CFA Level I: format, topics and preparation

Topic weights: 2026 vs 2027

Match the year to your sitting. Rows use 2027 labels: Corporate Finance was Corporate Issuers in 2026; Equities was Equity Investments; Derivatives and Risk Management was Derivatives; Portfolio Construction was Portfolio Management. The names map the table, not every learning outcome. A range change is in percentage points, not difficulty.

1. Question 1 of 10Level I previewEthical and Professional StandardsMultiple choice

   An issuer invites an analyst to a luxury resort for a plant tour and offers to pay all travel and lodging costs. The analyst can inspect the plant using ordinary commercial travel. Which action is most appropriate?

   A.Accept the offer because access is available to other analystsB.Use commercial travel paid by the analyst or the analyst's firmC.Accept the lodging but pay only for transportation
   Answer and explanations

   The analyst should protect independence and objectivity when a reasonable alternative exists. Paying ordinary travel costs avoids a benefit that could influence, or appear to influence, the resulting research opinion.

   Review the tested method

   • A: Access offered to others does not remove the potential conflict.
   • B - correct: Ordinary firm-paid travel protects independence.
   • C: Accepting luxury lodging still creates the benefit.
2. Question 2 of 10Level I previewQuantitative MethodsMultiple choice

   An investor buys a share for $40, receives a $1 dividend, and sells the share for $42. The holding-period return is closest to:

   A.5.0%B.7.5%C.10.0%
   Answer and explanations

   The total gain is the $2 price increase plus the $1 dividend, or $3. Dividing $3 by the $40 initial price gives a holding-period return of 7.5%.

   Review the tested method

   • A: 5% includes only the price gain and omits the dividend.
   • B - correct: The $3 total gain divided by $40 is 7.5%.
   • C: 10% overstates the $3 gain on a $40 investment.
3. Question 3 of 10Level I previewEconomicsMultiple choice

   A binding price ceiling is set below the competitive equilibrium price. The most likely immediate market outcome is:

   A.A shortage because quantity demanded exceeds quantity suppliedB.A surplus because quantity supplied exceeds quantity demandedC.No change because the equilibrium remains available
   Answer and explanations

   The lower controlled price raises quantity demanded and reduces quantity supplied relative to equilibrium. The gap between the two quantities is a shortage.

   Review the tested method

   • A - correct: At the lower binding price, demand exceeds supply.
   • B: A surplus would reverse the quantities in the stem.
   • C: A binding ceiling prevents trade at the original equilibrium price.
4. Question 4 of 10Level I previewCorporate FinanceMultiple choice

   A company identifies an independent project with a positive net present value. Accepting the project is most likely to:

   A.Increase shareholder valueB.Leave shareholder value unchangedC.Decrease shareholder value
   Answer and explanations

   A positive NPV means the present value of expected cash inflows exceeds the required investment at the appropriate discount rate. Accepting the project should add that positive amount to firm value.

   Review the tested method

   • A - correct: Positive NPV adds value at the stated required return.
   • B: Zero NPV, not positive NPV, would imply no incremental value.
   • C: Negative NPV would reduce value.
5. Question 5 of 10Level I previewFinancial Statement AnalysisMultiple choice

   A company has current assets of $200 and current liabilities of $100. It uses $20 of cash to pay accounts payable. The current ratio after payment is:

   A.1.80B.2.00C.2.25
   Answer and explanations

   After payment, current assets are $180 and current liabilities are $80. The new current ratio is $180 divided by $80, or 2.25, higher than the original 2.00.

   Review the tested method

   • A: 1.80 reduces assets but incorrectly leaves liabilities at $100.
   • B: 2.00 is the ratio before the payment.
   • C - correct: Both sides fall by $20: $180 / $80 = 2.25.
6. Question 6 of 10Level I previewEquitiesMultiple choice

   A stock is expected to pay a $3 dividend next year. If the required return is 9% and dividends are expected to grow at 4% indefinitely, the stock value is closest to:

   A.$33.33B.$60.00C.$75.00
   Answer and explanations

   The constant-growth dividend model divides next year's dividend by the required return minus the growth rate. Dividing $3 by 5% produces an estimated value of $60.

   Review the tested method

   • A: Dividing by 9% omits the positive growth assumption.
   • B - correct: $3 / (9% - 4%) = $60.
   • C: Dividing by growth alone is not the dividend valuation model.
7. Question 7 of 10Level I previewFixed IncomeMultiple choice

   For an option-free fixed-rate bond, an increase in the required yield will most likely cause the bond's price to:

   A.DecreaseB.Remain unchangedC.Increase
   Answer and explanations

   A bond price is the present value of its promised cash flows. Raising the discount rate reduces that present value, producing the inverse relationship between price and yield.

   Review the tested method

   • A - correct: A higher discount rate lowers the value of fixed cash flows.
   • B: Fixed coupons do not imply a fixed market price.
   • C: An increase in price would require a lower yield, other things equal.
8. Question 8 of 10Level I previewDerivatives and Risk ManagementMultiple choice

   A long forward contract has a delivery price of $100. If the underlying asset is worth $110 at expiration, the payoff to the long position is:

   A.-$10B.$0C.$10
   Answer and explanations

   The long forward payoff at expiration is the spot price minus the delivery price. The holder can receive an asset worth $110 for $100, creating a $10 payoff.

   Review the tested method

   • A: -$10 is the payoff to the short, not the long.
   • B: Zero would require spot to equal the $100 delivery price.
   • C - correct: The long receives $110 of value for a $100 payment.
9. Question 9 of 10Level I previewAlternative InvestmentsMultiple choice

   The early negative returns commonly shown by a private equity fund's J-curve are most closely associated with:

   A.Initial fees and investments before exits create gainsB.Daily marking to market of every portfolio companyC.Guaranteed distributions during the commitment period
   Answer and explanations

   Private equity funds incur fees and deploy capital before portfolio improvements and exits can produce gains. Early net returns may therefore be negative before later realizations lift the cumulative result.

   Review the tested method

   • A - correct: Costs precede realized exits, causing early negative net returns.
   • B: Daily exchange pricing is not the defining J-curve mechanism.
   • C: Distributions are neither guaranteed nor normally immediate.
10. Question 10 of 10Level I previewPortfolio ConstructionMultiple choice

    A portfolio invests 60% in an asset expected to return 8% and 40% in an asset expected to return 2%. The portfolio's expected return is:

    A.4.4%B.5.6%C.6.0%
    Answer and explanations

    Portfolio expected return is the weighted average of component expected returns. The calculation is 0.60 times 8% plus 0.40 times 2%, which equals 5.6%.

    Review the tested method

    • A: 4.4% reverses the two portfolio weights.
    • B - correct: 0.6 x 8% + 0.4 x 2% = 5.6%.
    • C: 6% is not the weighted average of the supplied returns.

Use your exam year before choosing a lesson

The ten shared sample questions below teach selected foundational methods. They are not a complete 2026 or 2027 syllabus, and completing them is not a readiness result.

1. 01

   Sitting in 2026

   Use the 2026 learning outcomes to check coverage. Retain the published 2026 topic names when matching older notes, even though the comparison table uses 2027 labels.

2. 02

   Sitting in 2027

   Use the 2027 outline and errata for the exact learning outcomes. Keep older explanations only where the method and assumptions still fit; a similar title alone is not enough.

3. 03

   Your first study task

   Try the current-ratio question before viewing its answer. Rebuild both balances after the payment, then use its method link to study the financial statement analysis lesson. Repeat with a changed starting ratio.

How preparation changes at Level I

Independent study guidance, not an official timetable or a prediction of passing.

1. 01

   Test recall before rereading

   Attempt a small closed-note set. Separate a missing concept from an arithmetic or wording error before choosing what to revise.

2. 02

   Check units and periods

   For a return or valuation calculation, write the cash-flow timing, rate period and units before using the calculator.

3. 03

   Keep Ethics in the rotation

   Practise applying duties to the stated facts throughout your preparation. Recognizing a Standard name is only the first step.

Build a plan you can actually complete

1. 01

   Choose the correct curriculum

   Check the year and, for Level III, the pathway before buying material or reusing old notes.

2. 02

   Separate learning from rehearsal

   Reserve sessions for new content, missed-question review and timed mixed practice. Use the linked level-specific plan for a weekly schedule.

3. 03

   Finish the PSM requirement

   Account for the Practical Skills Module separately from exam preparation. Check its completion requirements in your candidate account.

What a Level I calculation asks you to do

Original illustration: invest USD 1,000 for two years at 5% annually, compounded once per year. Find the future value.

Choose the resource for the task

What you actually need to do in each topic

Use these original practice prompts to turn the topic map into observable skills. They illustrate selected tasks, rather than replacing the exam-year learning outcome statements.

How to judge difficulty without relying on a pass-rate headline

1. 01

   Breadth can expose uneven foundations

   Someone comfortable with accounting may still be new to probability, bonds or professional standards. Start with a small mixed sample and mark both wrong answers and correct guesses. Use those observations to decide where an introductory lesson is needed.

2. 02

   Recognition is weaker than recall

   A formula can look familiar while the inputs remain unclear. Close the notes, name each variable and explain when the formula applies. Then change a value or assumption and solve again. This tests a different skill from rereading a highlighted page.

3. 03

   Speed follows a repeatable process

   Learn to identify the task, write consistent units and check the result’s direction. Time mixed practice after that process becomes reliable. Rushing an unfamiliar calculation can conceal the underlying gap and reinforce a wrong method.

Registration, results and preparation: the short answers