# 60 CFA® Exam Questions Forecast

soleadea

4 years 7 months 2 days

Below, you can read a list of 60 exam issues that our specialists expect to come up in the Level 1 CFA 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 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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## Comments

Piotr K53 replied on Permalink

Rocks! Thank you! :)