The 2027 Level I exam, topic by topic

Why ethics matters in investing

Trust, conflicts and why ethical conduct protects clients and markets.

How the Code and Standards are organised and enforced

How the rules are structured and what happens when they are broken.

Professionalism cases (Standard I)

Applied cases on professional conduct and independence.

Market integrity cases (Standard II)

Cases on fair markets and the use of information.

Client duty cases (Standard III)

Cases on what an adviser owes each client.

Employer duty cases (Standard IV)

Cases on loyalty and duties inside a firm.

Research and client communication cases (Standard V)

Cases on research, recommendations and how they are communicated.

Conflict of interest cases (Standard VI)

Cases on disclosing and managing conflicts.

Member and candidate cases (Standard VII)

Cases on conduct as a member or candidate.

Mixed ethics cases

Cases that combine several standards in one situation.

What a return is made of

Holding period returns over one period and over several.

Averaging and adjusting returns

Arithmetic, geometric and continuously compounded returns.

Judging managers and building indexes

Money-weighted and time-weighted returns and benchmarks.

Discounting and compounding cash flows

Price bonds, shares and cash flows with the time value of money.

Describing a return series

Central tendency, dispersion, quantiles and shape.

Probability tools and key distributions

Scenario probabilities, expected values and the main distributions.

Samples, confidence and tests

Estimate a mean and test a hypothesis about it.

How diversification changes risk

Weights, correlation and portfolio variance.

Running many scenarios

Historical and Monte Carlo simulation and bootstrap resampling.

Fitting a line: beta and forecasts

Simple regression: slope, fit and forecasts.

Big data and machine learning basics

Data types, learning methods and how analysts use them.

Pricing power and competition

How costs, prices and competition set a firm's output.

Booms, slowdowns and recoveries

Phases of the cycle and the indicators that track them.

Government taxes and spending

How budgets and taxes steer the economy.

Central banks and interest rates

Mandates, tools and limits of monetary policy.

How rivalry between states moves markets

Cooperation, conflict and sanctions, and what they do to markets.

Gains and losses from trade

Comparative advantage, tariffs and who wins from trade.

Currency quotes, regimes and flows

Exchange rate moves, real exchange rates and capital flows.

Cross rates and forward rates

Exchange rate arithmetic, step by step.

Starting an analysis project

Purpose, sources and steps of a financial analysis.

When revenue and costs count

Revenue recognition, expenses and earnings per share.

What the balance sheet measures

Assets, liabilities, equity and how they are measured.

Building operating cash flow

Operating, investing and financing cash flows.

Cash flow patterns and free cash flow

Free cash flow and cash flow ratios.

Costing goods held for sale

Inventory cost formulas, write-downs and their effect on ratios.

Fixed assets from purchase to sale

Capitalised costs, depreciation, impairment and disposals.

Leases, pensions and share-based pay

Long-term obligations and how they reach the statements.

Deferred tax and effective tax rates

The gap between book and tax figures.

Can you trust the reported numbers?

Spotting aggressive choices and judging earnings quality.

Ratios and DuPont

Liquidity, solvency, profitability and trend analysis.

Building a three-statement forecast

A sales-driven pro forma model.

Business forms and who owns them

Sole owners, partnerships and corporations compared.

Who funds a company and what they want

Shareholders, lenders and other stakeholders and their claims.

Keeping managers accountable

Incentives, board oversight and governance risks.

Running the cash cycle

Working capital, the cash conversion cycle and short-term funding.

Choosing which projects to fund

NPV, IRR and ranking projects.

Mixing debt and equity

Capital structure and the weighted cost of capital.

How companies make money

Business models and how firms price their offer.

What a share gives its owner

Rights, claims and features of common and preferred shares.

Share classes and shareholder votes

Dual-class structures and cumulative voting.

New share sales and stock markets

Primary and secondary offerings and how exchanges work.

Dividends, buybacks and price gains

Splits, buybacks and their effect on shares and EPS.

Price versus intrinsic value

When a share is undervalued or overvalued.

Valuing shares from dividends and cash flows

Dividend and free cash flow models.

Pricing shares with multiples

P/E and other multiples against peers.

From forecast to share value

Revenue, margin and cost forecasts that lead to a value.

Sizing up an industry

Competitors, industry structure and the forces that shape profits.

Strategy, margins and funding needs

Cost leadership, differentiation and operating leverage.

Turning analysis into a recommendation

What makes a rating and a research report useful.

Required return from beta and factors

The CAPM, beta and the cost of equity.

Bond basics and the indenture

Issuer, security, coupon and the other terms of a bond.

Repayment, coupons and embedded options

Amortisation, calls and other redemption terms.

Bond market segments and indexes

Government, municipal, corporate, investment grade and high yield.

How companies borrow short and long term

Commercial paper, bank loans, repos and corporate bonds.

How governments borrow

Sovereign, local, agency and supranational debt.

Full price, accrued interest and matrix pricing

Price a bond from its yield and back.

Yield to call, yield to worst and spreads

Yield measures and how to restate them.

Floaters and money market yields

Price and yield of floaters and short-term paper.

Moving between the three rate curves

Spot, par and forward rates and how they link.

Where bond returns come from

Coupons, reinvestment and price changes over the holding period.

Estimating price moves with duration

Macaulay, modified and money duration.

Correcting duration with convexity

Refine the price estimate for large yield changes.

Duration for callable bonds and key rates

Effective duration, prepayment and key rate exposure.

Default, recovery and ratings

Default probability, loss given default and expected loss.

Judging sovereign borrowers

Credit analysis of national and local governments.

Judging corporate borrowers

Issuer and issue ratings, covenants and leverage.

Pooling loans into bonds

Why banks securitise and what investors gain.

Non-mortgage pools and credit enhancement

Asset-backed securities, covered bonds and deal structures.

Mortgage pools and prepayment

Pass-throughs, CMOs and prepayment risk.

What a derivative is and where it trades

Contracts whose value depends on an underlying, on exchanges and over the counter.

Obligations, rights and payoffs

How forwards, futures, swaps and options differ.

Hedging, leverage and their dangers

Price discovery, hedging and system-wide risk.

Why riskless profits disappear

No-arbitrage pricing, replication and the cost of carry.

Forwards and FRAs: price and value

The forward price at the start and the contract's value later.

Futures and daily settlement

Daily settlement, margin and futures value.

Swaps as bundles of forwards

Swap rates and values for interest rate and currency swaps.

What drives an option's value

Moneyness, intrinsic value and time value.

Linking calls, puts, shares and bonds

Put call parity and its uses.

Option prices from an up or down tree

The one-period binomial model and risk-neutral pricing.

Vehicles, fees and waterfalls

How alternative funds are structured and how managers are paid.

Fees, IRR and smoothed values

Returns, drawdowns and risk measures for alternative funds.

Buyouts, venture and private lending

Private equity, venture capital and private debt.

Buildings, REITs and networks

Real estate and infrastructure, direct and listed.

Land, timber, farmland and commodities

Natural resources and how they earn returns.

Absolute-return funds and strategies

Hedge fund strategies, lock-ups and fund terms.

Crypto, tokens and ledgers

Blockchains, digital assets and their risks.

Risk, utility and diversification

Asset class records, investor preferences and why diversifying works.

Market line, beta and CAPM

Combining risk-free and risky assets and pricing risk.

Investing as a process and fund vehicles

The portfolio management process and the vehicles it uses.

Writing the investment policy statement

Objectives, constraints and the written policy.

Mental mistakes investors make

Overconfidence, limited attention and other biases.

Choosing, measuring and limiting risk

A firm-wide process to identify and control risk.