December 7th 2008:
2:37am – After finally getting to sleep approximately 7 and a half hours before the Level One CFA examination was set to begin in Sydney, I received a phone call from a good friend of mine asking me to meet him at bar nearby. It’s saturday night and for the fourth weekend in a row, I am unable to agree to his request. The CFA preparation process had been grueling and I had not put in anywhere near the recommended 250 hours. But somehow I felt I had come as far as I could have – 2 weeks of solid study had blended the 18 study session curriculum into some sort of continuum of finance knowledge – in short, I felt I was ready.
6:30am – Having managed to get some level of sleep (I dont believe it was of the REM kind), my mind is mapping out the day ahead. I’d been thinking about this day for at least the last week and despite not being as prepared as I may have dreamt, I couldn’t wait for it to be over. Cook and eat breakfast, follow instructions on the list that I had magnetised to my fridge – “can of tuna, apples, pencils, calculator, eraser, etc..”, get in pre-ordered taxi to the exam and pass. How hard could it be?
7:55am – Other than waiting in a line for 10 minutes to go to the overpopulated toilet, things have gone smoothly thus far. I am outside the venue, frantically reading over my CFA in two pages cheat sheet, and hoping that the 9 hours ahead of me passes me by as quickly as possible. Interestingly, having completed two other degrees, I had probably put in the most study that I ever have for one exam. More interestly, save for the dark depths of administrative law, I also felt that despite this fact I had the greatest chance of failure in any one exam that i’ve ever done. The weight of the course materials is perhaps greater thanmost people realise and is siply exhausting to try and learn in a shot amount of time without prior knowledge or working experience.
10:00am – One hour into the paper, I have completed around 75 of the 120 questions. I am well ahead of time. At this stage my reflections on the paper are that it is far more qualitative than I had believed it would be. I have probably used my calculator 4 or 5 times by this point. Knowing the intracacies of each study session (at many points including trivia-esque details) has been required many a time to narrow the answer down from 2 options to the correct one. The CFA Institute seems to believe that instead of asking two questions, they will ask two questions in the form of one question (see made up question below):
In periods of rising prices, inventory will least likely be overstated and COGS will be maximised when:
a) LIFO is used for both purposes
b) LIFO is used and FIFO is used respectively
c) FIFO is used for both purposes
d) FIFO is used and LIFO is used respectively
1:00pm – I managed to get a small amount of study done during the break on areas that were not tested heavily during the morning session. I also ate my prepared can of tuna (gourmet I know) so that I didn’t fall asleep in the afternoon session. I decided it was smart not to arrive at the exam when they said to in the afternoon (1 hour early) and returned with about 15 minutes before the next exam was due to start. I was feeling very confident at this point.
3:30pm – Thank you CFA for making me feel so confident – why could you not have been so kind in the afternoon? Like some crual set-up, sometime around 60% through the afternoon exam session, I was just about ready to committ exam suicide. I felt it was a very tough afternoon paper and often I found myself down to a choice between two options in one question (which was really two questions). I was usually sure of one answer out of the two you needed to know to get the answer correct and close to sure about the second. I estimate that I got a maximum of 24 questions wrong in the morning paper compared to around 45 in the afternoon paper. With 40 or so questions to go, I remember feeling absolutely drained (180 questions in) and thoroughly ready to go home and relax my brain. No such luck.
6:00pm – Overall, I’d say the paper was far less quantitative than I may have hoped or planned. I was ready to calculate the depreciation in year 27 of a 40 year capital lease and instead I was instructed to do unexpected things. All I can say about my experience in level one is know the concepts, know them in detail and be very sure about everything. The CFA Institute has a way of making you doubt even the most concrete parts of your knowledge. How well do you know what you think you know? Do firms really need to lodge a statement of changes in owners equity under US GAAP or is it optional – their questions will test knowledge qualitatively and you must be ready if you wish to have a chance. I don’t believe time was a problem at all but I did do 2 practice quizes timing myself accurately (less than the ~10-15 I heard others doing). Overall I completed a breakdown of how I think I went and even in my most conservative assessment where I got all the 66 questions I checked as possibly wrong wrong, I still got greater than the 70% that is needed to pass. Here’s hoping but the fatigue of it all may have messed up my assessment.
2:01am Thursday 29th of January – Results have just been released (later due to the time difference in Australia). My study has paid off and I passed level 1 of the CFA program. Not sure what happened to my corporate finance results but beggars can’t be choosers I guess…
My results in the difference sections are below: