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The CFA exam, which is held twice every year, is scheduled for 5th December in India this year. The CFA exam essentially tests your fundamental knowledge of the Finance domain. Anyone having a graduate degree is eligible to appear for the exam. People having degrees in domains other than finance are also eligible. These days engineers, doctors, MBAs who want a career in risk management, investment banking, opt for this exam.

The exam is categorized in 3 levels, based on the level of difficulty of the exam. The Level I is held twice a year whereas Level II and III are held only in June.

The syllabus is divided into following subcategories

Exam Outlines

I. Ethical and Professional Standards

  1. Professional Standards of Practice
  2. Ethical Practices

II. Quantitative Methods

  1. Time Value of Money
  2. Probability
  3. Probability Distributions and Descriptive Statistics
  4. Sampling and Estimation
  5. Hypothesis Testing
  6. Correlation Analysis and Regression
  7. Time Series Analysis
  8. Simulation Analysis
  9. Technical Analysis

III. Economics

  1. Market Forces of Supply and Demand
  2. The Firm and Industry Organization
  3. Measuring National Income and Growth
  4. Business Cycles
  5. The Monetary System
  6. Inflation
  7. International Trade and Capital Flows
  8. Currency Exchange Rates
  9. Monetary and Fiscal Policy
  10. Economic Growth and Development
  11. Effects of Government Regulation
  12. Impact of Economic Factors on Investment Markets

IV. Financial Reporting and Analysis

  1. Financial Reporting System (IFRS and GAAP)
  2. Principal Financial Statements
  3. Financial Reporting Quality
  4. Analysis of Inventories
  5. Analysis of Long-Lived Assets
  6. Analysis of Taxes
  7. Analysis of Debt
  8. Analysis of Off-Balance-Sheet Assets and Liabilities
  9. Analysis of Pensions, Stock Compensation, and Other Employee Benefits
  10. Analysis of Inter-Corporate Investments
  11. Analysis of Business Combinations
  12. Analysis of Global Operations
  13. Ratio and Financial Analysis

V. Alternative Investments

  1. Types of Alternative Investments and Their Characteristics
  2. Real Estate
  3. Private Equity/Venture Capital
  4. Hedge Funds
  5. Closely Held Companies and Inactively Traded Securities
  6. Distressed Securities/Bankruptcies
  7. Commodities
  8. Tangible Assets with Low Liquidity

VI. Corporate Finance

  1. Corporate Governance
  2. Dividend Policy
  3. Capital Investment Decisions
  4. Business and Financial Risk
  5. Long-Term Financial Policy
  6. Short-Term Financial Policy
  7. Mergers and Acquisitions and Corporate Restructuring

VII. Equity Investments

  1. Types of Equity Securities and Their Characteristics
  2. Equity Markets: Characteristics, Institutions, and Benchmarks
  3. Fundamental Analysis (Sector, Industry, Company) and the Valuation of Individual Equity Securities
  4. Equity Market Valuation and Return Analysis
  5. Special Applications of Fundamental Analysis (Residual Earnings)
  6. Equity of Hybrid Investment Vehicles

VIII. Fixed Income

  1. Types of Fixed-Income Securities and Their Characteristics
  2. Fixed-Income Markets: Characteristics, Institutions, and Benchmarks
  3. Fixed-Income Valuation (Sector, Industry, Company) and Return Analysis
  4. Term Structure Determination and Yield Spreads
  5. Analysis of Interest Rate Risk
  6. Analysis of Credit Risk
  7. Valuing Bonds with Embedded Options
  8. Structured Products

IX. Derivatives

  1. Types of Derivative Instruments and Their Characteristics
  2. Forward Markets and Instruments
  3. Futures Markets and Instruments
  4. Options Markets and Instruments
  5. Swaps Markets and Instruments
  6. Credit Derivatives Markets and Instruments

X. Portfolio Management and Wealth Planning

  1. Portfolio Concepts
  2. Management of Individual/Family Investor Portfolios
  3. Management of Institutional Investor Portfolios
  4. Pension Plans and Employee Benefit Funds
  5. Investment Manager Selection
  6. Other Institutional Investors
  7. Mutual Funds, Pooled Funds, and ETFs
  8. Economic Analysis and Setting Capital Market Expectations
  9. Tax Efficiency
  10. Asset Allocation (including Currency Overlay)
  11. Portfolio Construction and Revision
  12. Equity Portfolio Management Strategies
  13. Fixed-Income Portfolio Management Strategies
  14. Alternative Investments Management Strategies
  15. Risk Management
  16. Execution of Portfolio Decisions (Trading)
  17. Performance Evaluation
  18. Presentation of Performance Results

The fees of the exam is 1110 USD. The last day of registeration is 24th August. Post enrollment, the candidate is given CFA cirriculam and material.

Preparation for the exam

The exam is easier for candidates who are from finance background, but could be a bit tricky for non-finance backgound candidates. It requires regular practice and study for at least 4-5 months to pass the exam. Ethics and Financial statement ananlysis carry maximum weightage. Students are also expected to clear cutoff of every section separately. The syllabus is pretty vast as it covers domains of Mathematics, Finance, Derivates, Equities and Ethics.

Essentially, a sytematic approach towards your preparation can help you master the fundamentals and ace the exam. Practicing numerical and theory questions,everyday from CFA material, can help you understand about the genre of questions asked in the exam. It’s also important to know that just reading the material won’t be sufficient to clear the cutoff, as the exam is competitive, questions can be tricky. A clear cut approach is to practice as many mock exams as possible, revising important formulae and their application can help you gain the insight on how to attempt the question.