As a finance or investment professional, climbing the corporate ladder and experiencing career progression, in general, entails acquiring the right knowledge and skills to succeed in a highly competitive industry.
One way of doing this is by undergoing a CFA course and passing the CFA exam.
The Chartered Financial Analyst (CFA) program allows you to obtain a professional certification awarded by the CFA Institute.
A certificate signifies your expert-level knowledge and understanding of financial markets and investment analysis.
To acquire a CFA certification, you need a bachelor’s degree and at least three years of relevant professional experience. You also have to pass three exams for different tiers: Level I, Level II, and Level III.
Once you obtain a certificate, you boost your reputation as a financial or investment professional. It can also give you a leg up as you explore better, higher-paying career opportunities locally and internationally.
Table of Contents
The CFA Level I Curriculum
As mentioned, the CFA certification has three levels. Level I is the starting point of your CFA journey.
In general, the CFA Level I exam evaluates your understanding of the tools and concepts regarding investment valuation and portfolio management.
The exam covers 10 topic areas. These are the subjects you have to learn and master as you prepare for the test.
Below is an overview of these 10 topic areas:
1. Ethical and Professional Standards
This portion of the CFA program covers ethics’ crucial role in the investment profession. It is explored in a way that you apply the concepts you learn to make smart, ethical decisions as a finance or investment professional.
During the course, you can learn about the CFA’s Institute Code of Ethics and Standards of Professional Conduct and the Global Investment Performance Standards, including their application and importance in the industry.
This subject also discusses a framework that can help guide your decisions and behaviors as a financial or investment professional.
Lastly, you can also learn about the common challenges to ethical behavior in the investment industry and ways to deal with and overcome them.
2. Quantitative Methods
The quantitative methods part of the program enables you to learn about and understand different quantitative concepts and strategies used in financial analysis and decision-making in all investment-related matters.
It covers these specific subject areas:
- Time value of money, including interest rates and compounding.
- Discounted cash flow applications, including net present value (NPV), internal rate of return (IRR), and holding period returns.
- Statistical concepts and market returns, including descriptive and inferential statistics, central tendency, and dispersion.
- Probability concepts, including covariance, correlation, and Bayes’ formula.
The topics in this area can come in handy for making decisions regarding opening new businesses.
This topic covers both microeconomics and macroeconomics, where you can learn about:
- Demand and supply analysis.
- Firm and market structures.
- Aggregate output and price levels.
- Economic growth.
- Business cycles.
Other related topics, such as monetary and fiscal policy, capital flows, international trade, and currency exchange rates, will be discussed as well.
4. Financial Reporting and Analysis
This part of the CFA training course encompasses topics and practices about evaluating the financial performances of companies and organizations, and financial reporting.
The topic aims to help boost your understanding and mastery of the following:
- Income statements
- Balance sheets
- Cash flow statements
- Income taxes
- Long-lived assets
- Non-current liabilities
This part of the CFA course also aims to teach you about the concepts of financial reporting quality and identifying signs of poor- and low-quality reports.
You can also learn strategies for analyzing financial reports so you can make better future forecasts.
5. Corporate Finance
This subject covers topics regarding:
- Corporate governance
- Capital budgeting
- Cost of capital
- Leverage and working capital management
You can gain a deeper understanding of these concepts and how they relate to making sound investment and financing decisions under this topic.
6. Equity Investments
Under this portion of the CFA program, you’ll delve into the concepts of:
- Equity investments
- Market indexes
- Market organization
- Market efficiencies
- Security markets
Additionally, you’ll learn more about equity analysis and valuation. These include topics on multiple industry classification strategies and frameworks for managing industry and company evaluation.
7. Fixed Income
The fixed income part of the program helps you understand the basic concepts and unique attributes of the following:
- Fixed-income securities
- Fixed-income markets
- Fixed-income valuation
- Asset-backed securities
It also includes risk analysis, which teaches you how to evaluate the central elements of underlying bond returns and risks with emphasis on interest rate and credit risk.
Derivatives are contracts that obtain their value from the performance of an asset, event, or outcome.
This part of the CFA course enables you to gain knowledge of basic derivatives and derivative markets. It also covers fundamental features and valuation concepts for forward commitments, options, and swaps and their uses.
Contingent claims and arbitrage, a concept associating derivative pricing with the price of an asset, is also discussed.
9. Alternative Investments
Under this part of the program, you can gain a better understanding of the most commonly used alternative investments, such as:
- Hedge funds
- Real estate
- Private equity
- Infrastructure investment
You can learn about the characteristics, advantages, and limitations of these alternative investment options.
10. Portfolio Management and Wealth Planning
This topic gives you an overview of portfolio and risk management in regard to investments.
It helps you understand the following:
- The portfolio management process.
- The portfolio approach to investments, including planning and construction.
- The asset management industry.
- Mutual funds.
Your CFA tutors may also discuss other concepts under each topic area to help broaden your knowledge and boost your chances of getting a Level I certification.
Tips for Acing the CFA Level I Exam
Having an in-depth understanding of these different topics plays a huge role in helping you prepare for and pass the CFA Level I Exam.
You can also increase your chances of getting the CFA Level I certification when you follow these additional tips:
- Choose a CFA course provider that provides in-depth training, relevant and up-to-date learning materials, flexible study plans, and qualified tutors.
- Create a good, realistic study plan.
- Know the ins and outs of the calculator you’ll use during the exam.
- Learn a strategy for taking the exam, such as managing your time for answering sections or questions, and ensure you follow it during test day.
- Take as many practice or mock tests as possible.
When you prepare well for the CFA Level I Exam, you leave nothing to chance and you can be sure you get the certification you need to start your journey to career advancement.