1. Put in a lot of practice time!

Because the CFA exams are so long (6 hours for each level), time management is essential. It’s one thing to absorb information; you’ll also want to put it into practice so that you can improve your recall and ensure that you’re understanding the questions. Start with the CFA Institute’s books, which contain a plethora of mock exams and practice questions. Then, identify your weakest subjects and concentrate on reviewing them. Then, at least two months before the exam, begin taking mock exams. Free mock questions can be found at the end of this blog.

2. Don’t waste time.

About 285 hours of study is recommended by the CFA Institute. However, depending on your background, time management skills, and prep course, you can make the most of each hour, reducing wasted study time significantly. For example, with The Princeton Review, you should be able to put your distractions aside and complete your Level I CFA exam preparations in under 120 hours.

3. Develop a study plan

Setting aside that time and committing to staying on track is critical. By spreading the required work out over six months, you not only establish a solid routine that allows you to digest all of the material, but you also give yourself some leeway to reschedule your study sessions if you fall behind.

4. Focus on concepts

The CFA exams are becoming more conceptual, particularly the Level I exam. Concentrate on the most important formulas for the exam and provide a formula sheet that highlights common-sense applications and how to derive any additional information you might require. Finally, you’ll want to figure out which formulas you can skip if they’re consuming too much of your time.

5. Know your financial calculator

You’ll be able to bring one of two calculator models to the tests. Practice with your chosen device ahead of time so you know exactly how to use it. Once you’ve gotten the hang of it, you should be able to rack up some quick points right away.

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5 questions will be shown from a total of 30 free practice questions to prepare you for CFA level 1 exam. Enjoy!

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1. Which of the following statements relating to obstacles to efficient allocation of resources is/are most likely incorrect?

I: Price ceilings set below the equilibrium price lead to shortages, bribery, poor quality and black marketeering.
II: Subsidies decrease equilibrium quantities and lead to dead weight losses from overproduction.
III: Production quotas decrease equilibrium quantities and lead to dead weight losses from underproduction.

A. Only statement II

B. Both statements I and III

C. Both statements I and II

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2. Management fees in private equity are ________ those in hedge funds in that _________.

A. different from; fees are based on committed capital, not assets under management

B. different from; fees are based on assets under management, not committed capital

C. similar to; fees are based on assets under management

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3. Which of the following forms of trading blocs allow for unrestricted trade of goods and services among its members?

I. Free trade areas
II. Customs unions
III. Common market

A. I, II, and III

B. I and II

C. II and III

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4. The market values of a firm’s capital are given below:

Total debt: USD7 million
Outstanding preferred stock: USD2 million
Outstanding common stock: USD12 million
Before-tax cost of debt: 8%
Before-tax cost of common equity: 12%
Before-tax cost of preferred stock: 9%

Assuming company’s marginal tax rate is 35%, what is the weighted average cost of capital (WACC) for the firm?

A. 9.5 %

B. 10.0 %

C. 10.4 %

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5. A stock priced at GBP35.73 is projected to pay dividends of GBP1.50, GBP2.00, and GBP2.50 at the end of the next three years. At the time of the third dividend, the stock is expected to be worth GBP36.23.

If the required rate of return for this stock is 10%, the intrinsic value of the stock is closest to:

A. GBP34

B. GBP36

C. GBP32

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