We are extremely excited to announce that our latest complete CFA Level 1 Study Guide is now available. What initially was supposed to be only 150 pages, we decided along the way to add even more useful content and the final Study Guide ended up with 450 pages!
Here are a list of features you will find in our latest Study Guide:
– 450 Pages of Original Practical Content
– Summaries of all 18 Study Sessions
– Graphs, Tables and Formulas
– Practical Examples and Case Studies
– And much more
To find our more information about our Study Guide, we invite you to consult our dedicated Study Guide page
As we mentioned before, our focus at the Financial Analyst Warrior is to help you navigate through your CFA candidate journey in order to become a successful charterholder. Our mission is to create simple and very practical guides that are complementary to your CFA study toolkit. Our study guides help to demonstrate how the CFA material can be applied in the real world with real data.
Here is a brief introduction for each Study Session:
Study Session 1
The ethics section is probably the most underestimated study session of the CFA curriculum. Many candidates overlook it, assuming it is a “common sense” topic. Well it is not, you actually need to be familiar with the specific rules and standards since most of the questions will be in grey area situations rather than black or white. Candidates expecting questions such as: “is it ethical to steal money from clients?” are in for a big surprise. Practice questions are the key to success in general, but even more so for this study session.
Study Session 2
This is a very basic study session and it is therefore very important to pick-up all the points you possibly can there. If you have never taken any finance course in your life, make sure you make one with the concept of present value since it is one of the foundations of finance. The curriculum introduces a wide array of quantitative methods material so if you are rusty in this topic, we recommend you dig-up an introduction to statistics book. The material here is very basic but it sometime helps to have a more thorough explanation, which you will find in an introductory quantitative methods book.
Study Session 3
As with study session 2, some of the topics are only covered superficially so it is a good idea to look up these topics in a quantitative method book if you are not too confident about your skills in this area. Remember that the exam will cover the quantitative method topics from an investment angle so you should keep that in mind when you study the material.
Study Session 4
Economic analysis is the starting point of top-down analysis which is why study session 4 to 6 are relevant for financial analysts. We found that the curriculum covers a vast array of topics but does not elaborate too much since the focus of the CFA is investment analysis. However, it sometime helps to understand the full picture to really grasp a concept. Therefore, do not hesitate to pull out your microeconomics or macroeconomics book when you are having trouble with a topic. There are a lot of graphs that are there for you to visualize the concepts. Candidates are not expected to be able to plot any graphs although you should know what they generally look like.
Study Session 5
This study session is less theoretical than study session 4 and is easier to visualize in real life. To see the implementation of some of the topics covered here, it can be helpful to read the international economic news. We found that real life examples are great to solidify your knowledge of a topic.
Study Session 6
This study session is relatively short but as important as the other two economics study sessions. To illustrate the concepts, we provided current international examples and applications. There are many topics here that will be covered in more depth on level 2 exam.
Study Session 7
The basic financial statements are covered very quickly in this study session since they will be covered in greater detail in study session 8 and 9. If this is your first encounter with accounting, spend some time understanding the mechanics of financial reporting, including double entry accounting and journal entry.
Study Session 8
This is a deeper analysis of the various elements that could be found on the income statement, balance sheet, and cash flow statements. Some of these elements will be dissected further in study session 9. The differences between U.S. GAAP and IFRS are often tested so make sure you know them. Also, candidates should be fully proficient in the indirect and direct method of constructing the cash flow statement.
Study Session 9
This study session analyzes four of the more complex elements of the balance sheet. We suggest for this section that you download, as we did here, an actual annual financial statement from a listed company. You can learn a lot and understand better from looking at the notes to the financial statement since they often feature details and calculations on income taxes, inventories, long-term assets and long-term liabilities.
Study Session 10
This is a relatively short study session but has a great practical importance for a financial analyst. The precious three study sessions provided an overview of the various reporting requirements and what the company “says” about the health of their finances. The analyst must be able to see through what is reported and assess the true financial situation of the firm.
Study Session 11
For candidates who took any corporate finance course in the past, this study session will be a piece of cake. This is why, for most candidates who have some college finance background, study session 11 will be a topic that will be skimmed quickly. This is a dangerous approach since there are some topics hidden in this study session that candidates may not have covered in their basic corporate finance college course. Examples of such topics are country risk premium, break points and the appropriate inclusion of floatation costs.
Study Session 12
As we will demonstrate in this study session, this is one of the most practical topic from the level 1 curriculum since the topics discussed here can be implemented immediately to build a portfolio. This is actually the approach we will take in this study session so you can see how to apply the theory in real life!
Study Session 13
The equity section is broken down into a qualitative and quantitative section. Study session 13 is qualitative which means you will learn mostly theories and vocabulary. Make sure you are familiar with the CFA Curriculum definition even if you are already familiar with some of the terminology.
Study Session 14
This is the quantitative section of equity which will actually come back on level 2 and 3 of your CFA journey. As we did in the following pages, we encourage you to actually use those equity valuation techniques to value an actual stock. All the data you need to apply the techniques learned in this section are available online. We find that the best way to decisively learn a topic is by applying it. Besides, these techniques will get you more comfortable with the use of Excel which is a huge asset in the finance and investment fields.
Study Session 15
The basic concepts of fixed income instruments are covered here. There are a lot of definitions and theories in this study session which can come up on the exam. Make sure you can distinguish all the various types of risk associated with fixed income securities. Candidates should also have a basic knowledge of the different yield spreads.
This study session introduces the basic of debt valuation, which is easily performed with your financial calculator. It also delves deeper in the concept of interest risk which is measured by duration. The credit analysis has a large ratio analysis component which was covered in the financial reporting and analysis study sessions.
Study Session 17
Candidates should have a basic understanding of the mechanics of forwards, futures, options and swaps. Valuation of these various derivative instruments is left for the level 2 CFA exam so you should not expect a very high level of difficulty for this study session. Make sure you are comfortable with the risk management strategies a portfolio management can implement using options.
Study Session 18
Many topics are covered here but only superficially. There is a special focus on commodities in this study session so you should be comfortable with the vocabulary associated with them. Candidates should also know basic hedge funds categories and compensation structure.
We want to mention again that this Study Guide is not meant to replace your current study materials but instead to complement your study sessions and provide you with a more simplified and practical resource to guide you along your CFA level 1 preparation.
If you have not done so already, we invite you to check out our latest eBook Study Guide specifically tailored for the December 2013 CFA Level 1 exam. With over 400 pages of fresh content, this Guide is the ideal companion to your CFA Study Toolbox.