This document is a complete and structured study aid for candidates preparing for the Quantitative Methods section of the CFA® Level 1 exam. Covering the full range of topics required by the CFA Institute, it includes detailed questions and answers designed to improve understanding, application, and performance in this key area. The materials are suitable for independent study or for use alongside official CFA Institute resources. Every topic is broken down into digestible sections to reinforce quantitative problem-solving skills and practical financial application.
Includes exam-style questions with detailed solutions, conceptual explanations, and visual aids where necessary. Each section builds on core concepts required for investment analysis, portfolio management, and risk assessment.
Exam Weight: 6–9%
Key Topics Covered:
- Rate and Return
Foundational concepts of returns, interest rates, and the building blocks of performance measurement. - Time Value of Money in Finance
Includes discounting, compounding, annuities, perpetuities, and solving cash flow problems. - Statistical Measures of Asset Returns
Mean, variance, standard deviation, skewness, and kurtosis with investment applications. - Probability Trees and Conditional Expectations
Probability theory in finance, including Bayes’ theorem and scenario trees. - Portfolio Mathematics
Quantitative basis for portfolio theory and asset allocation. - Simulation Methods
Monte Carlo simulations and their relevance to modeling investment returns and risks. - Estimation and Inference
Sampling distributions, confidence intervals, and reliability of estimates. - Hypothesis Testing
Null and alternative hypotheses, p-values, and common statistical tests used in investment research. - Parametric and Non-Parametric Tests of Independence
T-tests, Chi-square tests, and correlation tests used in market analysis. - Simple Linear Regression
Understanding relationships between variables and interpreting regression output. - Introduction to Big Data Techniques
Covers AI, machine learning basics, and their relevance to modern financial analysis.
Ideal For:
CFA Level 1 candidates, finance students, and professionals who want a strong command over quantitative techniques in financial analysis.
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