60 CFA Exam Questions Forecast

Questions Forecast

Below, you can read a list of 60 exam issues that our specialists expect to come up in the CFA Level 1 Exam (includes QM, FRA, CF, PM, FI, DI topics). We are also waiting for you proposals of exam issues. If you have any, write in a comment below. In the meantime you can also register at our portal and get access to Free Mock Exam for CFA level 1 candidates.

Quantitative Methods

  • real risk-free interest rate + inflation = nominal risk-free interest rate
  • money-weighted rate of return = IRR
  • 3 disadvantages of bank discount yield
  • compute average price of the stock assuming constant monthly budget (harmonic mean)
  • compute sample standard deviation
  • positively skewed distribution (mode < median < mean)
  • fat-tails (leptokurtic distribution)
  • kurtosis vs. excess kurtosis for a normal distribution
  • independent events
  • compute the probability of no more than 2 successes in 5 trials (binomial distribution)
  • compute the probability that a variable will be higher than a given value (normal distribution)
  • lognormal distribution vs. normal distribution (lognormal prices of assets; normal distribution returns)
  • compute confidence interval
  • properties of t-distribution (symmetrical; defined by one parameter (degrees of freedom = n-1); more conservative than normal distribution; the higher n the more t-distribution resembles normal distribution)
  • F-test

Financial Reporting and Analysis

  • straight line amortization vs. accelerated amortization
  • basic EPS vs. diluted EPS (diluted EPS is always lower or equal to basic EPS)
  • FIFO vs. LIFO when prices are decreasing
  • expanded accounting equation
  • operating vs. capital leasing and their impact on financial statements
  • duPont analysis
  • percentage-of-completion vs. completed contract method (long-term contacts)
  • installment method
  • reporting items like dividend paid in the proper cash flow (IFRS vs. US GAAP)
  • impact of the change in receivables over the period on the cash flow from operations

Corporate Finance

  • NPV vs PI (NPV > 0 PI > 1)
  • compute growth rate
  • compute equity beta
  • compute DTL given DOL and DFL
  • operating break even point vs. ‘normal’ break even point
  • compute the cost of trade credit
  • compute acid test ratio (quick ratio)
  • steps of capital budgeting
  • dividends vs. shares repurchase

Portfolio Management

  • compute utility (utility function)
  • risk aversion vs. risk tolerance
  • compute correlation coefficient (pay attention whether you are given standard deviations or variances)
  • optimal investor portfolio vs. optimal risky portfolio
  • compute the return on a leveraged portfolio
  • properties of beta (higher beta higher systematic risk; market beta = 1)
  • undervalued portfolios (above SML)
  • ability to take risk vs. willingness to take risk

Fixed Income

  • floaters interest rate risk vs. inverse floaters interest rate risk
  • coupon rate vs. YTM for premium bonds
  • CoCos
  • compute forward rate given spot rates
  • characteristics of duration (the higher coupon the lower duration, the higher YTM the lower duration, the higher time to maturity (usually) the higher duration)
  • compute total price change (remember to use convexity adjustment (always up))
  • compute the price of the bond
  • portfolio duration

Derivative Investments

  • FRA vs. interest rate option
  • compute the price of the put option using the put-call parity (remember to subtract the present value of dividends from the stock price)
  • decide which of the options has the biggest time value (given option premium and intrinsic value)
  • arbitrage
  • payoff of the covered call
  • impact of volatility on the option value (increase for both put and call)
  • compute the payoff of the plain vanilla swap for a party receiving fixed rate
  • compute variation margin
  • exchange for physicals
  • futures vs. forwards
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