The Corporate Finance topic area that you have completed this week makes up 8% of the estimated exam weight, as a result we are now roughly 2/3 of the way through the curriculum. At this stage you may be feeling like you are beginning to forget some of the concepts that you studied earlier in the process. This is completely normal, but the fact that you have diligently worked to answer every single LOS and EOC (End of Chapter) question in the first 11 study sessions should provide you with some confidence. In addition the fact that you are keeping up with the pace of this program means that you will be securing yourself 4 weeks of question practice leading into the exam. If you utilize those 4 weeks efficiently you should be able to refresh your memory ensuring that you are in peak shape for the test.
Before we move on to this weeks challenge let’s have another high level glance at your progress so far. As you can see from the diagram below, the upcoming 4 weeks are going to be fairly light in terms of reading intensity compared to what you have been used to earlier in the program. Savor this opportunity to really concentrate on comprehending the material, rather than cutting back on the effort. And in the (unlikely) event, that you are finding yourself with time left over, go back and practice the tricky EOC questions that you have listed throughout the process, particularly those from the essential Ethics and FRA readings.
Source: Financial Exam Academy (Based on the CFA® exam – level 1 curriculum – December 2013)
The week to come:
As you have probably already gleaned from the diagram above, we are going to cover Portfolio Management this week. You may find it surprising that the Portfolio Management topic area only makes up 5% of the estimated exam weight for the level 1 exam. The topic area gradually grows in significance as you progress through the 3 levels (At level 2 portfolio management makes up 5-15% of the guideline exam weight, and at level 3 portfolio management makes up roughly half of the entire exam), so it is definitely worth-while paying attention here.
The Level 1 Portfolio Management topic area is organized as 1 study session subdivided into 4 readings. The first reading (44 pages) provides an overview of the Portfolio Management function. The second (76 pages) deals with Risk and Return Statistics. The next reading (58 pages) expands on these concepts linking them to the CAPM Model. The final reading (43 pages) is about Portfolio Planning and Portfolio Construction.
As always we are going to apply our standard study approach to master this topic area as well:
- Please ensure that you attempt the EOC (End of Chapter) questions as the first thing when going through each reading. As you answer the questions make a list of the most difficult ones (especially whenever you resort to guessing). When you are done with the questions, review your answers thoroughly (particularly those that you got wrong) and add these questions to your list as well.
- Also please ensure that you write down and answer the LOS as you work your way through each reading. The combined effort of EOC practice and LOS statement “hunting” will ensure that you are focused on seeking out the most important information as you progress through each reading. Also make sure to create flash cards with key concepts and formulae, the same way we have done it the other weeks.
- Lastly as you wrap up each reading attempt only the challenging EOC questions from your list. Remove those answers that you can now confidently answer correctly from the list, and if there are any EOC questions left read the explanations thoroughly before you redo them. Continue this process until you have mastered all of the EOC questions in the reading. Save away the full list of difficult questions for future use in the revision process.