The Best Order to Study for CFA Level 1: A Step-by-Step Guide

Embarking on the journey to earn the CFA (Chartered Financial Analyst) Level 1 designation is an exciting yet challenging process. Aspiring finance professionals often find themselves wondering about the best approach to study for this exam. With a wide range of topics to cover, creating a well-structured study plan is key to succeeding. If you're asking, what is the best order to study CFA Level 1?, you're not alone. In this guide, we’ll walk you through the optimal order of topics, along with tips on how to make the most of your study time. Plus, we’ll highlight how institutions like the Boston Institute of Analytics (BIA) can support your preparation.

What’s the CFA Level 1 Exam All About?

Before diving into the study order, let’s first understand the exam’s layout. The CFA Level 1 exam consists of two main sections, each with 120 multiple-choice questions. These questions test knowledge across 10 key areas of finance:

1. Ethical and Professional Standards
2. Quantitative Methods
3. Economics
4. Financial Reporting and Analysis
5. Corporate Finance
6. Equity Investments
7. Fixed Income
8. Derivatives
9. Alternative Investments
10. Portfolio Management and Wealth Planning

The key to mastering the CFA Level 1 exam is understanding the importance and weight of each topic. Some subjects require more time and effort to grasp, while others build upon foundational knowledge. With that in mind, let’s explore the most effective order to study for the CFA Level 1 exam.

Best Order to Study CFA Level 1

1. Start with Ethics and Professional Standards

It’s a smart move to begin your CFA Level 1 preparation with Ethical and Professional Standards. This section is fundamental not only for the exam but also for your future career as a CFA charterholder. Ethics accounts for about 15% of the exam, and it’s tested across both morning and afternoon sessions.

• Why study it first? Ethics serves as the foundation for the entire CFA curriculum. Understanding the CFA Institute’s Code of Ethics and Standards of Professional Conduct will help you navigate other subjects more effectively. Moreover, ethical questions often appear throughout the exam, making early preparation crucial.

2. Tackle Quantitative Methods Next

Once you have a solid grasp of Ethics, it’s time to dive into Quantitative Methods. This section covers essential concepts like time value of money, probability, regression analysis, and statistical methods. It makes up around 8-10% of the exam.

• Why study it second? Quantitative Methods are the backbone of many other topics, such as Economics, Financial Reporting, and Portfolio Management. Understanding these concepts early will give you the analytical tools needed for the more complex subjects that follow.

3. Move on to Financial Reporting and Analysis (FRA)

Next, focus on Financial Reporting and Analysis (FRA). This section is one of the most critical and challenging, accounting for around 15% of the exam. FRA covers topics like income statements, balance sheets, cash flow statements, and financial ratios.

• Why study it third? FRA is foundational for many other subjects, such as Corporate Finance and Equity Investments. It’s also highly detailed, requiring significant practice to master. Starting early will give you plenty of time to digest the material and apply it to other areas of the curriculum.

4. Study Corporate Finance

After mastering FRA, move on to Corporate Finance. This section, which accounts for about 7-10% of the exam, covers topics such as capital budgeting, cost of capital, financial leverage, and working capital management.

• Why study it fourth? Corporate Finance builds directly on the concepts you learned in FRA, making it easier to understand. Additionally, the knowledge gained here will be useful for other sections, such as Equity Investments and Portfolio Management.

5. Dive into Economics

Once you’re comfortable with Corporate Finance, tackle Economics. This section accounts for around 10-12% of the exam and covers microeconomics, macroeconomics, and international trade.

• Why study it fifth? Economics is essential for understanding market behaviour and economic trends, which are key for topics like Equity Investments and Fixed Income. While the subject may seem challenging, studying it after Corporate Finance ensures that you have a solid foundation to build on.

6. Study Equity Investments

Next, move on to Equity Investments, which makes up about 10-12% of the exam. This section covers topics like equity analysis, market organization, and valuation techniques.

• Why study it sixth? Equity Investments builds on the knowledge you gained in Corporate Finance and Economics. By this point, you’ll have a solid understanding of financial markets, which will make it easier to grasp how equity investments work and how they’re valued.

7. Focus on Fixed Income

Once you’ve covered Equity Investments, study Fixed Income. This section covers topics like bond pricing, yield curves, and interest rate risk, accounting for about 10-12% of the exam.

• Why study it seventh? Fixed Income is similar to Equity Investments in many ways but involves more complex calculations. Studying this topic after Equity Investments will allow you to apply your knowledge of financial markets to understand how fixed income instruments work.

8. Tackle Derivatives

Next, dive into Derivatives, which makes up about 5-8% of the exam. This section covers futures, options, and swaps, along with how these instruments are used in risk management.

• Why study it eighth? Derivatives are more specialized and require a solid understanding of financial markets. By this point, you’ll have a good grasp of the foundational concepts needed to understand how derivatives are priced and used.

9. Study Alternative Investments

Once you’re comfortable with Derivatives, move on to Alternative Investments. This section covers real estate, hedge funds, commodities, and private equity, making up around 5-7% of the exam.

• Why study it ninth? Alternative Investments is less mathematically intense than other sections, so it can be a good topic to study toward the end. It also ties together concepts you’ve learned in previous sections, making it easier to grasp.

10. End with Portfolio Management and Wealth Planning

Finally, study Portfolio Management and Wealth Planning. This section accounts for about 5-7% of the exam and covers portfolio theory, asset allocation, and the role of financial advisors.

• Why study it last? Portfolio Management integrates concepts from many other sections, such as Equity Investments, Fixed Income, and Corporate Finance. Studying it last allows you to apply all the knowledge you’ve gained throughout your preparation to this comprehensive topic.

How Boston Institute of Analytics Can Help

Preparing for the CFA Level 1 exam can be overwhelming, but institutions like the Boston Institute of Analytics (BIA) offer expert-led programs to make the process more manageable. BIA’s CFA study programs are designed to guide candidates through the exam’s rigorous content in a structured and effective way.

• Expert Instructors: BIA’s instructors are experienced CFA charterholders who provide in-depth explanations and practical insights into the curriculum.
• Comprehensive Materials: BIA offers high-quality study materials, including mock exams, practice questions, and detailed notes to ensure you’re well-prepared for the exam.
• Flexible Learning Options: Whether you prefer in-person classes or online learning, BIA offers flexible study options that fit your schedule and learning style.
• Collaborative Environment: BIA fosters a supportive community where you can collaborate with fellow candidates, share insights, and tackle difficult concepts together.

Conclusion

The CFA Level 1 exam is a challenging but rewarding journey. By following a structured study plan and focusing on the right order of topics, you’ll be well on your way to mastering the material. Starting with Ethics, then moving through Quantitative Methods, FRA, and other core areas, will allow you to build a strong foundation and approach the exam with confidence.

Institutions like the Boston Institute of Analytics can provide the support and resources you need to succeed. With expert-led classes, comprehensive study materials, and flexible learning options, BIA ensures you’re well-prepared for the CFA Level 1 exam and the road ahead.