CFA Level 1 Exam

It's no secret that the banking industry is now more and more dependent on information technology (IT). Banks are forced to buy IT services in large quantities. The purchase is carried out according to different schemes for the support / maintenance of existing systems and for the development / creation of new ones. The first task is solved by people on the staff of the credit institution, generalists of a wide profile with good, but not expert knowledge of technology, and all more or less serious improvements and new projects are often left to the side: it is not profitable for the bank to keep narrow technical specialists on the staff on a permanent basis - they are purchased as needed. Programmers and other techies who have managed to stay in the banking industry develop technical skills to some average level, and the bank is no longer very interested in moving above this level, or rather, it is not ready to pay for it. In general, in IT banks, middle managers with a good knowledge of technology and business are valued, as well as analysts / technologists who are well aware of the business of a particular bank, who are able to set a high-quality task.

Textbook: Schweser FRM 2021

Among other ways to get out of this situation, a good option for programmers is to study finance. This allows you to increase your value further. After mastering technical skills, the programmer has no choice but to expand his understanding of banking, i.e. business, unless, of course, he is going to move to another subject area. And this is also a good test - if banking is not interesting, then it is not worth wasting time on banks. The most successful and happy in the bank are those people who are really interested in all these processes for the endless movement of money

FRM (Financial Risk Manager) is a Risk Specialized Certificate. In terms of difficulty, they roughly correspond to the first CFA level Consists of two parts, each requires an exam (held twice a year). You can pass both levels at once or take turns in two rounds, i.e. you can get a certificate in six months or a year of study, depending on the initial training. After successfully passing two exams, you need to confirm the relevant work experience, but the requirements for its content are lower than for CFA. It is quite possible to get certified by working in a field that is somehow related to risk, including IT. The exams have a lot of math and a good overview of the capital markets. More practical and technical exam than CFA. Perhaps the best choice for quick results (one year of preparation, 2 exams every six months).

CFA Level 1 Exam

CFA exam

Further, oddly enough, we will talk about the CFA certificate. I passed only the first level, the most general and introductory one, without specialized things. I just wanted a good theoretical coverage of basic things. Passing one level is quite a tangible achievement: in technical vacancies you sometimes come across such a phrase: CFA Level 1 as an advantage. And in the resume, submitted by CFA, even the first level, looks attractive to the employer. I did not aim at the other two levels, I do not see the point for myself.

The format of the CFA Level 1 exam is as follows. You need to answer 240 questions, each of which offers three answers. There is no penalty for an incorrect answer, if the correct answer is unknown, it is possible and necessary to guess, this is recommended. Questions are given 6 hours in one day. 6 hours are divided into 2 sessions of 3 hours each with a break of 2 hours for lunch and rest. Each session is given 120 questions, sessions are independent by themselves, but the result, of course, is general. Thus, an average of 90 seconds are allotted for a question, which is quite stressful. The second and third level exam formats are more complicated, and I will not write about them.

Exam preparation

The organizers say that preparation for the first level takes 300 hours, and I did about that. By the way, this grade is also found in language learning, for example, 300 hours are needed to master the CEFR B1 (Intermediate) level in German.

I studied for about a year, trying to spend one hour a day. Closer to the exam for two hours. The system is very important, i.e. regularity of classes. Before the exam itself, it is recommended to take a vacation for at least 2-3 days for a complete repetition. It is very useful.

I ordered books in paper form, at first I prepared using them. I walked through the topics, solved the problems at the end of each chapter. As it turned out later, these tasks are not at all similar to the questions from the exam, but they are suitable for checking the assimilation of the material. Then he sold the books and switched to electronic versions, read them from the phone, which was quite comfortable. With 3 months left before the exam, I switched to Kaplan materials - more focused and concise than the official ones. I read them from printouts (two pages per sheet on both sides). At the end of the chapters, Kaplan did not solve the problems at all, since they are even more distant from the real exam. About 2 months before the exam, he began to intensively solve questions from the official CFA database - they are available online after paying for the exam. There are about 1000 questions on all topics. They are much closer to the exam, but still have an educational focus. A month before the exam, I switched to CFA mock exams. There are 3 of them, you can download them as PDF (also after registration). It was very useful - the questions turned out to be as close as possible to the real exam. I regretted that I did not start solving problems from the mock exams from the very beginning and managed to master only two before the exam. In the end, the essence of the exam is to pass the test and, one way or another, you need to train yourself on it, to the detriment of the depth and quality of knowledge.

CFA Level 1 Exam

A mock exam from Kaplan is held 2 weeks before the exam. The mock exam costs money, but the benefits are many. The format repeats the real exam, but, of course, no one is watching the cheating. At the end, access to the site is given, where a video with a detailed explanation is offered for each question - a very cool thing. The practice exam really makes it clear how difficult it is to sit like this and solve for 3 hours in a row. I figured out if I had time, in principle, to answer all the questions, it was also interesting to feel the brain overload at the beginning of the third hour, when I can no longer remember and use elementary formulas. It also helped to plan the alignment of forces on a real exam.

What are the conclusions?

The exam provides a good broad overview of almost all areas of finance. Yet it is geared towards finance professionals. In finance, a certificate gives a competitive advantage, in IT it is unlikely, but the preparation process pumps knowledge, as well as the ability to systematically work intensively and effectively for a long time.