Introduction

I'm selling my Schweser 2007 CFA level 1 QBank(Question Bank) CD on ebay. It has over 4,000 sample questions and an analyzer that examines your completed sample exams and identifies your weaknesses.
CLICK HERE......................................................................................................................................................

Message to readers:
Due to an increased workload at the office and a course I am taking this fall I will be posting blog entries infrequently. I am still answering questions via email. I invite you to share your questions and thoughts with me at JamesUlan@gmail.com.

Hello
This blog is a guide to preparing for the CFA level 1 examination. These articles are based on my experience, which means that my recommendations may or may not be beneficial to you because no two CFA candidates are the same. Some of these recommended methods of studying and reviewing may be unhelpful to you because you are probably a different kind of learner and have different study constraints. Because of this, I urge you to evaluate each suggestion carefully, asking yourself “Is this strategy good for me, given my situation?”

If you would like advice on a topic of preparation that is not offered here, send me an email with your inquiry and I will happily share my thoughts with you. JamesUlan@gmail.com

How to Prepare: Candidates Working Long Hours

Candidates working long hours will have a challenging time preparing for the exam due to limited study time. Unfortunately, there is no easy solution for helping long-hours candidates find the time to study. The best advice I can give is to be persistent and determined. The following entry contains suggestions and ideas to help long-hours candidates prepare for and pass level 1.

My number one suggestion for candidates working long hours is to begin studying early. The benefit of this, is that you will have more time to study than if you began the traditional five months before the exam. Depending on how many hours you work per week you should consider starting up to 10 months beforehand. This may sound extreme, however, a candidate working 80 hour weeks may not be able to study after work and will have to do all of his or her studying at lunch and during the weekend.

If you have the luxury of choosing your projects at work, choose projects that require you to utilize CFA level 1 related knowledge.

Consult the article called Time Savings Tips. Use as many time saving tips as possible.

Try to take off the week before the exam to study. I realize that for candidates working long hours it may be difficult to take an entire week off.

Study during your lunch break. Also, study as efficiently as possible, meaning, keep yourself from day dreaming or talking.

Always study in a quiet environment like a library. Your time is to precious to be studying in distracting locations.

Take study materials with you everywhere, so you can study if you have a 5 minute wait before a meeting or a 10 minute wait before a doctor's appointment.

I would like to get advice from long-hours candidates on how best to prepare and what they did to free up time. Send me your story, JamesUlan@gmail.com

Analyst Mail Box

Q:

Hi James,

I am currently working as a mechanical engineer and I am thinking of enrolling in the CFA Level I program in June 2008.

I am not sure if I am able to prepare sufficiently well to pass the exam, given that I do not have sufficient background in financial accounting and economics (I have read up an econs textbook though, and now I'm pretty comfortable with the concepts). I am very good in the quantitative analysis methods, and I have good backgrd in statistics.

Therefore, financial statement analysis is the topic which I am most uneasy about, since it carries a very large weightage in the exam. I would like to know how to prepare well for this topic? The CFA recommended textbook is so difficult to understand! I wonder if you have any good and relevant textbook that is easier to understand and more suitable for someone like me.

As for the other topics like corporate finance, I feel that they are more on the quantitaive side, so I'm quite comfortable with these topics. Any other suggestions or advice you have for me are also very much welcomed.

Thanks!!

Regards,
Simon

A:
Hi Simon

Similar to you, before I began studying for level 1 I had never seen any accounting or financial statement material because I studied economics during my undergraduate schooling. I recommend using the Schweser books to improve your financial statement analysis because the material is condensed, which allows you to cover more material quicker. Unfortunately, there isn't one easy way to understand financial statements and accounting. I read the accounting material two full times, and select material a third time. Shoot me an email with any more questions. And remember, its perfectly ok, if you have to read financial statement analysis three times. Take care.

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Q:
James

Great blog so far!!! I am about to start studying. I have the CFA Institute books, but was thinking about buying the Schweser notes instead. A few people, including you, have recommended them. Does Schweser update them after every test. Eg. did they update them after the June exam?

A:
I spoke with the CFA Institute and Schweser. Neither update their books mid year, which means that you should use the same books to prepare for the December 2007 exam as other candidates used for the June 2007 exam. This means that there is no new material added to December 2007 exam, after the June 2007 exam. For each year's test, the CFA Institute usually releases the books in July of the preceding year, meaning the books for the 2008 exams are likely to be released in July of 2007. And Schweser usually releases their books in October or November of 2007 for the 2008 exams.

The Importance of Taking Practice Problems

I can not express enough that taking practice problems is extremely important. By doing lots of practice problems you will be able to convert your knowledge into question answering ability, which is key to passing level 1.

One should take as many practice problems as possible, however, be sure not to over-focus your time on taking practice problem such that you forgo a thorough reading reviewing of the material.

In order to develop adequate question answering abilities I recommend you do at least the following:

• Complete each practice problem at the end of each chapter.
• Immediately following completion of practice problems review incorrect problems and problems that you had a hard time with. The best way to review problems is to read over the solution then try to answer the problem again from scratch. This helps cement the solution.
• After finishing each book, take a sample test with questions only from that book. Save your practice exams, keeping track of what questions you got wrong and had a hard time with.
• After finishing your first read of the entire body of knowledge take at least three, six hour, timed, practice tests, to adequately prepare and simulate the actual exam. Review the questions you got wrong and had a hard time with.
• My practice schedule was to take a three hour practice exam on Saturday morning, take a break, then review my exam, and do the same on Sunday. Try to this for four weekends.

Thoughts on ethics/GIPS practice questions:

• To prepare for the ethics/GIPS portion I recommend taking a disproportionately large amount of practice questions. There are lots of small and seemingly minor rules you will be tested on for ethics that are easiest learned via taking practice problems. I feel that it is more effective to spend 5 hours reading the ethics/GIPS materials and 5 hours taking practice problems than to read ethics/GIPS for 8 hours and take practice problems for 2 hours.
  

Psychological and Physical Challenges of Preparing for and Taking a Large Exam

Studying for the exam is a major commitment and the preparation process will have a psychological effect on you. For me, the biggest difficulties were:

Decreased time with friends and family
Concern about having to take the level 1 exam again
Burnout

Decreased time with friends and family:
One result of perusing level 1 is that the time you spend with friends and family will decrease. You’ll find yourself declining social engagements, especially during the immediate period leading up to the exam. Your friends and family may stop inviting you to things, because they feel that you will just say no anyways. You may also feel guilty for neglecting to spend time with people you normally spend time with.

Before you begin studying for the exam I recommend you personally tell your closest friends and family about your CFA time commitment, letting them know that you won’t be able to spend as much time with them, asking them for their support, and telling them that you apologize in advance for being less accessible. By doing this your friends and family know what to expect and you will feel more comfortable about your time spent away from them.

You can find a way to spend time with your friends by inviting them to your place to do something that is not time consuming. To save time, try doing things in or around your house. By inviting your friends over they will see that although you have little free time you are still making an effort to maintain the relationship.

Concern about having to take level 1 again:
Roughly 65% of people fail the exam which means that the average test taker is more likely to fail than pass. I say this not to discourage you, but to remind you that you will need persistence and determination to pass, and that some people take the level 1 exam twice before they pass, especially if they are new to finance. Taking level 1 multiple times is not bad or embarrassing, however, you should do everything in your power to pass the first time.

Burnout:
If your retention becomes poor, your mind drifts while studying, and you don’t feel as motivated as you used to be you might be burnt out. There is no explanation why this happens when it does, but when you become burnt out make sure to recognize it early so you don’t go for two or three weeks without fixing the problem. To fix burnout take a two or three day break, doing relaxing activities that you enjoy. Treat yourself.

Your physical state directly affects your psychological state:

• Eating a balanced diet, avoiding alcohol, and getting good rest will keep you from getting sick and missing study time. These will also keep you happy and motivated.
• Remember to eat regularly, at least three meals a day. Your retention decreases when you’re hungry.
• Exercise as much as possible, even if only for 15 minutes a day because weight lifting and cardiovascular exercises are proven to improve memory and reduce stress (which you will have a lot of with work and studying). You can squeeze in an intense cardiovascular work out by jumping rope or running on an uphill treadmill for 15 minutes. http://www.apahelpcenter.org/articles/article.php?id=25

Tips for remembering and retaining a great deal of information:

• Use mnemonic devices, http://en.wikipedia.org/wiki/Mnemonic
• Review information frequently. Don't review information you've already learned pat. Your review time is best spent, drudging through the hard stuff.
• Understand what you're reading rather than trying to memorize information without comprehending it. If you read a chapter and a quick review of the key points will solidify the information, take the time to review the key points, else your recall will be poor. If you can not digest a concept, get help. Ask someone who is also taking the exam.
  
• Visualize the formula in your head. Do not move on in your readings until you can visualize the formula your head and write it paper.
  

The Spacing Effect states that one is more likely to remember a set of items when rehearsal is spaced over an extended period of time. This means that you should review the formulas often. Photocopy the formulas in the back of your books and keep them in your bag. Information on the spacing effect http://en.wikipedia.org/wiki/Spacing_effect

A link to memory resources courtesy of the National Institute of Health. http://www.nlm.nih.gov/medlineplus/memory.html

When Should I Finish My Initial Read of the Material?

The following is a guide that recommends how long you should prepare, based on your prior knowledge of the material. These recommendations assume that you will study for approximately 16 hours per week, that you will read at an average pace, retain at an average level, and that you will complete the practice problems at the end of each chapter. Take note that I am writing this review from the perspective of someone who prepared with the Schweser study materials. If you are preparing with the CFA Institute's materials this article doesn't apply to you because the CFA Institute's materials take longer to read than the Schweser materials.

The date on which you finish your first read of all the material will be a result of when you start, how much you study per week, how fast you read, and how much you already know.

When to start:

1. If you have no prior knowledge of the material and you don't have a technical background (Engineering, quantitative sciences), allow yourself 6 months of studying
   
2. If you have minimal knowledge of the material. I.e., you took micro or macro economics and statistics in college or you use them lightly at work, but you don't have a finance or accounting background. Allow yourself 5 and 1/2 months.
3. You have a solid knowledge of the material. I.e., you have seen statistics, economics, and either accounting or finance in school or at work. Allow yourself 5 months.
4. You have a vast knowledge of the material. I.e., you are an undergraduate student who has taken or is taking economics, statistics, corporate finance, and accounting; You've thoroughly studied for and already taken level 1 and you are taking it again; You have an MBA in finance or an MS in Finance. Allow yourself 4 months and 1 week.

When should one finish his or her initial read of all of the material to allow for ample review:

1. Candidates in group 1 should finish, at the latest, 2 months before the exam. In various places you will read that you should allow yourself at least 1 month of review before the exam, but this is not enough time if you are completely new to the material.
2. Candidates in group 2 should finish at the latest 1 month and three weeks before the exam.
3. Candidates in group 3 should finish at the latest 1 month and two weeks before the exam.
4. Candidates in group 4 should finish at the latest 1 month and one week before the exam.

The first thing one should do after his or her initial read of the material is take at least three, three hour practice exams, grade the exams, and analyize his or her weaknesses. This is key because it will allow you to formulate an effective gameplan for review. While studying the material I recommend you highlight or mark important concepts and formulas, as well as material that you don't understand. Also, after completing practice problems, mark in the book which problems you got wrong (I marked each with a "W"), and also mark which problems you had a hard time with (I marked each with an "H"). That way when you begin reviewing you will know which problems to review. Also, after reading each chapter I rated the chapter on a scale of 1 to 5; five meaning I fully understand the concepts and will remember the material and one meaning I desperately need to review the chapter. This rating system will help you when constructing your review strategy.

Mini reviews before the main review:
After finishing each book, I would go back and reread the chapters (or parts of chapters) I marked as a "one" (remember that "one" indicates an extreme need for review). You may have the urge not to do this because after finishing an entire book you become eager to move onto the next. Fight this urge and conduct mini reviews after finishing each book. Your mini reviews may take a long time, sometimes 3 or more days, however, they will greatly help drive the concepts into your head.

CFA Time Saving Tips

The most important factor contributing to your success is how much you study. There may not be one major thing you can do to save time and study more, but by executing lots of small time saving activities you can squeeze out up to an extra hour of studying per weeknight. Some of these time saving actions might seem ridiculous and funny, but remember not to ignore time saving techniques because they can mean the difference between passing and failing. The following are tips that will help you make the most of your time:

• Avoid alcohol consumption
• Late nights of drinking will ruin your study plan by making you tired, which decreases your retention and reduces your motivation, especially on weekends when putting in four to five hours of studying per day is critical.
• Try to log 10 hours of studying before the weekend begins
  
• Myself and my friends found it helpful to get as much studying done as possible during the week because the weekend is distracting.
• Cook and buy quick dinners and lunches
• During your study tenure and especially during the last two months you should save time by eating healthy meals that can be made or bought quickly.
• Study during lunch
• This is the perfect time to study the formulas
• On Sunday, prepare dinners for the entire week
• Don’t fool yourself into thinking you will be able to spend the same amount of time with friends and family as before. By accepting early on that you need to make time sacrifices in order to sufficiently prepare you will do better on the exam.
• Shower quickly :)
• Ask roommates to help you with errands.
• If your roommate is already going to the grocery store and you need something, ask him or her to pick it up for you.
• Study on the way to work
• If you can’t read while commuting, buy the Schweser mp3s so you can listen to the material. Listening to the material isn’t ideal, because there is no substitute for reading (for most people), however, listening is better than nothing.
• Make copies of each formula list (found in the back of each Schweser book) and keep one in your work bag, car, and bathroom. Make an effort to review the formulas during lunch or when you’re in the car with someone (thanks Sapna:)
• Use TIVO, DVR, and replay TV. Record all of your favorite shows and watch them all at once, fast forwarding through commercials.
• If your employer is flexible, commute to work during low traffic time periods or try to work at home one day every week.

Importance of a Study Schedule and How to Create One

It is important to follow a study schedule to keep you on pace. Without quantitative study goals you are unlikely to pass the exam. After constructing your study schedule, write or type up the schedule and keep a copy where it is visible. The act of codifying your study schedule will help you stick to the schedule. By writing your schedule out on paper, you are making a promise to yourself to follow the schedule. This may seem unnecessary but it is extremely important.

There are various ways you can construct your study schedule.

1. Set a minimum number of hours per week that you will study, i.e., I will study at least 15 hours per week, preferably more.
1. Pros: Having a numerical goal provides discipline and should get you into a routine.
2. Cons: 15 hours per week may not be enough studying for you to pass, which you won’t know until it is too late.
2. Set a deadline for completing each book. I.E., I will finish all five Schweser books by the end of Mach, or I will finish book 1 by January 21^st, and book by February 7^th, and so on…
1. Pros: Setting a goal to finish reading the material before the end of March will give you a lot of time to review.
2. Cons: If you set deadlines for finishing each book and it looks like you are going to miss a deadline you’ll rush through material to finish on time, decreasing your retention. An example, my goal was to finish reading all five books by the end of March. With three and a half weeks left I still hadn’t read books 4 and 5, which caused me to rush through the books. I retained very little and had to commit substantial time reviewing books 4 and 5.
3. Combining an ‘hours per week’ goal with a ‘deadlines for finishing each book’ goal is a good idea because it protects against the weakness of using just one of the methods.
4. Also, do not skip the practice questions at the end of each chapter. Doing these questions will prepare you to answer quickly on test day, and timing is a crucial part of the exam.

It is important to be dynamic with your study schedule. If you feel that you need to study more per week, change your schedule to reflect the additional required study time and stick to your new schedule.

My study schedule looked like this:

• Four days per week, 2 and ½ hours per day. 30 minutes during lunch and 2 hours after work. Give yourself a free day during the week to do what you like. This will keep you sane.
• Four hours on Saturday and four hours on Sunday.
  

This equates to 18 hours of study time per week, which will put you in a good position on test day.

Studying for over 5 hours in one day rendered my brain a useless quivering mass. However, this will be different for everyone. Its been proven that when studying a large amount of material you will remember better the first and last items studied. These phenomena are known as the primacy and recency effects. http://en.wikipedia.org/wiki/Primacy_effect. It has also been shown that taking breaks in the middle of complicated learning sessions helps improve learner retention. http://www.recallplus.com/Breaks.asp For example, if you are reading a particularly difficult chapter and you take a break in the middle of reading the chapter rather than taking a break at the end of the chapter, you will learn better.

Choosing Your CFA level 1 Exam Study Materials

You have a few choices when it comes to level 1 study materials. Keep in mind that the CFA exam is based on a body of knowledge that is continuously being updated by the CFA institute. Every year the CFA institute publishes new curriculum books (http://www.efastcom.com/CFABookstore/control/main), which can be purchased for $395 on the website.


The CFA institute's study book are very long winded and take a while to read. I've spoke to some candidates who studied with the institute's books and they said it took them forever to cover all of the material. I purchased the Schweser study notes, which are a condensed summarized version of the CFA institute curriculum. Schweser is a company owned by Kaplan that employs past CFA test writers, as well as other finance professionals who create study materials designed to help you learn the material quickly. I found that Schweser's books were easy to understand and it took me 2 and 1/2 months to read all five books studying approximately 16 per week. I recommend using Schweser's notes.

To be fair, I know of four companies that offer CFA study materials, Stalla (www.stalla.com), PassPro (www.passpro.com), 7 City Learning (www.7city.com), and Allen Resources (http://www.allenresources.com/). I haven't spoken to anyone who used these materials so I can't attest to their quality or lack thereof. If you can't decide between Schweser, Stalla, and Allen Resources get as many opinions as possible from friends who have taken the exam and people on internet message boards/chat rooms and force yourself to make a decision. On the bright side if the study materials don't work out, you can take the exam over and over until you pass. If one set of study materials doesn't work try a different set.

However, it is important that you asses how much time you will have in the 4 to 6 months leading up to the exam and purchase study materials that will allow you to cover all the material, thoroughly review your weak spots, and take lots of practice questions. Remember, studying with the CFA institute curriculum books doesn't allow most working adults to adequately prepare.

Buying used materials:
Buying used study materials corresponding to previous tests can be dangerous because the test content changes every year. I recommend you don't buy old materials because since the test changes every year, some of the content in the old materials won't be tested at all and new information added by the CFA institute won't be included in your old study materials. If you must buy used materials you can buy June 2007 materials for the December 2007, because the Institute doesn't make major changes in the test within the same year, however, it does make big chances from year to year. This means that the June & December 2007 exams are more similar than will be the December 2007 and June 2008 exams. So, don't buy December 2006 materials to study for the June or December 2007 test. Also, many CFA societies offer scholarships that pay for study materials and the cost of the test itself. Visit this link to find your local society http://www.cfainstitute.org/society/societies.html.

If you have any questions about study materials feel free to shoot me an email at JamesUlan@gmail.com.

Good Luck!

CFA Jobs

What are some examples of CFA related professions:

• Equity (stock) analysis
• Examples of companies are any major investment bank, Standard and Poors, Value Line, etc.
  
• Credit (bond) analysis
• Standard and Poors, Moody’s, Fitch Ratings, DBRS
• Mergers, acquisitions, and divestitures
• Any major investment bank, namely Goldman Sachs, JP Morgan Chase, and Lehman Brothers. There are also a number of boutique M&A firms.
• Investment banking
• Conduct initial public offerings of stocks
• Conduct placements of bonds
• Trading
• View a list of investment banks on wikipedia http://en.wikipedia.org/wiki/List_of_Investment_Banks
• Private equity
• Carlyle group, Texas Pacific Group, Blackstone, KKR, Goldman Sachs
• List of the 50 largest Private Equity firms: http://www.peimedia.com/pei50
• Real estate investing
• Vornado, Equity Office Properties, Equity Residental, Brookfield Properties
• Pension & Endowment management/consulting
• Russell, Cambridge Associates, Ennis Knupp, Barclays Global
• Visit Pension and Investing online for a list of various P&I companies: http://www.pionline.com/apps/pbcs.dll/section?category=PENSIONFUNDDIRECTORY&IssueDate=20070122
• Private wealth management (private banking)
• All major investment banks, Mellon Financial, Stanford Financial, US Trust
• Hedge funds
• Bridgewater, D.E. Shaw, SAC Capital Partners, etc.
• Mutual funds
• Fidelity, American Funds (a Capital Group Company), Vanguard, etc.
• Economic consulting
• NERA, LECG
• Tax and transaction consulting (i.e., accounting firm)
• KPMG, Deloitte & Touche, PriceWaterhouseCoopers, Ernst & Young, Grant Thornton, etc.

If you are unfamiliar with any of these visit www.investopedia.com or www.wikipedia.com Investopedia’s definition of Private equity is lacking. Wikipedia has a good explanation of private equity, http://en.wikipedia.org/wiki/Private_equity

Top CFA employers by region:
http://cfachicago.org/pdf/pcr_top_employers.pdf

Efinancial News' Guide to Careers in Financial Markets Your Guide to Finding a Job in Securities and Banking:
http://www.efinancialcareers.com/images/fuseads/inhouse/cifm_us.pdf

Deciding to Take the CFA Exam

If you’re interested in the CFA designation you're probably in one of a few different groups.

• You've heard of the exam and you're interested in learning more.
• You've researched the exam and you're undecided about taking it.

If you've heard of the exam and you're interested in learning more:

Begin by reading about the content of the exam to determine if you are truly interested in the material. Exam content can be found at http://www.cfainstitute.org/cfaprog/courseofstudy/topic.html. If you are not interested in the material don’t take them exam. If you are interested you must decide if taking the exam is right for you.

If you’ve researched the exam and you’re still undecided about taking the exam, ask yourself:

What kind of benefit will the CFA charter provide me? Monetary, upward mobility, increased knowledge?

• View a compensation survey of CFA charterholder statistics: http://www.cfainstitute.org/aboutus/press/release/05releases/20050506_01.html

Does taking the CFA exam make sense given my current career position?

• Is it favorable for a 50 year old CFO working 70 hour weeks at a major corporation to pursue the CFA designation? Probably not. Will taking the CFA be helpful to a college graduate who is two years out of school and wants to make the jump from marketing to an equity analysis position? Most likely.

Am I prepared to study between 10-20 hours per week for four to five months?

• If you cannot study for at least 10 hours per week for four months you have a low chance of passing the exam.

Do I have the will power to study this much? How will this commitment affect my life?

• The time you put into the exam will greatly take away time with friends and family.

Common reasons for pursuing the CFA designation:

• Interest in exam content
• Desire to increase knowledge
• Improve compensation
• Augment upward and lateral career mobility
• Signal competence to current and potential employers
• Career change to finance
• Career change within finance
• Prepare for the analytical side of an MBA program
• Facilitate admission to a high caliber MBA program
  

Blog Resources

Blog Entries in Word Format:
The Importance of Taking Practice Problems
Psychological and Physical Challenges of Preparing for and Taking a Large Exam
Importance of a Study Schedule and How to Create One
When Should I Finish my Initial Read of the Material
CFA Time Saving Tips
Importance of a Study Schedule and How to Create one
Choosing Your CFA level 1 Study Materials
CFA Jobs
Deciding to Take the CFA exam

CFA Designation Articles

Behavioral finance on minds of attendees at CFA Institute conference

And take $300 for your trouble

MBA, CFA Discussion Dominates Debate

CFA or MBA: Which is right for you?

CFA vs. MBA, which is best for you?

CFA Institute's Media Highlights

well-traveled teacher: Here, there and everywhere, CFA tutor really goes the extra mile

CFA Links

www.cfainstitute.org
The CFA Institute’s website

www.analystforum.com
A message board dedicated entirely to the CFA.

www.schweser.com, www.stalla.com, www.passpro.com, www.7city.com, www.allenresources.com
Exam Study Materials Websites

www.cfainstitute.org/society/societies.html
Directory of CFA member societies. Most cities have a society of CFA charterholders/CFA candidates.

www.cfapubs.org/doi/pdf/10.2469/ccb.v2005.n3.4000
Standards of Practice Handbook, 9th Edition, 2005. Read this to prepare for the ethics portion of the exam. Note: this is extremely helpful and I recommend that all CFA level 1 candidates read this. This is the most recent edition of the Standards of Practice Handbook.

http://en.wikipedia.org/wiki/Chartered_Financial_Analyst
Wikipedia's information on the CFA designation.