CFA Level 1 Notes & Cheat Sheets

59 Modules, Every Key Concept

Condensed study notes for every CFA Level 1 module — key concepts, formulas, and decision frameworks distilled into quick-reference cheat sheets.

314

Key Concepts

163

Formulas

58

Decision Frameworks

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Rates and Returns

Quantitative Methods — Module 1. Full cheat sheet below.

Key Concepts

8

Interest Rate Components

Nominal rate = Real risk-free rate + Inflation premium + Default risk premium + Liquidity premium + Maturity premium.

Holding Period Return (HPR)

Total return earned from holding an asset over a single period, including price change and income.

Arithmetic vs Geometric Mean

Arithmetic mean is the simple average of returns; geometric mean accounts for compounding. Geometric ≤ Arithmetic always.

Harmonic Mean

Used for averaging ratios like P/E or dollar-cost averaging. Always ≤ Geometric mean ≤ Arithmetic mean.

Money-Weighted Return (MWR)

IRR of all cash flows; sensitive to timing and size of external cash flows. Reflects investor experience.

Time-Weighted Return (TWR)

Geometric mean of sub-period returns; not affected by external cash flows. Reflects manager performance.

Continuously Compounded Return

rcc = ln(1 + HPR). Allows additive compounding across time periods.

Gross vs Net Return

Gross = before management fees; Net = after all fees. Pre-tax vs after-tax returns also critical.

Formulas

6

Holding Period Return

HPR = (P1 - P0 + D1) / P0

Where: P0 = beginning price, P1 = ending price, D1 = income/dividend

Geometric Mean Return

RG = [(1+R1)(1+R2)...(1+Rn)]1/n - 1

Where: Ri = return in period i, n = number of periods

Harmonic Mean

H = n / Σ(1/Xi)

Where: n = number of observations, Xi = individual values

Annualized Return

Rannual = (1 + Rperiod)c - 1

Where: c = number of periods per year

Continuously Compounded Return

rcc = ln(1 + HPR) = ln(P1/P0)

Where: ln = natural logarithm

Real Return (exact)

(1 + Rnominal) = (1 + Rreal)(1 + π)

Where: π = inflation rate

Decision Frameworks

2

Which mean return to use?

Use when:

  • +Arithmetic mean: for forward-looking expected single-period returns
  • +Geometric mean: for historical multi-period compound performance
  • +Harmonic mean: for dollar-cost averaging or averaging P/E ratios

Avoid when:

  • -Arithmetic mean when evaluating past compounded growth
  • -Geometric mean for expected future single-period estimates

Money-weighted vs Time-weighted return?

Use when:

  • +MWR when evaluating the investor's actual experience
  • +TWR when evaluating the portfolio manager's skill

Avoid when:

  • -MWR for manager comparison (distorted by client cash flows)
  • -TWR when investor controls timing of cash flows

All Cheat Sheets by Subject

Quantitative Methods

11 modules
1

Rates and Returns

8 concepts · 6 formulas · 2 decisions

Free preview
2

Time Value of Money in Finance

7 concepts · 7 formulas · 2 decisions

3

Statistical Measures of Asset Returns

7 concepts · 6 formulas · 2 decisions

4

Probability Trees and Conditional Expectations

6 concepts · 4 formulas · 1 decisions

5

Portfolio Mathematics

5 concepts · 4 formulas · 1 decisions

6

Simulation Methods

4 concepts · 2 formulas · 1 decisions

7

Estimation and Inference

5 concepts · 3 formulas · 1 decisions

8

Hypothesis Testing

5 concepts · 3 formulas · 1 decisions

9

Parametric and Non-Parametric Tests of Independence

3 concepts · 3 formulas · 1 decisions

10

Simple Linear Regression

5 concepts · 5 formulas · 1 decisions

11

Introduction to Big Data Techniques

5 concepts · 1 decisions

Economics

8 modules
1

The Firm and Market Structures

7 concepts · 6 formulas · 1 decisions

2

Understanding Business Cycles

5 concepts · 1 decisions

3

Fiscal Policy

6 concepts · 3 formulas · 1 decisions

4

Monetary Policy

6 concepts · 3 formulas · 1 decisions

5

Introduction to Geopolitics

5 concepts · 1 decisions

6

International Trade

5 concepts · 1 formulas · 1 decisions

7

Capital Flows and the FX Market

5 concepts · 1 formulas · 1 decisions

8

Exchange Rate Calculations

6 concepts · 4 formulas · 1 decisions

Financial Statement Analysis

9 modules
1

Introduction to Financial Statement Analysis

6 concepts · 1 decisions

2

Analyzing Income Statements

6 concepts · 6 formulas · 1 decisions

3

Analyzing Balance Sheets

5 concepts · 4 formulas · 1 decisions

4

Analyzing Statements of Cash Flows I

6 concepts · 3 formulas · 1 decisions

5

Analyzing Statements of Cash Flows II

3 concepts · 5 formulas · 1 decisions

6

Analysis of Inventories

5 concepts · 4 formulas · 1 decisions

7

Analysis of Long-Term Assets

5 concepts · 4 formulas · 1 decisions

8

Topics in Long-Term Liabilities and Equity

4 concepts · 2 formulas · 1 decisions

9

Analysis of Income Taxes

6 concepts · 3 formulas · 1 decisions

Corporate Issuers

7 modules
1

Organizational Forms, Corporate Issuer Features, and Ownership

6 concepts · 1 decisions

2

Investors and Other Stakeholders

5 concepts · 1 decisions

3

Corporate Governance: Conflicts, Mechanisms, Risks, and Benefits

5 concepts · 1 decisions

4

Working Capital and Liquidity

5 concepts · 6 formulas · 1 decisions

5

Capital Investments and Capital Allocation

6 concepts · 4 formulas · 1 decisions

6

Capital Structure

6 concepts · 4 formulas · 1 decisions

7

Business Models

6 concepts · 1 decisions

Equity Investments

6 modules
1

Market Organization and Structure

7 concepts · 3 formulas · 1 decisions

2

Security Market Indexes

4 concepts · 2 formulas · 1 decisions

3

Market Efficiency

6 concepts · 1 decisions

4

Overview of Equity Securities

5 concepts · 3 formulas

5

Company Analysis: Past and Present

4 concepts · 2 formulas

6

Equity Valuation: Concepts and Basic Tools

6 concepts · 6 formulas · 1 decisions

Fixed Income

5 modules
1

Fixed-Income Instrument Features

4 concepts · 2 formulas · 1 decisions

2

Fixed-Income Cash Flows and Types

4 concepts · 3 formulas

3

Fixed-Income Bond Valuation

4 concepts · 4 formulas · 1 decisions

4

Interest Rate Risk and Duration

5 concepts · 5 formulas · 1 decisions

5

Credit Risk and Credit Analysis

5 concepts · 3 formulas · 1 decisions

Derivatives

2 modules
1

Derivative Instruments and Markets

5 concepts · 5 formulas · 1 decisions

2

Derivative Pricing and Valuation

5 concepts · 5 formulas · 1 decisions

Alternative Investments

3 modules
1

Alternative Investment Features, Methods, and Structures

5 concepts · 3 formulas · 1 decisions

2

Private Capital: Equity and Debt

4 concepts

3

Real Estate, Infrastructure, and Hedge Funds

5 concepts · 2 formulas · 1 decisions

Portfolio Management

3 modules
1

Portfolio Risk and Return: Part I

6 concepts · 4 formulas · 1 decisions

2

Portfolio Risk and Return: Part II

5 concepts · 5 formulas · 1 decisions

3

Portfolio Management Overview and Planning

5 concepts · 1 decisions

Ethical & Professional Standards

5 modules
1

Ethics and Trust in the Investment Profession

6 concepts · 1 decisions

2

Code of Ethics and Standards of Professional Conduct

6 concepts · 1 decisions

3

Guidance for Standards I–VII

8 concepts · 1 decisions

4

Introduction to GIPS

5 concepts · 1 decisions

5

Ethics Application

5 concepts · 1 decisions

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