year” and that “some topics are combined for

testing purposes”.

Table 2: Curriculum Topics Overview

Topic Exam weight Words LOS EOC Questions

Ethical & Professional Standards 15% 9% 2% 3%

Quantitative Methods 12% 13% 17% 13%

Economics 10% 18% 19% 17%

Financial Reporting and Analysis 20% 20% 21% 19%

Corporate Finance 7% 7% 8% 7%

Portfolio Management 7% 6% 5% 9%

Equity Investments 10% 9% 11% 15%

Fixed Income Investments 10% 11% 10% 11%

Derivatives 5% 5% 4% 5%

Alternative Investments 4% 2% 1% 1%


Finally, at the risk of over-engineering this explanation, the below chart highlights the guideline exam

vs. curriculum weight in a scatter plot. The obvious observations to draw from this are that FRA

(Financial Reporting and Analysis) is the largest topic area both in terms of its exam weight (20%)

and weight in the curriculum (20%). As noted above Ethics is the largest outlier to the upside with its

exam weight (15%) far outstripping its weight in the curriculum (9.2%), conversely Economics carries

a modest exam weight (10%) compared to its weight in the curriculum (17.5%).


Ethical &ProfessionalStandards

QuantitativeMethods

Economics FinancialReporting and

Analysis

CorporateFinance

PortfolioManagement

EquityInvestments

Fixed IncomeInvestments

Derivatives

AlternativeInvestments

0%

5%

10%

15%

20%

25%

0% 5% 10% 15% 20% 25%

Cu

rric

ulu

mW

eig

ht

Guideline Exam Weight




A 21 week study schedule

While fairly intense, it should be possible to get through the curriculum and final revision process in

21 weeks without losing your sanity. If you are able to allocate more than 21 weeks you can reduce

the intensity somewhat, however if you extend the study period too far, you may struggle to stay

focused and loose motivation half way through. By now you should have a rough idea about how

many hours you are able to dedicate to your studies for the CFA level 1 each week for the 21 week

duration of the study program. Now let’s look at how much time is required and adapt your study

schedule accordingly, this will help minimize the risk that you will fall behind on your study schedule

and get demotivated.

Table 3: The First 15 Weeks

Readings Curriculum weight Exam weight Week

1-2: Ethics 7.0% 11.5% 1

3-6: Ethics & Quants 4.5% 5.5% 2

7-10: Quants 7.6% 6.9% 3

11-15: Quants & Economics 8.0% 5.7% 4

16-20: Economics 10.7% 6.1% 5

21-25: Economics & FRA 8.2% 7.2% 6

26-29: Financial Reporting & Analysis 6.3% 6.3% 7

30-34: Financial Reporting & Analysis 7.8% 7.8% 8

35-39: Corporate Finance 5.2% 5.6% 10

40-43: CF & Portfolio Management 6.1% 7.0% 11

44-46: Portfolio Management & Equity 4.9% 5.4% 12

47-50: Equity 5.5% 6.0% 13

51-54: Fixed Income 7.2% 6.5% 14

55-57: Fixed Income & Derivatives 6.0% 5.7% 15

58-60: Derivatives & Alternatives 5.0% 6.8% 16

Flashcards & Questions – readings 1-12 22.6% 27.0% 17





Mock exams 100.0% 100.0% 22


There are certain aspects of the process that are generally applicable for all candidates studying for

the exam. We all need to work our way through the same 18 study sessions, and ideally we need to

allocate our study time to each topic according to their guideline exam weight. In addition the last 6

weeks preceding the test is best spent with a primary focus on question practice.




Keeping the above insights in mind table 3 contains the FEA Elite framework for getting through the

curriculum in three phases: 15 weeks applying the FEA Elite Study Approach to the 60 readings + 5

weeks revision and 1 week of mock exams (So 21 weeks of total study time). As you can see some

of the topic areas have been combined in order to fit the reading period into 15 weeks during phase

1. The final 6 weeks in phase 2 and 3 are going to be spent focusing primarily on question practice

and flashcard revision. We will delve into the strategy for phase 2 and 3 in more depth in a later

chapter.

The number of end of chapter questions deviates between 33 and 117 each week (80 questions a

week on average). If you have access to a question bank and have got the extra time and energy you

can top up the number of questions some weeks, but I would prioritize mastering all of the end of

chapter questions in the curriculum before turning to other sources. On top of this you will have to

revise your answers and redo the challenging questions on your list. A conservative estimate of the

time spend would be that you spend about two hours answering the end of chapter questions each

week (80 * 1.5 = 120 minutes) based on the 1.5 minute per answer pace required for the exam. You

will probably need another two hours to revise your answers in depth, and perhaps another hour

answering and revising the challenging questions at the end of each reading. In other words I would

recommend that you allocate an average of 5 hours each week to question practice. If you work

quickly or your list of challenging questions at the end of each reading is fairly short, you are likely to

be able to get through the questions in less than 5 hours, conversely you will have weeks were you

need to answer more than 100 questions, so this is just an estimate for the average run rate, it will

deviate from week to week. This implies that you would allocate roughly 5*15 = 75 hours to question

practice, or roughly a third of the 225 hours we recommend you should at least spend on phase 1.

Which study activities should you prioritize

If you only have 5 hours available each week, this would in my opinion be a much better use of your

time, than reading through the entire curriculum, without answering any questions at all. Question

practice is crucial for level 1. That said this is not a recommendation to completely ignore the

readings (that would be a recipe for disaster).

Hopefully you have got more than 5 hours to spend so you can allocate time to "LOS answer hunting"

and flash card writing as well. It is kind of difficult to quantify how much time you need to spend on

these two activities. There are roughly 530 LOS in the curriculum (just around 35 LOS for each week

of phase 1). How long time do you think it will take you to locate and study the answers in each

reading and write these down on flash cards? It largely depends on which study tools you are using

(curriculum or a study guide). Your reading strategy (are you reading through each book cover to

cover? Or are you skimming through the material dipping into the text whenever something applies to

the LOS?).

If you are reading the curriculum books cover to cover you will need to get through roughly 3,000

pages (1,337,180 words). Maybe you are a fast reader? But if you are not, and only read 10 pages

an hour you will spend roughly 20 hours a week just reading during phase 1 (on top of the 5 hours for

question practice). If you have this kind of time available go for it, but if you don't you need another

strategy (and don't compromise question practice!). When you see the numbers broken down this




way, it should become apparent why we recommend you get a study guide like Wiley to speed up the

process.

So what are the alternatives?

1. Spend a longer period of time on your studies. If you e.g. extend the time period from 15+6 weeks to

25+6 weeks you will be able to get through the entire curriculum at the same reading speed (10 pages

per hour) allocating "just" 12 hours a week (also the 5 hours for question practice will be reduced to just

3 hours). Maybe your ideal study period is something in between? If you have a rough idea about your

reading speed and how many hours you are likely to be able to commit each week, you can work with

the numbers and see how many weeks in advance you will need to start your study program in order to

increase your chances of success.

2. Read faster. If you can plough through 20 pages an hour you will "only" need 10 hours a week (plus the

5 hours for question practice) to get through the curriculum. Unless you are a fast reader you may

struggle to reach this speed reading every single paragraph. If that is the case you will need to adapt a

reading strategy whereby you are skimming through the text looking for definitions, formulas, figures,

tables and segments that directly pertain to the LOS that you are on the lookout for and slowing down

the speed to comprehend these segments fully. This is a fairly risky strategy though.

3. If you are not comfortable skimming through the material, another way of achieving the same objective

would be using one of the many study guides available in the marketplace. The benefit here is that

somebody else has gone through the hassle of reducing the volume of information, cutting out what the

study guide provider considers less important information. The drawback of course is that you do not

get to read the entire curriculum, and you may potentially be missing details that could come up on the

exam.

As we discussed at the beginning of this chapter we are all different, and there is no one-size fits all

approach to studying the CFA level 1 exam. You can however save yourself from a lot of trouble if

you spend a few minutes now considering the above options for studying the curriculum:

How many hours do you expect to be able to commit each week?

What kind of reading speed are you anticipating? 10 pages an hour? 15 pages an hour? 20 pages an

hour? Test yourself. If you have got the curriculum books in front of you, time yourself for the next 1

hour and see how many pages you are able to work through (did you remember to write down flash

cards and look for answers to the LOS?). If you don't have the curriculum in front of you, grab some

random text book of the shelf and read for an hour. This might not provide a perfect estimate, but it is

way better than a random guess.

How many weeks do you have available for phase 1 if you are going to reserve 6 weeks for phase 2

and 3 before the CFA exam that you are hoping to sit? (June or December).

Once you have considered these questions you are in a better position to make an informed decision

about:

Which mode of study (curriculum/abbreviated study guide) provides the best fit for your style?




Whether or not by using your chosen mode of study you are realistically able to get through the

curriculum 6 weeks prior to the upcoming test, ready to commence phase 2 and 3 and make the

information stick?

If you are still unsure, feel free to shoot us an email at [email protected] and we

can discuss your personal situation. Let’s work through an example as well to see if it makes things

clearer:

Example:

Let's say that you are able to commit 15 hours each week

You have measured your reading speed to be app. 15 pages an hour.

And you are now 21 weeks away from the upcoming exam.

You will need the last 6 weeks for revision and mock exams, so you have got 15 weeks to get

through the curriculum. You will spend roughly 5 hours each week on average on question practice

leaving you 10 hours for studying the curriculum. Given your reading speed you are able to get

through roughly 150 pages a week (or 2,250 pages in the 15 weeks allocated). If you are going for

the standard approach of reading through the entire curriculum cover to cover you are facing a bit of

a train wreck. If there is no way you can allocate more hours each week the only way that ends are

going to meet is if you compromise on one of the following 3 criteria:

1. You postpone your exam registration for the following exam and make sure you allow time for question

practice (75 hours) and studying the curriculum (200 hours). (75+200) / 15 ≈ 18. You would need 18+6

weeks.

2. You decide to speed it up, by either skimming through passages of the curriculum or buying an

abbreviated study guide.

3. You decide to cut down on the end of chapter question practice while reading through the curriculum.

Unfortunately the 3rd option becomes the default option for many candidates because they did not

take a step back to think this through upfront. This is in my mind by far the worst of the 3 options, as

question practice is crucial for your performance at the level 1 test. Hopefully, if you are going

through this exercise and are discovering that you are unable to execute your plan, you will go for

either option 1 or 2. If you are determined to sit the current exam and discover that you do not have

enough time to get through the curriculum, using a study guide is by far the best option available.

Summary:

You cannot afford to do badly on FRA (given its 20% weight in the test), you are most likely to score

“easy” points within Ethics, and if time pressure is forcing you to skim any part of the curriculum,

chances are that the damage will be minimized if you skim through some of the Economics readings.

This is not a recommendation to take Economics lightly though. It is still estimated to make up 10% of

the test. If you decide to use Wiley or another abbreviated study guide I would therefore still strongly

recommend that you read the entire ethics topic area in the underlying curriculum, to make sure you




study this high impact material at source. The weekly program outlined in this study guide takes

these issues into consideration. The time allocated to Economics reflects the guideline exam weight

(rather than the weighting of the bloated curriculum readings) and Ethics is awarded significant

prominence in the revision program and is the only topic area revised in its entirety during phase 2 in

the final 6 weeks leading up to the exam.




The 3 Phases

Phase 1 - for each reading (15 weeks)

1. Create LOS-, key concept- and formula flash cards as you work your way through each reading. Make

sure to note the book-, reading-, page- and LOS/formula number next to your answer at the back of

each card irrespective if you use card board or a smartphone app. Answer and revise the flashcards,

make a note of the flashcards that you found difficult to answer in your question log.

2. Answer and revise the end of chapter questions. Make a note of the questions that you found difficult

and your percentage score in your question log.

3. Answer and revise only the difficult flashcards and end of chapter questions the following day and

make a note of those that you are still finding difficult. Repeat this process for as many days as it takes

until you have mastered all of the flashcards and end of chapter questions related to the reading. You

can complete this over several days in parallel with starting the next reading, just make sure you carve

out a little bit of time each day until you have mastered all.

Save your list of difficult questions

Please ensure that you save away the complete list of difficult flashcards and end of chapter

questions (collated in steps 1 and 2) from each reading in your question log. These lists will be

invaluable as revision aids when you get to the final month of preparation before the exam. If you are

not convinced, think about it like this. There is nearly 1,300 end of chapter questions in the

curriculum; ideally you would want to go through these questions in the last 6 weeks prior to the

exam (on top of mock exams and other activities). Based on the 1.5 minute per answer exam pace it

will take you roughly 1,950 minutes (32.5 hours), to just work your way through the end of chapter

questions (without revising them). If we allocate another 1.5 minute to revise each question it will take

you roughly 65 hours to do this task. Now imagine if you have got a shorter tailored list containing the

questions that you personally are finding difficult, enabling you to avoid wasting time on the 500 (or

whatever number) questions that you already finding easy. The same logic applies to the flashcards.

These tailored lists could save you tens of hours during the crucial final phases of exam preparation

that would otherwise have been wasted on questions you already know the answer to. Time that you

can redeploy at high impact tasks like revising the difficult questions and flash cards one extra time,

doing multiple exam style mock exams and perhaps revise the Ethics readings again. If you are a

borderline pass marginal improvements like this could potentially have a big impact.

Phase 2 – (5 weeks)

Don’t attempt to finish or re-read the curriculum. This may sound a little bit harsh (if you are not on

top of the material yet), but you should really have finished reading the curriculum now. Phase 2

should be centered on flashcards and question practice. You should only really go back to the

readings in a targeted way to briefly refresh on concepts that cause you trouble in your question

practice. No rule without exceptions, and we are going to read select bits of the ethics reading again

(more details to follow below).




Also, don’t worry if you feel like you have forgotten most of the curriculum at this stage. With the

content from 60 individual readings sailing around in your head, it is no surprise if you are feeling a bit

confused. I certainly felt that way. Granted that you have made effective use of your dedicated hours

during phase 1, you will probably surprise yourself at the exam recalling all sorts of obscure details

from the curriculum that you cannot consciously retrieve right now.

It is immensely valuable having experienced the conditions that you are going to be facing on exam

day in advance. Many candidates will walk into the exam setting with only a theoretical idea about

how the exam is going to progress. It is something entirely different if you have tried it on your own

body. Having already experienced the situation helps with subtle improvements like setting the

correct exam pace, and dealing with the fatigue that will invariably set in during the afternoon

session. Recreating a close match to the actual exam conditions while you are doing the mock

exams is therefore a very effective way to improve your chances.

Review only the flashcards that you made a note of in your question log. Batch them in 5 groups and

revise one group each week. Go through the same iterative process attempting only the difficult

flashcards the following day and make a note of the questions that you are still finding difficult.

Continue this process for as many days as needed until you have once again revised and mastered the

flashcards.

Revise only the end of chapter questions from your question log and go through the same iterative

process for as many days as required until you have once again mastered this list.

Break the Ethics readings into 5 pieces and revise one piece each week, to make sure you are on top

of this material.

Attempt one mock exam each week, try and replicate the real life exam conditions as closely as

possible. Find a quiet area with a desk and a chair (maybe in a public library or somewhere else where

you cannot be disturbed), switch off your mobile phone and bring only the mock exam, some paper,

pencils, an eraser and your calculator. The morning session should run uninterrupted from 9 to 12 then

take 2 hours break before sitting down for the afternoon session between 14 and 17. Revise the test

the following day, make a note of the questions that you answered inaccurately, your topic scores and

your overall exam score. Go through the familiar iterative process working your way through the difficult

questions for as many days as required until you have mastered all of them. Identify the two large topic

areas 10%+ that you performed the worst in and add 20 questions from each of these 2 topic areas to

your study routine for the following week. If you follow this approach, share and compare your progress

with FEA Elite, the actual exam is going to be less of a shock to the system.

There really isn’t a golden standard for how many questions, flashcards and mock exams you need

to go through before you are ready to face the level 1 test. However if you have gone through the

outlined process and are able to answer all of the end of chapter questions from the underlying

readings, without fail, you are definitely on the right track. Mock exams vary in quality and the level of

difficulty. Scoring above 70% on a single mock exam (while encouraging) is therefore no guarantee

that you will be able to handle the test. The CFA Institute provides no specific guidance on the %

score needed to pass the exam, and the actual test could easily be more difficult than your practice




exams. That said I would gain a lot of comfort if my score was at 70% or above towards the end of

phase 2.

LOS flash cards:

The LOS represents “the specific knowledge, skills and abilities” (wording by the CFA Institute) that

you are expected to acquire as a candidate. It should therefore be fairly self-evident why it may be

useful to include these as part of your revision process. You should already have created a flash card

for each of the roughly 530 LOS in the curriculum. Attempt to answer the LOS in your head before

reading the backside of each flash card. The one drawback here is that the quality of your LOS

flashcards is only as good as your comprehension at the time that you wrote them down (as the

curriculum books do not provide guideline answers for these). If you crafted your answers carefully

based on the curriculum readings however, studying these flashcards should provide a very effective

tool for refreshing your memory on key curriculum topics.

The process of answering the LOS should also help pinpoint areas of weakness at this stage. List the

LOS that you are completely clueless about (hopefully that is not going to be many at this stage), and

if you have got the time dip back in and read small passages targeted to the individual LOS (the

exact location of the answer in the curriculum/study guide should be marked out on the back of the

card). Sometimes the answers can be found in the chapter summaries as well (These are provided

for most readings except for ethics). Cover LOS flash cards related to 12 readings each of the 5

weeks during phase 2 (same as for the end of chapter questions). If you have got the time run

through the deck of flash cards multiple times.

Other flash cards:

You should have created a second deck of flash cards during your studies containing formulas and

key concepts. These are likewise becoming invaluable tools in refreshing your memory on key

aspects of the curriculum. Go through the flash cards related to 12 readings a week during phase 2

(same as for the LOS and end of chapter questions). If you have got the time run through the deck of

flashcards multiple times, and dip into the curriculum if something is not clear (the exact location of

the answer in the curriculum/study guide should be marked out on the back of the card).

Do practice a lot of questions:

There really isn’t a hard and fast rule on how many questions and mock exams you need to go

through before you are ready to face the level 1 test. However if you have gone through the outlined

process and are able to answer all of the end of chapter questions from the underlying readings,

without fail, you are definitely on the right track. Mock exams vary in quality and the level of difficulty.

Scoring above 70% on a single mock exam (while encouraging) is therefore no guarantee that you

will be able to handle the test. The CFA Institute provides no specific guidance on the % score

needed to pass the exam, and the actual test could easily be more difficult than your practice exams.

End of chapter questions:

Did you save all of the question lists from each individual reading along the way? If so you have got

an invaluable resource for the revision process as they will help you identify and skip the questions




that you managed to answer with ease as you progressed through the curriculum. There is no point

wasting your limited revision time on these questions. During the first week we are going to work

through the 205 end of chapter questions in the first 12 readings. If you have stored the question lists,

the 205 questions may be reduced to 150 or even 100, it should be pretty clear why that may help

you save time.

Once you have answered the questions make sure that you pay attention to the explanations for the

end of chapter questions in the curriculum books. This is a super important aspect of the revision

process, especially for those questions that you got wrong. If you are pressed for time (like most

candidates) skip the explanations for the questions that you answered correctly, but read the

explanations twice and slowly for the questions that you got wrong for maximum comprehension.

Studying these explanations in detail constitutes the most efficient use of your time at this stage, as

the process will isolate many of the insights that you are still struggling with and that could thus

provide a marginal improvement to your exam score, now that you have understood them.

Once you have revised the end of chapter questions, create a new shorter list of the questions that

you are still struggling with and work your way through this reduced list of tricky questions. If there

are any challenging questions left after the second iteration rinse and repeat until you are able to

answer every single one correctly. Follow the same procedure for the remaining 4 weeks of phase 2

covering 12 readings each week.

CFA Level I Practice Tests

Practice tests need to be a corner stone in your CFA level I preparation. As with anything in life,practice makes perfect.

When people ask me for a snappy "what is most important to pass the CFA exam?" Questionpractise and flashcards are the two factors I always highlight. Including full length practice tests aspart of your phase 2 preparation is an absolute must!

I would aim to complete weekly practice tests each Saturday during phase 2 (the first 5 out of 6weeks of revision) and to squeeze in a couple of extra tests during phase 3 (the last week before thetest). I realize you might not be able to do every single Saturday on top of everything else, but youshould be able to do at least 5 practice tests before the exam day.

When you do a practice test try and imitate the exact exam conditions as closely as you can. Makesure you sit somewhere quiet, with no distractions and no study aids that you would not have accessto on exam day. All you need is a desk, chair, calculator, test, scrap paper, pencil, eraser and scoresheet. You can do this in a quiet corner of your home (if there is one), in a meeting room in youroffice or in a library or similar. Please switch your smartphone off and leave it in another room if at allpossible.

Ideally measure the time exactly like the actual test. Complete the morning paper between 9am and12am, take a well-deserved two hour break to stretch your legs and complete the afternoon paperbetween 2pm and 5pm. Once you have done this a couple of times you will get the hang of it. Youwill become much better at pacing yourself and you will work out your own preferred way of filling inthe score sheet efficiently.




Once done, leave the paper and return to revise the answers the following day. Add all of thequestions that you answered wrong to your question log. Spend sufficient time revising theexplanation for each answer to really understand the rationale. You should especially focus on theexplanation for those that you answered incorrectly, and redo only those the following day. If thereare still questions you are struggling with redo the process the day after until you are comfortable withall of them.

Note down your score from the first attempt and make a note of your individual topic scores. If youscored particularly poorly on one of the big topics (10%+ exam weight) make sure to include someextra practice questions from this topic area during the following week. Don't despair if your scoresare dreadful on your first couple of attempts. By phase 3 (the last week before the test) you shouldideally be able to consistently score 75%+, to ensure you have some margin for error and differencesin test difficulty come exam day.

Keep at it:

Even if you feel comfortable that you will be able to pass the test, it makes sense to continue solving

questions at full tilt until the very day before the exam. You have already made such a big effort to get

to this stage, and you will be really disappointed if you end up marginally short of the pass mark on

exam day because you geared down just before the finish line.

Ethics examples:

As mentioned above, the only exception to the “abstinence” from reading curriculum content in the

last month is Ethics. Remember all of the examples in reading 2? Well whether you remember them

or not, it is not a bad idea to read them one more time. There are 178 examples, so make sure that

you cover seven examples a day for the rest of the phase 2 (this will allow you to get through all of

the examples before 6 June), and if you have time read them twice. It is likely that a large proportion

of the estimated 36 ethics questions on the exam will be based on examples similar to the ones

described in reading 2. So a solid understanding of these provides one of the most favorable trade-

offs between effort and likely impact on the exam outcome.

Phase 3 – (The very last week)

Now in the last week it is all about practicing mock exams. There are several sources from which you

can acquire additional mock-exams if you are running short. Don’t just do the tests though, ensure

that you are allowing yourself time to revise the answers thoroughly, this last step of the process is

obviously crucial for absorbing the new insights from the questions that you were struggling with, and

is almost as important as actually answering the questions.

Depending on your other commitments, if you are able to clear the calendar for the last week before

the test this is definitely worth considering. This way you can pretty much do a mock exam with exam

like conditions every second day of the week and then use the days in between to revise the answers

for the tests. In other words if you do a mock exam Monday and revise it Tuesday, then do another

mock exam Wednesday and revise it Thursday then relax and regain energy Friday before the test

Saturday.




Attempt one mock exam every second day. Again try and replicate the real life exam conditions as

closely as possible. Revise the test the following day, make a note of the questions that you answered

inaccurately, your topic scores and your overall exam score. Go through the familiar iterative process

working your way through the difficult questions for as many days as required until you have mastered

all of them. Identify the two large topic areas 10%+ that you performed the worst and add 20 questions

from each of these 2 topic areas to your study routine the day after each mock exam.

Spend the last day before the test running through any questions that you have still not mastered

based on the above.

In the “unlikely” event that you are running out of questions to answer during the last month of

revision, there are multiple sources that you can turn to. Some of the study providers like Wiley and

Schweser do provide access to full length mock exams. These are arguably the most popular

providers, but there are multiple other suppliers with similar services. If time is limited however I

would suggest that you focus on the above activities (including end of chapter questions, flash card

revision and mock exams) as the first priority. Only if you have confidently put these challenges to

bed would I start worrying about getting access to additional questions.

Relax on the last Friday:

It is important that you do not do a lot of work the Friday before the test, spend the bulk of the day

doing things that relax you and ensure that you get a good and long sleep before hitting the test. The

worst thing you can do is to stay up late Friday evening doing a last minute cramming session. You

have spent months acquiring all of the information that you need. So there is really no added value

from extending a last minute revision session into the early hours, it will only detract from your ability

to perform Saturday, as your energy levels will be depleted.

Exam Day Strategy (CFA Level I)

The CFA Institute does not publish the exam result needed to pass the exam, but the modest pass

rates (44% in December 2014) highlights that this is not an exam to take lightly. The 44% pass rate is

actually a lot higher than the average pass rate in the recent past, and is calculated based on the

people who actually show up for the exam (not the entire population of candidates signed up for the

program), so factoring in no-shows the pass rate would be even lower.

Most candidates will spend 100s of hours learning the material for the CFA level 1 test in detail, but

surprisingly little time working on their exam technique. This is a shame as working on your exam

technique is probably the highest impact test preparation work that you can do. So let's go over a few

tactics that are easy to apply and likely to help lift your performance at the margin.

The CFA Institute go out of their way to ensure that the test conditions are the same for allcandidates around the world. You will be allowed to bring exactly the same items into the test room,the exact same instructions will be read aloud, and you will be answering the exact same set of 240multiple choice questions, so there is no ambiguity comparing your score with other candidates.

It shouldn't shock anyone that spending a few hours optimizing your exam day strategy will paydividends, yet it is my impression that a lot of candidates do not give this adequate thought.




Practice ExamsAs we have already covered my key advice in this regard is to run at least a couple of practise examsreplicating the exact exam conditions as closely as you possibly can. If you have ever competed inany sport, you will know that while pre-season practice in the training ground is important, everythingdoes not come together until season starts and you get proper match training. When you enter theexam room for the big day, you want to have some game training under your belt.

Find a quiet place with a desk and a chair, where you cannot be disturbed. Ideally if you have a studyat home where you can be at peace, otherwise a library would be a good place. Make sure there areno electronics (phone, tablet, laptop, TV etc.). All you need to bring is the test, an answer sheet,pencil, eraser, calculator and a watch. Ideally you want to match the time of the exam as well. Themorning paper should be completed between 9am and 12am, rest for two hours and complete theafternoon paper between 2pm and 5pm.

The CFA exam is always going to make for a stressful day, but if you complete the above stepsseveral times in advance, it is going to be less of a shock to the system. It also gives you a chance toadjust your pace if you have a tendency to run through the questions to slowly or quickly.

Lastly it opens your eyes to the importance of what might appear trivial details, like your strategy forfilling out the score sheet. At the test I would recommend that you fill out the score sheet instantlywhen you have an answer. Don't waste time filling in a draft response on a separate piece of paper totransfer the answers at the end. You will waste precious minutes, and might end up making errors. Ifyou are a borderline pass. These little tweaks can easily help salvage a question or two, and thismight be the difference between a pass mark and another half year without a social life. So please doat least a couple of practise runs.

Plan your journey

Plan your journey and show up early. You have been studying for months, and the very last thing you

want on exam day, is to show up stressed or late because you didn't plan ahead of time. Figure out

where to park, public transport options etc.

Answer the easy questions first

As you work your way through the exam some questions will be relatively easy to answer. Answer

these questions instantly and move on to the next. Some of the questions however will be harder, if

you don't instantly know how to address a certain question, just read it and move on to the next

question instantly (Do not even spend another 10 seconds if you are not instantly sure how to

respond to a question, just move on). Answering the "easy" questions in fairly short order will provide

you with a morale boost. It also ensures that you bank the easy points quickly and do not leave them

on the table for later, when you may be tired and struggling for time.

Given the structured prep work that you have gone through you would hope that all of the questions

should be easy… Unfortunately this is probably not going to be the case. The CFA Institute is known

for throwing plenty of curve balls into the mix, and the sheer size of the curriculum virtually

guarantees that there are corners of the material that you simply will not be able to recall, or haven’t

touched because you used an abbreviated study guide. Once you have worked your way through all

of the questions and answered the "easy" ones, have a look at your watch. Even though there may

still be a significant number of questions that you need to go back and revisit, the fact that you have




probably answered more than half of the questions in less than half of the time, while having a first

read through of the tricky ones should provide a significant confidence boost.

Follow up with the tricky questions

Now it is time for the second wave. If so inclined quickly count the empty boxes on your answer

sheet. If you are e.g. missing 30 questions and have got 90 minutes left, do the simple arithmetic to

figure out that you have got 3 minutes available for each of these questions. Chances are that

through answering the "easy" questions and giving your brain a little bit of time to process the "tricky"

ones it may have sparked something in your memory enabling you to answer some of the "tricky"

questions with relative ease on the second attempt. Some of the questions however are likely to still

bug you, if you cannot recall how to answer these questions just provide your best guesstimate.

Hopefully this should only happen for a very limited set of questions due to your thorough exam

preparation. You should always answer every single question even if you have no clue, as there are

no negative marks for incorrect answers.

One important point to stress is that you fill in the questions on your answer sheet as soon as you

have worked out an answer, don't wait and do it at the end, as you may be scrambling for time then,

and make mistakes. Use a light hand however for questions that you are a little bit unsure about, so

you can go back and correct if need be.

The afternoon session

Rinse and repeat for the afternoon session. One complaint that is repeated by many candidates is

that they feel tired and less energized during the afternoon session. We all respond differently to

pressure, but as previously covered it is definitely a good idea to sit as many mock exams as

possible mimicking the exact conditions on exam day. Doing so will prove invaluable in terms of

learning to adapt the exam pace that works for you and getting a feel for how your body responds

during the later stages of the afternoon session where most candidates start to feel super tired.

Study Schedule

I have included the table below as an executive summary condensing the most important action

points each week as you pass through the 3 phases of the FEA Elite study program. If you are

committed to work harder than the average candidate, and want to be held to a higher standard by

the FEA Elite community, please send us an email at [email protected] we would be

glad to have you on board.

Table 4: Study Schedule (December 2015)

Week Dates Readings Activity

PHASE 1:

111 Jul -

18 Jul1 – 2

Ethics: 94,214 words, 40 EOC questions and 6 LOS.

Reading 2 is the “meatiest” and contain the majority of the

questions.

2 - 25 Jul 3 – 6Ethics & Quantitative Methods: 58,725 words, 33 EOC

questions and 19 LOS.




This week we are going to complete Ethics and move into

Quantitative Methods.

3 - 1 Aug 7 – 10

Quantitative Methods: 101,920 words, 87 EOC questions and 57

LOS.

Some of the EOC questions in these readings are not multiple-

choice, making it harder to mark your own answers.

4 - 8 Aug 11 – 15

Quantitative Methods & Economics: 106,603 words, 106 EOC


These readings are shorter but slightly more EOC question and

LOS heavy than the previous week.

5 - 15 Aug 16 – 20

Economics: 143,441 words, 136 EOC questions and 62 LOS.

This is probably the most intensive week. Economics has the

worst curriculum size/guideline exam weight trade-off out of all

topics.

6 - 22 Aug 21 – 25

Financial Reporting & Analysis: 110,269 words, 136 EOC


Another heavy schedule this week to finish economics. And begin

with an introduction to financial statements, the mechanics of how

they work and the standards they are subject to.

7 - 29 Aug 26 – 29



Another week in the company of financial statements

8 - 5 Sep 30 – 34



A final more in-depth walkthrough of financial statements. The

complexity is increased compared to previous weeks. A lot of

candidates start to lose focus in these readings.

9 - 12 Sep 35 – 39

Corporate Finance: 69,841 words, 89 EOC questions and 36

LOS.

Anything will feel like a vacation after FRA... 5 short readings on

everything from capital budgeting to corporate governance

10 - 19 Sep 40 – 43

Corporate Finance & Portfolio Management: 81,955 pages, 99

EOC questions and 28 LOS.

Portfolio management is a fairly small topic area at level 1. It

grows in significant as you progress through the program, so pay

attention.

11 - 26 Sep 44 – 46

Portfolio Management & Equity: 65,519 words, 91 EOC


Another week to finish up portfolio management and start equities

12 - 3 Oct 47 – 50

Equity: 73,650 words, 117 EOC questions and 37 LOS.

The Equity valuation: Concepts and Basic Tools reading features

heavily in terms of LOS and EOCs.

13 - 10 Oct 51 – 54Fixed Income: 95,924 words, 98 EOC questions and 31 LOS.

Introduction to fixed income, a fairly heavy work load this week.




14 - 17 Oct 55 – 57

Fixed Income & Derivatives: 80,320 pages, 60 EOC questions

and 27 LOS.

Another fairly intense week both in terms of size and the

complexity of the content.

15 - 24 Oct 58 – 60

Derivatives & Alternative Investments: 66,669 words, 58 EOC

questions and 24 LOS

If you are lagging behind this is the time to catch up, as you do not

want to invade your revision time.

PHASE 2:

16 - 31 Oct 1 – 10

Revise the 160 EOC and 82 LOS related to readings 1-10

Revise the first 49 reading 2 ethics examples (7 a day)

Mock Exam Saturday (Revise Sunday - attempt to replicate the

exam experience as closely as possible)

17 - 7 Nov 11 – 20





18 - 14 Nov 21 – 34





19 - 21 Nov 35 – 50





20 - 28 Nov 51 - 60





PHASE 3:

Exam - 5 Dec 1 - 60

Complete and revise 2 more mock exams. Practice any

outstanding end of chapter questions and flashcards that you are

still struggling with.




Tips and Tricks

Plan your exam day

Go visit the exam venue prior to sitting the exam. It may be useful to go there on a Saturday morning

a few weeks prior to discover what the traffic is normally like on a Saturday, and to figure out where

to park if you are driving. Please bear in mind that depending on the size of the exam venue, traffic is

likely to be heavier on the day of the event as all the other candidates are heading the same way.

Show up early

Show up early and have a final whip through your flashcards at the venue if you like. Waiting is

boring, but doing so will allow you a margin of error if something unforeseen happens on your

commute. Don't overdo it off course. You need to get a proper night’s sleep before the event. If you

live nearby you can probably leave it a bit later (if everything else fails you can always walk), but if

you have got a long commute I would probably factor in at least an hour.

Figure out where you can leave your belongings

You are typically not allowed to bring your belongings into the exam room, so it is also a good idea to

figure out if there is a safe place to put your belongings while you are at the test. If not it is good to be

prepared so you don't bring your tablet, smartphone and/or other stuff and have to worry about

whether or not it is going to get lost or stolen.

Food

It is also a good idea to bring your own food. Even if there are food options available at the venue,

the queues are likely to be long, and you may not want to waste time during your break standing in a

food queue.

Earplugs

If you get easily distracted by noises, you are allowed to bring earplugs for the exam.

Hold you head down

The safest bet is to show no emotion and don't make eye-contact with anyone while sitting the test,

basically don't do anything that would leave even the slightest impression that you might be cheating.

I know this sounds pretty paranoid, but the CFA Institute is pretty paranoid about ensuring candidates

are not cheating, as it will tarnish the reputation of the designation, so err on the side of caution. You

can read the CFA Institute's rules for violations and misconduct by clicking this link.

Bring your flash cards everywhere

As you progress through the readings and are creating flash cards with the LOS, formulas and other

key concepts that you are encountering bring a stack of these flash cards with you wherever you go.

If you are commuting waiting for a dentist appointment or experiencing any other downtime take out

your flashcards and revise. It is much easier to carry flashcards around than carrying your curriculum




books. Even better if you are using a flashcard app on your smartphone, as your phone is probably

always going to be with you.

Acronyms

Depending on your style of study, acronyms may help you remember certain concepts. E.g. I was

taught the acronym Calvin + Klein = Paul + Smith to remember the put-call parity (C + K*discount

factor = P + S). This approach may not work for you, but if you take a minute to sit down and come

up with something memorable for each of the key formulas in the curriculum, you are that much more

likely to remember these on exam day. And yes, I do realize that Calvin Klein = Paul Smith does not

make any sense, but I can still remember the put-call parity to this day, because of this acronym.

CFA Website

The CFA Institute's website is an underutilized resource. They release a full six hour mock exam in

October if you are sitting the exam in December. The mock exam is for free and consistent with the

formatting conventions used on the actual exams. I would recommend using this mock exam as one

of your last in the week leading up to the test. The CFA Institute also provides topic based practice

test to help you access your topic level strengths and weaknesses. Apart from this the website

provides exam details, testing policies, information on exam grading and results and a walkthrough of

a typical exam date. It is well worth it familiarizing yourself with the page early in your study process.

Calculator app

If you don't want to carry around your clunky calculator or look like a total gig when studying on public

transport you can get the BA II PlusTM Financial Calculator app for iPhone/iPad in the iTunes store.

The app is from Texas Instruments and does what it says on the tin, it basically turns your apple

device into a BA II PlusTM Financial Calculator. Unfortunately you won't be allowed to bring your

iPhone into the test, but at least it should make your study time easier. At the time of writing this app

doesn't yet seem to be available in the Android or any other app stores, but hopefully that is just a

matter of time. The important point is that you familiarize yourself with the calculator so using it is

second nature for the exam.

Calculator Guide

Knowing exactly how to operate your calculator can save you valuable time on the exam day. If you

are not already super familiar with the calculator going through an instructional guide is therefore time

well spent. If you want to go straight to the source, Texas Instruments provide their own user guide

with the device.

Unless you have got plenty of time to spare I would recommend using this guide as a reference guide

only however, rather than reading it cover to cover, as it is more than 100 pages long (You could

have gotten half way through ethics or read this study plan twice by the time you finish).

Thankfully there are plenty of shorter free tutorials available on the internet e.g. Quartic Training

provide a useful set of tutorials at this link tailored for the CFA program.

http://www.quartic-training.co.uk/cfa_program/calculator_tutorial




Maintain morale

Ensure that you know exactly why you are sitting the test and what it is going to do for your career

and your life once you have passed. Are you doing it to prove to yourself that you are an

accomplished analyst? Are you using the test as a springboard to find a new job? Are you going to

use it as a lever to negotiate a pay hike? Or are you just interested in learning more. Whatever your

goal is you should keep it right front and center for those difficult days where the last thing you want

to look at is a CFA book.

Take off the last week before the exam

If you are able to get the last week before the test off from work, you will have the time available to sit

multiple mock exams (as described in the chapter about the last month before the test). Doing so is

likely to reduce your stress levels, as you are able to fully immerse yourself in the test preparation

without too much interference thinking about work.




How to Use the Website

The Financial Exam Academy Website is packed with free information tailored to help you on your

journey towards the CFA level 1 exam.

Let's walk through a few of the key services available:

New to the CFA

This segment provides some more insights if you are new to the CFA program and still on the fence

considering whether or not studying for the exam is the right thing for you.

FEA Elite

If you decide to take up the challenge and study for the CFA level 1 exam in 21 weeks, you can

locate the weekly study program within the FEA Elite segment of the website. By signing up to FEA

Elite you will also receive these weekly study programs directly in your inbox each week leading up to

the CFA level 1 exam + weekly progress reports enabling you to share your own progress and

compare with other highly committed FEA Elite members.

Topics

Within the Topics area of the website you will be able to find an introduction and useful tips and tricks

that you can use as a primer while studying for each of the 10 CFA level 1 topic areas.

Blog

The last segment on the website contains a mix of thorough explanations and useful acronyms for

some of the key concepts in the curriculum along with various tidbits and useful advice and updates

relevant to your studies.

What to Expect from the email list?

As I have alluded to several times throughout this guide we provide free access to the

www.FinancialExamAcademy.com email newsletter. Just to manage your expectations, this is what

you will receive:

Weekly study plan updates every Saturday morning at 9AM (US East Coast Time).

Insightful tips and strategies that will help improve your chances of progressing through the test.

We hate spam, and we will not include any junk and spam in our newsletter.

If for whatever reason you no longer want to receive our emails you can unsubscribe at any time

using the link at the bottom of each email sent across.




FEA Elite

If you have made it all the way to the end of this study plan, you will have seen plenty of references toFEA Elite. If you are sitting the December 2015 exam, and are committed to working harder andsmarter than the competition to pass the test, then this group is for you.

FEA Elite is an exclusive group limited to strongly committed candidates. As this is the first time weare organizing this, we have waived the entrance fee for candidates signing up for the December2015 group. We do however reserve the right to only accept candidates that (1) indicate a sufficientlevel of time commitment to stand out from the average CFA candidate.

FEA Elite is an exclusive group of candidates committed to push themselves and the rest of thegroup to leave the remaining candidates in the dust. We are going for a 100% pass rate amongst ourclass of December 2015, so there is no space for procrastinators, late starters and half-heartedcommitments.

On the other hand if you know you are willing and able to work hard, but want guidance on how towork smarter to get the optimal result out of your efforts we would be happy to have you onboard.

Setting yourself up for the 21 week study program:

If you have committed to join FEA Elite there are a couple of things you can do in advance to get theball rolling before we start the actual study program on July 11, 2015.

1. Create a question log (explanation & instructions are here).

2. Get a dependable flashcard app (why use flashcards? Which CFA flashcard app to use?).

3. Get a study guide (You can complete the CFA level 1 without a study guide, but this post willexplain why I think most candidates would benefit from owning one).

The 21 week study plan

If you have signed up for FEA Elite you will receive a weekly email with detailed instructions for theweek ahead and if you respond with your own progress stats, you will receive a progress report withaggregate anonymized data from the FEA Elite candidates each week, so you can get a sense howyour progress compares, and adjust if you are slipping behind.

Why do you need an accountability partner for CFA level 1?

Studying for the CFA level 1 test is a pretty lonely pursuit. 100s of hours spent revising material onyour own, with very little time for your social life. The temptation to spend time on your favourite sparetime activities is intense, but every hour counts.

As a result I am generally not recommending joining traditional study groups, as you will spend toomuch time travelling to and from group meetings and small talking while there. Online classes maywork, depending on your personality, but most candidates are able to get more done on their ownthan in a group setting.

www.financialexamacademy.com/question_practice

www.financialexamacademy.com/use-flashcards

www.financialexamacademy.com/flashcards

www.financialexamacademy.com/wiley

www.financialexamacademy.com/do-you-need-a-cfa-level-i-study-guide




There is however one big drawback from living as a temporary hermit. Apart from deterioratingpersonal hygiene standards. You don't have a clue how you compare to the rest of the candidatesout there. When studying for the CFA you are not competing against an explicit target. You arecompeting against a group of candidates all fighting for the same result, and if you completely isolateyourself, you won't have any idea how your current performance compares to everyone else.

This is why we came up with FEA Elite. FEA Elite is a group of candidates committed to workingharder/smarter than the average candidate, and share our progress anonymously with the rest of thegroup to keep each other to a higher standard. We are only a small subset of the total population ofCFA candidates, so by helping each other, we can all pass the December 2015 level 1 test.

If you want to join us, please send an email to [email protected] answering thefollowing two questions to enrol:

Question 1. Are you prepared to start your study program at least 21 weeks in advance of the test(11 July 2015) to follow the program?

Question 2. Are you willing and able to commit to a study program requiring 15 hours a week for thefirst 15 weeks and 25 hours a week for the remaining 6 weeks of revision leading up to the test?Please consider other commitments (work, studies, family, social life etc.) to ensure this is realistic?

Enrolment is open from today. Please don't delay if you would like to join us, as you will get the bestresults the sooner you join.

Looking forward to see you inside, and help improving your chances to pass the December 2015level 1 test.

Thank You!

Well done! You've made it to the end of the Financial Exam Academy Study Guide.

Hopefully the information in this guide will help you enjoy a smoother ride through the CFA level 1

exam preparation process. Amongst the key takeaways from this guide should be:

Follow the weekly exam preparation guides posted in the FEA Elite segment of the website and

through the email distribution list. If you follow this program every single week during the 21 weeks

leading up to the exam, you will have followed a structured process covering every single corner of the

curriculum.

Create flashcards and answer the end of chapter questions as you work your way through each

reading. Fill in the question log with lists of difficult flashcards and end of questions from each reading.

This is going to become a crucial study aid that will help focusing your attention on the highest

time/reward activities during your last month of exam revision.

The final key takeaway is that you should spend the last 6 weeks prior to the exam focusing primarily

on answering questions. You will be going through all of the tricky flashcards and end of chapter

questions again and again, until you ensure that you are able to answer every question without fail. In

addition it is crucial that you sit as many mock exams as possible, and that you attempt to imitate the

exam conditions as closely as you can.