CFA Level 1 – All You Need to Know

In this article, we will be looking at CFA Level 1 exam. CFA is also known as The Chartered Financial Analyst program is a postgraduate professional certification offered to investment and financial professionals worldwide by the American-based CFA Institute.

The CFA Level 1 exam introduces you to ten broad topics in investment analysis and ethics, laying the groundwork for Levels 2 and 3 of the CFA program. In 2021, the CFA Level 1 exam will be held six times a year in February, March, May, July, August, and November.

According to CFA Institute, it takes a typical candidate an average of:

  • 4+ years to complete the CFA program;
  • 300+ hours of studying per Level
  • 6 months of preparation for each exam (i.e. about 11.5 hours study per week assuming 300 hours)

The CFA Level 1 exam is an introduction to 10 broad topics of investment analysis and ethics, building a solid foundation of your financial knowledge for Level 2 and 3. 

In 2021, the CFA Level 1 exam will be held six times a year in February, March, May, July, August, and November. It will return to a four-times-a-year schedule in February, May, August, and November starting in 2022.

We need to understand what CFA Level 1 is about to beat it. So, let’s go through some common questions I’ve received from candidates recently (and my answers):

How Hard Is CFA Level 1?

Having passed all 3 levels, my view is that CFA Level 1 is the actually the easiest amongst the 3 exams.

​While Level 1 covers a wide range of topics, it doesn’t yet delve into too much detail of each concept, as it focuses on bringing all candidates to the same knowledge level before Level 2. It is quite do-able and approachable with some study hours put in, regardless whether you have any background in finance. 

In the spirit of being objective, I’ve found some relevant statistics on this (see table below):

  • The strongest evidence we have is the average study hours by actual candidates in CFA Institute’s June 2019 Candidate Survey: Level 1 records the lowest average study hours of 303.
  • Number of pages / readings / topics are not really good measures of difficulty, just ask any CFA charterholder out there!
CFA Level 1CFA Level 2CFA Level 3
Average Study Hours
​(June 2019 CFA Institute Survey)
Number of Pages ​in CFA Curriculum3,2953,2502,564
Number of Topics Tested10106
Number of Readings574838

What Are Level 1 Historical Pass Rates Like?

The latest pass rates for CFA Level 1 are 44% (Feb 2021) and 49% (December 2020) respectively, with an average pass rate of 42% for 2010-2021. 

How Much Does CFA Level 1 Cost?

The total exam fees for CFA Level 1 are US$1,150-$1,450, consisting of:

  • A one-off enrolment fee of US$​450, plus
  • Exam registration fee of US$700-1,000 depending how early you register.

There are other optional additional fees to consider:

  • An extra $150 plus shipping, if you would like hard copies of the CFA curriculum instead of e-Books (included in exam registration fees).
  • Rescheduling fee of $250, only if you have to reschedule your computer-based exam appointment. 
  • Third party study materials, if you choose to use them, could range from US$300-2,500 depending on packages you choose. 

What Is The Level 1 Exam Format? How Is It Structured?

  • CFA Level 1’s computer-based exam consists of 180 multiple-choice questions in total, split into two 2 hours and 15 minutes exam sessions with 90 questions each.
  • On average, you should allocate 1.5 minutes (90 seconds) per question.
  • There are 3 answer choices for each multiple choice question.
  • 1st exam session (2 hours 15 min) covers 4 topics: Ethics, Quant Methods, Economics, and Financial Reporting and Analysis.
  • 2nd session (2 hours 15 min) covers the remaining 6 topics: Corporate Finance, Equity, Fixed Income, Derivatives, Alternative Investments and Portfolio Management
  • All questions are equally weighted and there are no penalties/negative marking for wrong answers.​

What Are The Latest Level 1 Exam Curriculum & Topic Weights?

CFA Level 1 Topic AreaTopic Weight in 2021
Quantitative Methods8-12%
Financial Reporting & Analysis13-17%
Corporate Finance8-12%
Equity Investments10-12%
Fixed income10-12%
Alternative Investments5-8%
Portfolio Management5-8%

Due to COVID-19, CFA Institute announced that 2020 curriculum will be applicable in 2021 with no changes, therefore allowing postponed candidates carry on using the same curriculum in 2021. This means the 2020 topic weight would be identical in 2021.

For those considering using previous year’s books to study, it’s worth referring to the latest CFA curriculum changes article to check how much the curriculum has changed over the year.