Changes to the CFA Level 1 Exam for 2014



The curriculum changes for 2014 CFA exams are now available on the Institute’s website. The changes are important, not only for repeating candidates but also for first-time testers as well.

Obviously, those repeating a level will need to know what material they will see again and what has changed. For the most part, you can use last year’s curriculum to keep the material fresh in your head until the new curriculum is delivered. You will want to check out the changes so you aren’t wasting your time on stuff that won’t appear on next year’s exam.

First-time testers will want to pay attention to changes as well. The Institute doesn’t talk about it but many believe that new readings or LOS have a better chance at showing up on the exam. Briefly skimming the LOS will also help you get an idea of what depth and material the Institute wants you to know.

A Tale of Two Changes
There are basically two types of changes in the LOS from year to year. There are always minor revisions to wording and some LOS may be split or combined. These aren’t a big deal and most candidates wouldn’t notice the change on the test itself.

The biggest changes are in the dropped or added LOS due to changes in the curriculum readings.

Every year presents some changes to the curriculum at all three levels, but rarely do they change a great deal. A complete list of LOS changes are available for each level of the CFA exams on the FinQuiz website. Looking through the list at least once is an absolute MUST for all candidates. Whether the Institute wants a different direction in a topic area or just wants to update the material, a change in readings is a big deal.

2014 Level 1 Changes
The level 1 curriculum and LOS didn’t change much from 2013 to 2014. There are the perennial wording changes with the readings remaining exactly the same.

The requirement to determining the business cycle phase based on an economic indicator has been removed from economics.

The LOS requiring candidates to describe DC and DB pension plans has been moved from reading 32 to reading 42.

LOS 34 has been added to: Describe reasons for investors to assess the quality of cash flow statements.

The biggest change in the coming year’s curriculum is to the fixed-income section. Readings by Frank Fabozzi CFA, a long-time contributor, have been replaced with new readings. The old readings 52-58 have been replaced with the new readings below:

Reading 52 Fixed- Income Securities: Defining Elements
Reading 53 Fixed-Income Markets: Issuance, Trading, and Funding
Reading 54 introduction to Fixed-Income Valuation
Reading 55 Understanding Fixed-Income Risk and Return

All the LOS associated with readings 52 through 59 from last year have changed along with the readings. The new Fixed-income material is covered in reading 52-56.

Reading 57, Derivatives Markets and Instruments has been revised but remains largely the same.

Reading 67, Investing in Commodities has been dropped from the Alternative Investments topic readings, leaving only the introduction material in study session 18.

Make sure you put in the time to cover the new fixed-income material. Not only will it help to set you up for the points in level 2 and 3, but it may be a focus in this year’s level 1 exam.

‘til next time, happy studyin’
Joseph Hogue, CFA