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How to Clear CFA Exam Level- I

The Level I examination lays emphasis on tools and inputs, and includes an introduction to asset valuation & portfolio management techniques. The course also covers securities laws and regulations, and the CFA® Institute Code of Ethics and Standards of Professional Conduct. The curriculum highlights an overview of asset valuation and portfolio management practices. It consists of multiple-choice questions and is offered in June and December only.

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Subjects to be studied

  1. Financial markets and other financial instruments
  2. Corporate finance
  3. Analysis of financial statement
  4. Quantitative methods of investment analysis”

Exam Questions Format:

The Level I examinations include 240 total multiple choice type questions, 120 questions for each of the sessions i.e. for morning and evening sessions. Each multiple choice question is free standing (i.e. not dependent on other questions) and has three possible answers: A, B, and C. All questions are equally weighted and there is no penalty for guessing.

While answering the Level I multiple choice exam, remember:

  1. Carefully manage your time. Don’t spend too much time on any one question or topic area. On average, you should allocate 1.5 minutes to each multiple choice question, including the time to record your answer on the answer sheet.
  2. Read the questions carefully. A careless reading of the question may lead you to a completely different and incorrect answer.
  3. Read each item carefully and eliminate obviously incorrect answers. If you have to guess and you can eliminate one of the responses, your odds of answering the question correctly are much higher. Remember that there is no penalty for guessing.
  4. Mark your answers on the answer sheet as you complete each question.Some candidates mark their answers in the examination book and wait until the end of the examination to complete the answer sheet. This is not at all advisable.
  5. Expect to encounter questions that you will not be able to answer correctly. There is a great deal of material to cover and the questions are challenging. Standard setters and the Board of Governors (at all three levels) take account of examination difficulty in setting Minimum Passing Scores. For a full description of how the MPS is established, see The CFA Program: Our Fifth Decade (PDF).
  6. Examination writers use a standard set of formatting conventions on the multiple-choice questions. Many sample examinations produced by third parties do not follow these conventions, so review the CFA Institute format presented below. .
  7. Familiarize yourself with the instructions for filling out your answer sheet (PDF). Instructions are also available at the time of the examination.

Formatting Conventions Used for Level I Exams:-

Item Construction

Each item on the Level I multiple-choice exam consists of a stem (question, statement, and/or table) and three choices, A, B, and C.

Two basic formats are used:

  • Stems using sentence completion with three unique choices
  • Stems phrased as questions with three unique choices

Example 1 (Stem using sentence completion)

An analyst suspects that a particular company’s U.S. GAAP financial statements may require adjustment because the company uses take-or-pay contracts. The most likely effect of the appropriate adjustments would be to increase that company’s:

  • Return on assets
  • Debt-to-Equity Ratio
  • Interest Coverage Ratio.

Example 2 (Stem phrased as question)

An analyst suspects that a particular company’s U.S. GAAP financial statements may require adjustment because the company uses take-or-pay contracts. Which of the following is most likely to increase as a result of the appropriate adjustments being made to that company’s financial statements:

  • Return on assets
  • Debt-to-equity ratio
  • Interest coverage ratio.

Item Stems

The Level I CFA examination does not use except, true or false in item stems and avoids the use of not in item stems whenever possible. When appropriate, stems will include one of the following qualifiers: most likely, least likely, best described, most appropriate, most accurate, least appropriate, or least accurate. Each stem supports only one item on the examination.


The Level I CFA exam does not use any of the following choices:

  • all of the above,
  • none of the above,
  • A and B only,
  • B and C only,
  • cannot determine,
  • cannot calculate,
  • not enough information to determine

Choices consisting of words or sentences are typically ordered from shortest to longest; choices that are quantitative are ordered from the smallest number to the largest number. The choices agree grammatically with the stem; the language common to all choices is placed in the stem.

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