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Chartered Financial Analyst Level 1· Exam reference card · 2026 · Edureify AI
Chartered Financial Analyst Level 1

1 Cheat Sheet

CFA Level 1 Is a Breadth War — Speed and Concept Mastery Win It

180 questions across 18 topic areas in 270 minutes. You can't study everything equally. Know where the points are and allocate your time like a portfolio.

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Among the harder certs
Avg: Approximately 43–46% pass rate historically (CFA Institute data)
Pass: 750 / 1000
Most candidates understand Chartered Financial Analyst Level 1 concepts — and still fail. This exam tests how you apply knowledge under pressure.
Core Framework

CFA Level 1 Topic Weight Allocation (Approximate)

CFA Level 1 tests breadth across 18 topic areas. Ethics uses the Standards of Professional Conduct — answer from the perspective of what protects client interests while maintaining market integrity. FSA is the make-or-break section for most candidates.

  1. 01
    Ethical and Professional Standards — 15–20% (most heavily tested per question count)
  2. 02
    Financial Statement Analysis — 13–17% (most failed topic area)
  3. 03
    Fixed Income — 11–14%
  4. 04
    Equity Investments — 10–12%
  5. 05
    Quantitative Methods — 6–9%
  6. 06
    Economics — 6–9%
  7. 07
    Other topics (Derivatives, Alt Investments, Portfolio Mgmt) — combined 20–25%
Scenario Traps

Wrong instinct vs correct approach

A portfolio manager receives gifts from a client
✕ Wrong instinct

Accept the gift since it's from a client, not a prospective client

✓ Correct approach

Under Standard I(B) Independence and Objectivity, gifts from clients must be disclosed to the employer and approved — they can create a conflict of interest regardless of the source

Comparing two companies where one uses LIFO and one uses FIFO
✕ Wrong instinct

Compare financials directly since both are GAAP-compliant

✓ Correct approach

Adjust the LIFO company's financials using the LIFO reserve to make them comparable; direct comparison without adjustment produces misleading results

Calculating EPS when dilutive securities exist
✕ Wrong instinct

Use basic EPS since it's simpler and more conservative

✓ Correct approach

Diluted EPS must be calculated using the treasury stock method for options and the if-converted method for convertible securities — report the lower of basic or diluted EPS

Quick Rules

Know these cold

  • ▸ Ethics — hen in doubt, protect the client's interests and disclose the conflict
  • ▸ LIFO reserve adjustment — IFO inventory + LIFO reserve = FIFO inventory
  • ▸ Calculator — lways check BGN/END mode before annuity calculations
  • ▸ Diluted EPS is always ≤ Basic EPS — if your calculation shows otherwise, recheck
  • ▸ Intercorporate investments — 20% = fair value; 20–50% = equity method; >50% = consolidation
  • ▸ Free cash flow = CFO − CapEx; use it when net income is manipulated
  • ▸ Duration measures price sensitivity to interest rate changes — longer duration = more price volatility
Self Check

Can you answer these without checking your notes?

In this scenario: "A portfolio manager receives gifts from a client" — what should you do first?
Under Standard I(B) Independence and Objectivity, gifts from clients must be disclosed to the employer and approved — they can create a conflict of interest regardless of the source
In this scenario: "Comparing two companies where one uses LIFO and one uses FIFO" — what should you do first?
Adjust the LIFO company's financials using the LIFO reserve to make them comparable; direct comparison without adjustment produces misleading results
In this scenario: "Calculating EPS when dilutive securities exist" — what should you do first?
Diluted EPS must be calculated using the treasury stock method for options and the if-converted method for convertible securities — report the lower of basic or diluted EPS
Failure Patterns

Common Exam Mistakes — What candidates get wrong

Underinvesting in Ethics preparation

Ethics accounts for 15–20% and uses a nuanced framework. Candidates who rely on common sense get ethics questions wrong — the Standards have specific language and hierarchy that must be learned precisely.

Confusing LIFO and FIFO impacts in different inflation environments

In rising price environments: FIFO gives higher inventory values, lower COGS, higher net income. LIFO gives lower inventory values, higher COGS, lower taxable income. These relationships reverse in falling price environments — candidates flip them under pressure.

Misapplying time value of money calculations

Mixing up PV, FV, annuity due vs. ordinary annuity settings on the financial calculator causes systematic errors. Calculator mode (BGN vs. END) is one of the most common sources of computational mistakes.

Treating all equity valuation models as interchangeable

DDM applies to dividend-paying stocks with stable growth; FCFE/FCFF apply to companies with unpredictable dividends; P/E and EV/EBITDA multiples are relative value tools. Using the wrong model for the scenario is a frequent error.

Ignoring working capital in financial statement analysis

Changes in working capital significantly impact cash flow from operations. Candidates who only read net income miss the cash conversion cycle and its implications for company quality.

CFA Level 1 rewards efficient preparation over exhaustive study. Test which topic areas are your real gaps.

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