Professional Standards and Ethics:

This is one of the most important topics of study because the CFA certification program is committed to the promotion of universal professional ethics. This is reflected in subject weighting as well, with ethics having equal weighting across all three CFA Levels. This subject covers the code of ethics, professional standards, and Global Investment Professional Standards, as well as a larger aspect of the ethics issue as it pertains to the financial business (GIPS).

Corporate Finance (Corporate Finance) is a term used to describe the financial activities of a company.

This part, which is only 7% weighted, covers topics including capital planning, NPV IRR, cost of capital, measures of leverage, dividend basics, and share buybacks, as well as working capital management and public company corporate governance. Among the topics explored are agency issues in the context of the agency-principal relationship.

Economics:

This section covers the fundamentals of microeconomics and macroeconomics, with an emphasis on the latter. People with an economics background naturally excel at macroeconomics and find it easier to integrate all of the information presented through graphical presentations, which is the typical method. This topic has a 10% weighting, indicating that it is important enough to explore aggressively.

Financial Reporting and Analysis:

As previously noted, it carries a 20% weighting, making it a substantial enough knowledge area for anyone pursuing CFA. This test measures your knowledge of financial ratios and financial statements, which are frequently used in financial analysis. Revenue recognition, accounts receivables, and inventory analysis, as well as taxes and long-term assets, should all be familiar. Keep in mind that local accounting procedures are of little value when studying for this exam because the CFA is a global exam that focuses on US GAAP and IFRS norms.

Quantitative Analysis Methods:

This section focuses on quantitative analysis and mathematically-based strategies for dealing with complex financial problems, which is why this subject is so important. Some of the most important subjects covered in this section include performance assessment, time value of money, statistics and probability principles, sampling, and hypothesis testing, as well as correlation and linear regression analysis in Excel. In the realms of fixed income, equities, and portfolio management, a good understanding of these principles will provide you with some really useful tools and techniques. The mastery of a substantial portion of the CFA body of knowledge would be aided by a solid grasp and command of quantitative processes.

Alternative Investments:

This part delves into investment types not covered by the other CFA knowledge areas. This can be seen in real estate funds, venture capital, hedge funds, and commodities, to name a few. Because commodities will be heavily emphasized, it will be advantageous for participants to have a good understanding of commodity trading concepts. There may be seven or eight conceptually oriented questions in this part, some of which are directly related to commodities. Despite the fact that this topic has a low weighting in CFA Level I, it may be learnt rather quickly if you put in the effort.

Derivatives:

Derivatives are complex financial instruments, and this section covers the fundamentals of futures, forwards, options, swaps, and the most typical hedging strategies. More complex mathematical tools are typically employed to examine these odd financial instruments. Despite this, the majority of the material on Level I is introductory, and this section is just 5% weighted, accounting for only about 12 questions on the exam.

Stocks and bonds investments:

This section focuses on stock markets and covers a variety of valuing tools and approaches, including DCF, PE Ratio, PBV, and PCF. With approximately 25 questions, this section accounts for roughly 10% of the exam’s weighting. The majority of the questions are likely to be around business valuation and analysis.

Earnings Guaranteed:

The markets and instruments of fixed income, as well as the methodologies used to price them, are discussed in this section. A variety of key concepts, including as yield metrics, duration, and convexity, are discussed. This section starts with a bond analysis and valuation, then moves on to the bond’s characteristics, and finally to 10 debt investment risks. On the exam, this section gets a 10% weighted.

The word “portfolio management” refers to the process of putting together a portfolio of investments.

This part introduces basic portfolio management concepts and introduces important topics including the Theory of Modern Portfolios and the Capital Asset Pricing Model. Only roughly 17 questions are weighted by section on the exam, which accounts for about 7% of the total. This section becomes increasingly significant when the focus shifts to the application of available knowledge for efficient portfolio management in Levels II and III of the CFA.