Thoughts on how to study CFA Level 1 Derivatives

[Arif Irfanullah]

As I start Derivatives with my CFA Level 1 batch, I’d like to share some thoughts on how to approach the topic.
Quickly go over R60 (Derivative Markets and Contracts). Get a general idea about derivatives. Don’t spend time on the questions initially. Come back to the questions after you’ve done the other readings. The questions will make a lot more sense then.
Next do R61 (Forwards). The Curriculum only has 3 questions. Do them well. Also do questions from other sources such as Schweser.
Next R62 (Futures). Do all the Curriculum questions. Also do practice questions from other sources.
Next R64 (Swaps). Swaps are like a series of forwards so I suggest you do this reading before doing Options. Do all the Curriculum questions. More practice is always good.
Next R63 (Options). Examples in the Curriculum are good. So are the Practice Problems.
Next R65 (Risk Management). Here the focus is on Options. Hence it makes sense to do R63 and R65 one after the other. Here again the Examples and Practice Problems are good.
Remember to go back to R60 questions.
Level 1 Derivatives is not very hard and is only 5% of the exam. Practice hard, as always, but do not get too hung up on this topic.

 

[Ivan S]

Good post Arif, thanks! I’m sure all the Level 1 Candidates that are preparing for the December exam will be grateful to you. There is also some general advice about derivatives in this article, and I’m glad to see that there’s a similar approach to derivatives like yours
http://www.timeprep.me/derivatives-cfa-level-1-2/

 

[TylerUK]

Thanks for the post Arif, and for the link Ivan. I was wondering, what about alternative investments? Is that important for the exam?

 

[Ivan S]

All segments are important for the exam. Your exam is graded by sections, and you should achieve certain % in each section. Although the grading process is not public and it is not known for sure, it may happen that you fail if you neglect a section or two. You should read all segments and be ready to answer correctly at least something from each section.
So yes, try not to skip the alternative investments