Cfa Level 1 Formula Sheet – A Comprehensive Guide

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CFA Level 1 Formula sheet [PDF Document] (2023) from kidsongmusicals.com

Are you looking to ace the Chartered Financial Analyst (CFA) Level 1 exam? If so, you’ve come to the right place. This article will provide an in-depth guide on the various formulas that you need to know in order to ace the CFA Level 1 exam.

The CFA Level 1 is the first of three exams that one needs to pass in order to become a Chartered Financial Analyst. This exam is designed to test the knowledge and understanding of financial analysis and investment tools. The exam is composed of 240 multiple-choice questions that need to be completed within six hours.

One of the most important things that you need to understand in order to pass the CFA Level 1 exam is the various formulas that you need to know. In this article, we will provide you with a comprehensive guide on the various formulas that you need to know in order to ace the CFA Level 1 exam.

Time Value of Money Formulas

The Time Value of Money is an important concept that you need to understand in order to pass the CFA Level 1 exam. This concept is based on the notion that money has time value and that the value of money can change over time. In order to understand this concept, you need to understand the various formulas related to it.

The first formula that you need to understand is the Present Value formula. This formula is used to calculate the present value of an asset or liability. The formula is as follows: PV = FV x (1+r)^t, where FV is the future value, r is the interest rate, and t is the time period.

The second formula that you need to understand is the Future Value formula. This formula is used to calculate the future value of an asset or liability. The formula is as follows: FV = PV x (1+r)^t, where PV is the present value, r is the interest rate, and t is the time period.

Risk and Return Formulas

Risk and return are two important concepts that you need to understand in order to pass the CFA Level 1 exam. In order to understand these concepts, you need to understand the various formulas related to them.

The first formula that you need to understand is the Risk-Adjusted Return formula. This formula is used to calculate the return of an investment after taking into account the risk associated with it. The formula is as follows: RAR = (R – Rf)/σ, where R is the return, Rf is the risk-free rate, and σ is the standard deviation.

The second formula that you need to understand is the Sharpe Ratio formula. This formula is used to measure the risk-adjusted return of an investment. The formula is as follows: Sharpe Ratio = (R – Rf)/σ, where R is the return, Rf is the risk-free rate, and σ is the standard deviation.

Portfolio Theory Formulas

Portfolio Theory is an important concept that you need to understand in order to pass the CFA Level 1 exam. In order to understand this concept, you need to understand the various formulas related to it.

The first formula that you need to understand is the Portfolio Return formula. This formula is used to calculate the return of a portfolio. The formula is as follows: Portfolio Return = (w1 x R1) + (w2 x R2) + … + (wn x Rn), where w1, w2, …, wn are the weights of each of the assets in the portfolio, and R1, R2, …, Rn are the returns of each of the assets in the portfolio.

The second formula that you need to understand is the Portfolio Variance formula. This formula is used to calculate the variance of a portfolio. The formula is as follows: Portfolio Variance = (w1^2 x σ1^2) + (w2^2 x σ2^2) + … + (wn^2 x σn^2), where w1, w2, …, wn are the weights of each of the assets in the portfolio, and σ1, σ2, …, σn are the standard deviations of each of the assets in the portfolio.

Capital Market Theory Formulas

Capital Market Theory is an important concept that you need to understand in order to pass the CFA Level 1 exam. In order to understand this concept, you need to understand the various formulas related to it.

The first formula that you need to understand is the Capital Asset Pricing Model (CAPM) formula. This formula is used to calculate the expected return of an asset. The formula is as follows: E(Ri) = Rf + βi x (Rm – Rf), where Rf is the risk-free rate, βi is the asset’s beta, and Rm is the market return.

The second formula that you need to understand is the Security Market Line (SML) formula. This formula is used to calculate the expected return of an asset. The formula is as follows: E(Ri) = Rf + βi x (Rm – Rf), where Rf is the risk-free rate, βi is the asset’s beta, and Rm is the market return.

Conclusion

In conclusion, the CFA Level 1 exam is a challenging exam but it is possible to pass it if you are well-prepared. It is important to understand the various formulas related to the various concepts that you need to know in order to pass the exam. This article has provided you with a comprehensive guide on the various formulas that you need to know in order to ace the CFA Level 1 exam. Good luck!

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