If you are considering a career in investment management, the Chartered Financial Analyst (CFA) program is a great way to advance your skills and knowledge of the industry. However, passing the CFA Level 1 exam can be a daunting task for many individuals. The exam consists of 240 multiple-choice questions, each designed to test your understanding of a different concept related to the field of finance.
In this blog post, we will break down what types of questions you can expect to see included in the CFA Level 1 questions.
Conceptual Questions
Conceptual questions aim to test your knowledge of fundamental concepts within finance. These questions do not require an in-depth understanding but rather focus on your ability to identify and explain basic concepts. The free CFA Level 1 materialwill have many examples of conceptual questions, such as ‘What is the time value of money?’ and ‘What is the difference between systematic and unsystematic risk?’
Calculation Questions
Calculation questions are designed to test your ability to apply formulas and equations to specific scenarios. These questions require a solid understanding of basic mathematics and accounting principles. Practice is key when it comes to calculation questions as they can be quite challenging. Examples of calculation questions include, “What is the expected return of a portfolio with the following assets and weights?”
Interpreting Data Questions
Interpreting data questions aim to test your ability to analyze and interpret financial statements and data. These effective CFA Level 1 questions require you to apply your knowledge and skills to extract information from a problem or scenario. Examples of data interpretation questions include, “What is the company’s net income for the year, given the following balance sheet and income statement?”
Scenario-Based Questions
These questions require you to use your understanding of fundamental concepts, formulas and equations to answer a question that is based on a scenario. Examples of scenario-based questions include, “What would be the impact on the stock price of a company if there was a change in the interest rate?”
