CHALLENGING TOPICS IN CFA LEVEL 1 TRAINING CLASSES

 

Most of the candidates preparing for CFA level 1 have experienced Financial Reporting Analysis, Derivatives, and Fixed Income challenging. At Aspire Now Global, the CFA faculty Mr. Vipul Kumar Roy has an experience of over a decade.    


If you are taking CFA level 1 training classes then this article is for you. This article will help you in preparation for CFA and is focused specially on the challenging topics.  

 

Some of the challenging topics of CFA level 1  

 

CFA level 1 candidate has seen that Fixed Income, Derivatives Investments, Financial Reporting, and Analysis are the most challenging. 

 

The complex thing about CFA level 1 exam topics- it's not about the weightage or length of the topic that makes the CFA exam tough. It is about the way the concepts are decoded. 

  

Let's talk about the three topics in-depth 

 

FIXED INCOME- 6 Readings (The readings have the number from 39-to 44) 

 

If you are a new candidate who just started the CFA level 1 training, this methodology for fixed Income may help you in CFA preparation:- 

 

  •  Start with Reading 42 is the introduction which explains different types of fixed-income securities and nomenclature. 

  • Start with Reading 44, which describes bond valuation and other concepts like implied forward. 

  • After completing the bond valuation, start with Reading 46. In this, you will discover risk and return analysis, modified duration, effective duration, convexity, and Macaulay duration. 

  • Carefully read Reading 45- Asset-Backed Securities. 

  • Thoroughly read again Reading 42.  

  • Start with Reading 43, which explains bond markets and basic mechanisms. 

  • Lastly, start with Reading 47, which explains credit analysis.  

 

FINANCIAL REPORTING AND ANALYSIS 

 In the CFA level 1 exam, you will find a lot of theories based on a vast range of accounting concepts. 

 

The first two readings focus on financial reporting and analysis frameworks, reporting standards, and authorities. 

 

The following three Readings describe the income statement, balance sheet, and cash flow statement. 

 

 Some Readings focused on various Accounting Techniques, followed by the readings describing different financial statement items. The last two Readings are focused on quality and applications. 

 

There are chances that FRA questions include a huge amount of data and some of them are irrelevant for problem-solving. It may be challenging for a candidate to pass the exam if they are unaware of the elements used to calculate the ratio. 

 

Excessive data makes analysis more complex. You must be able to decipher the data you see and assess its relevance to the topic you're working on. 

 

DERIVATIVES 

A derivative is a financial product whose price is determined by the price of an underlying asset. In underlying assets, there are different assets such as stocks, stocks indices, bonds, interest rates, and exchange rates.  

The value of the derivative instrument is affected by changes in the underlying asset's value. 

 

Derivatives include forwards, futures, options, and swaps. 

 

  • FORWARD COMMITMENTS 

The primary objective of forwarding commitments is to know the difference between pricing and valuation. Forward price refers to the fixed price of underlying to be purchased in the future.  

  

  • OTHER DI CONCEPTS 

When the candidate gets familiar with forwards, options, and swaps. It's time to look more into the perplexing issue like forwarding rate agreements, put-call parity, or put-call forward parity. 


TOPIC 

NO. OF READINGS 

PREDICTED QUESTIONS 

Financial Reporting and Analysis 

12 

c.a.26 

Fixed Income 

6 

c.a.20 

Derivatives 

2 

c.a.10 

 

The candidate preparing for CFA level 1 should focus more on these challenging topics as they have more weightage compared to other topics.  

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