CFA Level 1 Update – 4 Days Left Until the Exam

Seeing as I have managed to document my thoughts throughout my CFA level one study so far in my CFA Blog updates and my original CFA Level One Study Plan, I figured an update 4 days out from the exam is in order. I write this update knowing full well my time could be better spent studying.

Biggest points of interest

  • Very interesting course. it all comes together at some point. highly recommend skimming the whole course with schweser secret sauce to get your head around all you have to know. Once you do this, it is easier to focus on weaker areas.
  • Boredom of doing questions that you can do is a problem. circa motivation too. but must continue to do them or will forget.
  • Need to focus on problem areas.
  • Need to do practice questions.
  • Must do ethics material from CFAI, schweser Q bank or some other source of questions, all the practice Q’s you can get your hands on.

A post I made on Analyst forum is below with the results further down.

After going back and forwards on different plans and strategies for weeks (I think I have written at least 6 plans in excel and or word), I think i have finally found one i like. If it helps others, fantastic, if not it provides great procrastination time as i try to put off the 60 derivatives questions i am about to do after i write this…. This may not provide much value to most and is fairly elementary (i wish i had come up with it earlier).

Once you are fairly comfortable with the majority of the workload (which i assume most of us are by this point), there are going to be gaps in our knowledge which we need to improve. Simulating test conditions may also be important to some if time is an issue for you.

I have been taking the CFAI samples (nothing new here) but actually working through my results in a systematic way. I chose to do the CFAI samples first before i take the Schweser ones as they are obviously more representative of the exam.

My ‘systematic’ way is as follows (sounds stupid but i hope it helps)(also note i have the tests on my computer but it would work just as well for schweser etc)..

1-creating an excel spreadsheet for my answers numbered 1–>x
2-input answers as i do the test (put a star on the questions i know need revision on as i do the test or that I am totally guessing – also write the topic of the question in the next cell as a primer for later)
3-mark the test
4-go through with answers and identify problem areas.
5- create a “must revise”, a “forgotten formulas” and a “should revise” list in the same spreadsheet
6- add areas that you need to work on to the list and repeat this process for each of the sample exams and the Schweser exams and you will have a fairly comprehensive list
7- Revise key areas and question bank or some other way test yourself on these areas.

Here is a link to what it looks like – hope it helps someone – glad i wasted time not thinking about swaptions.

I have made a list of stuff I need to work on before the exam. It is below and the spreadsheet that I made it from is here. It is unedited.

Must Revise
E GIPS only apply to investment management firms
E - Under GIPs: composite must include all fee-paying discretionary accounts. non-fee paying can be added if disclosed. non-discretionary cannot be added.
E ETHICS – you cannot have unfair allocation methods of shares even if you disclose
E cannot knock people over on trading floor
CF calculating NPV practice cashflows
CF NPV profile – steeper slope = more sensitivity
CF mismatching strategy for short term forecasting
CF CAPM vs Bond Yield for Cost of Equity
CF effective cost of financing (73 mock 1)
CF discounted payback period (77 mock 1)
CF FCFF + discount rates
CF project sequencing
CF profitability index = 1 + NPV / initial cost
CF no tax deduction for preferred stock
CF MMY / Discount basis yield
CF DDM approach – cost of common equity = div yield + growth rate Q76 M2
CF 5 part dupont
D graphs + put call parity / prot put, covered call
D maintenance margin
D covered call and protective put. Covered call reduces upside and protective put reduces downside minus costs.
D FRA, swaps and different types
D covered call + protective put (96 m2)
AI Alternative investments (everything)
AI property valuation methods
AI commodities with stocks and inflation (111 m2)
AI emerging mkts (114 m2)
ECO Economic Profit vs Accounting Profit
ECO okup + inflationary gap
ECO government spending – budget deficits –> more loan demand —> IR higher
ECO structural unemployment = changes in technology , frictional = influenced by unemployment compensation
ECO The quantity of land and other renewable natural resources (37/mock 2)
ECO Phillips curves – REVISE – 39 / mock 2
ECO feedback rules (40/mock 2)
ECO Marginal cost pricing (42/ mock 2)
ECO nom IR = real Ir + expected inflation
ECO demand pull inflation leads to increase in price level and real GDP (44/m2)
ECO McCullum = Monetarist (new). Taylor = Keynesian (new)
ECO constant vs increasing cost industries
FE forward rate calcs / options / swaps
FE bootstrapping – forward rates
FE different term structure theories (expectations, liquidity preference + ..)
FE Zero volatility spread (103/m1) + OAS (104/m1)
FE increasing yield curve = bigger spread between nominal spread and Z spread
FE duration of portfolio is best described as % change in portfolios value if interest rates change by 100 basis points
FE different types of risk (98 m2)
FE Defaults rates + recovery rates (105 m2)
FE spot rate final for Z coupon bond – dont forget semi annual compounding
FE price sensitivity is negatively correlated coupon rate and level of mkt interest rates.
FE SPV vehicles are rated abased on collateral and credit enhancement mechanisms sued
FSA change in Lifo reserve due to change in inventory
FSA discon items, other comprehensive income, extraordinary items
FSA gaap vs ifrs
FSA CFO direct / indirect
FSA 5 component dupoint’
FSA DTA?DTL accrued warranty
FSA depreciable lives in high inflation times
FSA expensing vs capitalising r&d
FSA Treatment of Intangible Costs under GAAP(LOS 36b)
FSA % of Completion vs Completed Contract – revise
FSA net income –> FCFF
FSA FSA phases of analysis
FSA intangible assets and impairment
FSA Calculations on leases (q59 moxk 1)
FSA growth rate does not –>DTA/DTL (Q 60 mock 1)
FSA treasury stock method (!65 mock 1)
FSA Lease payment calc (Q66 mock 1)
FSA actual vs incurred expenses DTA / DTL (Q67 mock 1)
FSA always compare interest expense as a % of sales NOT total debt
FSA remember to put dividends paid into net income if from year before
FSA tough question on LIFO / FIFO COGS (51/m2)
FSA if there is no change in lifo / fifo, net profit margin is the same
FSA Q59/M2 – A=L + E… A= L + (Cont cap + ending retained earnings)…. A= L + [(cont cap) + (beginning retained earnings + Net income – dividends)]
FSA Discount Bonds = CFO Overstated, CFF understated
FSA Premium Bonds = CFO Understated, CFF Overstated
FSA Zero Coupon = CFO Severly Overstated, CFF Severly Understated
FSA treasury stock method
FSA The tax expense less DTL = Tax payable less DTA
FSA trading sec / available for sale + HTM securities effect on BS / IS
M/E time weighted return (GM) vs moneyweighted return (IRR)
M/E price weighted / value weighted unweighted indexes
M/E investments in diff bus cycles
M/E porters five forces + industry life cycles
M/E statistical models for long term projections, models for medium term
M/E commodities with stocks and inflation
M/E Technical Analysis
M/E projection models, averages and statistical techniques
M/E types of indexes (Q79 / m1)
M/E intrinsic value calcs (Q84 mock 1)
M/E bias (behavioural, survivorship, arbitrage)
M/E end of year dividend!!!!
M/E price weighted index and stock splits (Q79 / mock 2)
M/E calculating P/BV (85/82/90 m2)
M/E equivalent number of firms = 1/ HHI
M/E valuation using FCFF (84 m2)
M/E call markets no primary mkt (87 m2)
M/E FCFF (88 m2)
PM Relaxing of CAPM assumptions
PM Portfolio management (everything)
PM not compensated for risk that can be decreased by diversifying
PM people dont ask for risk
PM Market risk = systematic risk = non-diversifiable risk = risk you are compensated for.
Q roy’s saftey first
Q probability inc bayss theorem
Q correlation
Q Monte Carlo vs Historical Simulation(LOS 3.9.i)
Q Random Sampling
Q harmonic mean
Q portfolio variance, correlation and covariance
Q hypothesis testing
Q roy’s safety first vs sharpe ratio
Q Mean average deviation
Q confidence intervals
Q consumer surplus calculations
Q EAY / EAR / compunding freq Q
Q money weighted return = IRR, time weighted return = geometric mean
Q positively skewed distribution has a long tail to the right. Therefor mean >median>mode
Q Probability) P(a or B) = P(a) + P(b) – P(ab)
Q standard error (s.d/root n
Q hypothesis testing process (32 mock 2)
Q 1st: cov(a,b) = corr x stddev(a) x stddev(b)
Q 2nd: cov(A,B) = E[R(a) – E(R(a))]E[R(b) – E(R(b))]

4 thoughts on “CFA Level 1 Update – 4 Days Left Until the Exam”

  1. Hello,
    I love your posts. I am just now starting my prep for June 2011. Would it be possible to email/share any material or practice questions you may have? I would be ok with just the excel files too…


  2. Hey James, I congratulate you on passing the L3! What a feat it was! I’m studying for the June 2011 L1 exam right now and was looking for study tips and that is how I found your site…

    quick question…would it be at all possible to get a copy of the excel spreadsheet? As i’m trying to put together my own “study schedule” i thought I might incorporate your spreadsheet in there…and see if it helps.

    Anyway, you can email it to me if it’s possible, if not I understand.

    Thanks and good luck CFA Charterholder!

  3. Hello James ;

    Thanks for the blog ,, I’m sure you hear this a lot ..but really , its refreshing to have someone with passion for sharing . I am studying for the Dec 2011 level 1 . Like yourself don’t have the background , that is why I find your blog inspirational .. at what point did you decide that you’d go all the way to L3 … and , at what point you said no more … but with everything happening in the Financial sector and M&As globally , I congratulate you from the bottom of my heart … I Was looking for the updated plan …the one 4 days before the exam ..L 1 … could not find it … would you share it ? … … Thanks 8 )

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>