Last updated: September 16, 2021

CFA Exam: Level 1 / Topics / 3 Easiest

No simple Yes or No answer can be given to the question posed in the headline.

However, we think there are 3 topics that could be nominated in the 'easiest topic' category. We give our nominations to:

    1. Portfolio Management (PM),

    2. Corporate Finance (CF)*,

    3. Equity Investments (EI).

Especially if special conditions apply! If you meet these conditions, then the 3 topics should be – if not the easiest – then certainly easier for you.

We begin our analysis of the easy level 1 CFA exam topics with a table (see also all 10 topics tabulated).

Level 1 CFA Exam Topic Short Description Topic Weight No. of Readings No. of Formulas Predicted No. of Questions
Portfolio Management Portfolio: structure, risks & returns 5-8% 7 around 50 ca. 14
Corporate Finance* Corporate governance
& decision-making
8-12% 5 around 50 ca. 16
Equity Market, industry & company analysis 10-12% 6 around 40 ca. 20

* In your 2022 CFA exam curriculum, you will find new names for 2 topics. Financial Reporting and Analysis, FRA for short, changes its name to Financial Statement Analysis and Corporate Finance to Corporate Issuers. Still, the topics cover the same substance. Because the change is quite recent, we still use the well-known old names here.

The 3 topics have different exam weights. Equity gets the highest 10-12%, then there’s Corporate Finance* with 8-12%, and Portfolio Management with the lowest exam weight of 5-8%. As regards the number of readings to study or formulas to remember, the 3 topics are comparable. As far as the number of questions in level 1 CFA exam goes, you can read more here.

On QM & PM Relationship

There’s a bond between Portfolio Management (PM) and Quantitative Methods (QM).

Rate of return or dispersion measures can serve as perfect illustrations of this inter-topic connection. The two concepts (and some more) are present in both Portfolio Management and Quantitative Methods. However, if you study QM first, PM gets so much easier.


Study QM before PM to pave the way for the quantitative PM readings. All else is pure theory.

The 7 readings comprising the PM topic can be labeled as either theoretical or quantitative (that’s right!):

Reading 51 /theoretical/

in the intro, you will learn why portfolio diversification is so significant, who the market participants are and what steps make the portfolio management process.

As soon as you get familiar with all that, you will find out what portfolio managers must be able to do by studying:

Reading 52 /quantitative/

portfolio risk and return (part I)

Reading 53 /quantitative/

portfolio risk and return (part II)

With risk and return re-established in the context of a portfolio, you’re off to some basics of portfolio planning and construction followed by risk management process and some fintech and technical analysis issues:

Reading 54 /theoretical/

you will get to know about the Investment Policy Statement (IPS) and its elements, how to construct a portfolio, that not every client willing to take the risk is able to take it or how strategic asset allocation differs from tactical asset allocation.

Reading 55 /theoretical/

you will become aware of the importance of the risk management process.

Reading 56 /theoretical/

this reading is devoted to technical analysis and has been moved from QM to PM as of 2020.

Reading 57 /theoretical/

it’s a reading added as of June 2019 exam and it tells you about fintech and its applications to investment management (you’ll learn about artificial intelligence, machine learning, and distributed ledger technology).

In your 2022 CFA exam curriculum, Portfolio Management readings have numbers from 48 to 55 and a new reading, namely Reading 52: Behavioral Biases, is added.

We explain some of the major PM stuff in our free presentation The Power of Portfolio Diversification in 8 Diagrams:

Where Quantitative Skills Matter

There are 2 things every portfolio manager must be able to do:

1. Select 'the best' portfolios out of a larger set of investments, where 'the best' means with the best risk-return trade-off.

2. Choose from 'the best' portfolios those suitable for the client because compliant with the client’s investment profile.

Readings 52 & 53 are full of formulas and concepts that help you develop these analytical skills. You will learn:

1. how to calculate the portfolio’s risk and return,

2. that – on account of the risk-return trade-off – some portfolios are better than others and so we call them efficient portfolios (note: if we’d like to invest in risky portfolios only, we’d look for them on the efficient frontier),

3. that it’s better to invest in a portfolio consisting of an efficient portfolio and a risk-free asset rather than in the risky portfolios lying on the efficient frontier (to meet the risk-return trade-off),

4. how to use the utility theory to select the optimal investor portfolio,

5. how to make the analysis of risks and returns for different portfolios much easier thanks to the CAPM model.

So, to be able to grasp the real meaning of portfolio management (not only as a topic but also as a skill), you will surely need to understand what the expected rate of return, standard deviation, and correlation coefficient are and how they work. Without these QM concepts, there’s no portfolio management.

That is why you'll get Portfolio Management scheduled after Quantitative Methods if you choose Soleadea Topic Sequence while creating your study plan. We recommend our users what we believe to be the optimal level 1 topic sequence but you can also easily adjust it to your needs.


  • Where possible, topics are coupled based on the comparability of concepts, e.g. QM+PM (rate of return, standard deviation, covariance, etc.), FRA+CF (financing ratios).
  • More challenging topics are coupled with more easy ones allowing you to take a sort of a break meanwhile, so PM after complicated QM, CF after long and detailed FRA, or quite intuitive EI after more theoretical FI.
  • The most important topics – like FRA or QM – are scheduled upfront to ensure they are thoroughly studied.
  • The shortest topics – i.e. Derivatives and Alternatives – are scheduled more into the end. You can study them over a week if need be. Plus, DI should be easier to take in after you get familiar with the concept of options in FI.
  • Economics is scheduled next to last because if you're really needy for time that's the topic you can skim through (especially if you have some previous educational background in this area).

How Borrowing Can Make Life Easier

Let’s say you need a specific amount of money asap but you just don’t have it. Which solution is the easier one: borrow the money or make the money? Definitely, it’s a loan that helps you satisfy your need here and now. Especially if it’s a friend that you’re borrowing from ;).

It seems that the whole CF topic builds on this 'friendly borrowing' rule.

It borrows a lot:

from Quantitative Methods (QM) TVM,

from Portfolio Management (PM) beta & CAPM model,

from Financial Reporting and Analysis (FRA) financial ratios.

Get friendly with the 'lending' topics first and you can get done with Corporate Finance quickly.

That’s right!

By studying all the 3 topics before you start reading Corporate Finance, you can facilitate the understanding of this topic excessively.


Study QM, PM & FRA before Corporate Finance to speed up its intake. Apart from a couple of more complex bits, CF theory is quite intuitive & easy to handle.

Using our CFA Exam Study Planner and the Soleadea Optimal Topic Sequence, that’s exactly what you'll get! The first 4 topics are scheduled as follows: Quantitative Methods, Portfolio Management, FRA, and Corporate Finance .

Corporate Finance: No Troubles?

Owing to the borrowed concepts, quite intuitive CF issues and relatively easy formulas, Corporate Finance may actually prove to be the easiest level 1 topic.

Our categorization of the 5 CF readings and the analysis of their contents look as follows:

3 easy readings:

Reading 31

introduction to corporate governance & ESG (environment, society, governance) you will get to know more about it when studying for your level 2 exam.

Reading 32

TVM (NPV & IRR) already explained in Quantitative Methods,

investment decision criteria such as profitability index, payback period, discounted payback period,

capital budgeting steps,

types of investment projects (conventional vs unconventional).

Reading 34

different types of risks from the perspective of a company (business risk, sales risk, operating risk, financial risk),

how the company measures its risks using measures of leverage (DOL/DFL/DTL = degree of operating/financial/total leverage).

2 moderate readings:

Reading 33

WACC and its components:
you will learn how to calculate the cost of capital for various sources of financing,
beta & CAPM already explained in Portfolio Management,
cost of equity and pure-play method for beta estimation may prove a bit more complicated (shouldn’t be too problematic, though).

Reading 35

working capital management in a company,

ratios but you don’t need to worry about that ‘cos you already know how to interpret them having done your FRA first!

In your 2022 CFA exam curriculum, Corporate Finance (aka. Corporate Issuers) readings have numbers from 27 to 32.

Can Level 1 Topic Get Any Simpler?

Many CFA exam candidates invest in stocks. If you’re an investor yourself and follow companies listed on the stock exchange, you will find the Equity Investments topic quite basic in many aspects (though equity is not only stocks).


Interest in stocks & listed companies gives you a head start. Besides, Equity Investments is mainly theory and it learns smoothly.

The topic is mostly theoretical, which means you need to hire your memory skills to get the job done (even if you never made any investments, no big deal you can still ace the topic if your memory’s good):

Reading 36 – introduction to markets

Real basics, including types of assets and contracts, financial intermediaries, orders on the stock exchange, and the distinction between the primary and secondary security markets.

Reading 37 – indices

Probably the most complicated of all Equity readings. You get to know different types of indices, how they are created, as well as what the advantages and disadvantages of the indices are. Also, examples from many markets throughout the world are given.

Reading 38 – market efficiency

3 forms of market efficiency are explained: weak, semi-strong, and strong. To complement the picture, types of market pricing anomalies (e.g. January effect) and behavioral mechanisms behind investors’ decisions are described.

Reading 39 – types of equity securities

Reading 40 – industry and company analysis

Reading 41 – basics of equity valuation

The last two readings include issues elaborated on in greater detail in the level 2 curriculum. Don’t get misguided by the fact that Equity can be defined as quite plain and simple among all 10 level 1 topics. In the level 2 exam, this topic gets the greatest weight (along with 3 different topics) and becomes more complex with its different valuation methods and scary formulas.

In your 2022 CFA exam curriculum, Equity readings have numbers from 33 to 38.

On Market Efficiency (& Not Only)

There are 3 forms of market efficiency: weak, semi-strong, and strong. Each next form includes the previous one as shown below:

Weak form efficient market when all past information about prices and volumes are included in the price of an asset.

Semi-strong form efficient market when all past information about prices and volumes as well as all publicly available information is included in the price of an asset.

Strong form efficient market when all past information about prices and volumes as well as all publicly available and confidential information is included in the price of an asset.

What follows is that:

for weak form efficient market technical analysis should yield no abnormal returns,

for semi-strong form efficient market both technical and fundamental analysis should yield no abnormal returns.

Not only markets can be efficient!

Also topics can be analyzed with respect to their efficiency. On the efficiency of topics, we write in one of our posts on study planning. Before you go, also take a minute to think about how efficient is your exam prep. If you wish it was more productive, use our CFA Exam Study Planner that puts you in charge, motivates you to work, holds you accountable, and makes you study:

It All Starts With Your CFA Exam Study Plan


& customize it to suit your needs :)

+ get: weekly control, maintained motivation & knowledge retention!