Browse CFA Level 1

Chapter 1: Rates and Returns

Chapter 1: Rates and Returns (CFA Level 1): Key concepts, definitions, and exam tips with practical examples. Use it to reinforce intuition and avoid common pitfalls.

In this section

  • Interest Rates as Required Returns, Discount Rates, and Opportunity Costs
    Interest Rates as Required Returns, Discount Rates, and Opportunity Costs (CFA Level 1): Definition and Role of Interest Rates, Opportunity Cost Interpretation, and Margin and Spread Considerations. Key definitions, formulas, and exam tips.
  • Real Risk‑Free Rate and Risk Premiums
    Real Risk‑Free Rate and Risk Premiums (CFA Level 1): Defining the Real Risk-Free Rate, From Real to Nominal: Adding the Inflation Premium, and Essential Risk Premiums. Key definitions, formulas, and exam tips.
  • Measuring Returns over Time
    Measuring Returns over Time (CFA Level 1): Holding Period Return (HPR), Discrete vs. Continuous Returns, and Discrete Returns. Key definitions, formulas, and exam tips.
  • Money‑Weighted vs. Time‑Weighted Returns
    Money‑Weighted vs. Time‑Weighted Returns (CFA Level 1): Money-Weighted Rate of Return (MWRR), Core Concept of MWRR, and Why MWRR Matters. Key definitions, formulas, and exam tips.
  • Annualized and Continuously Compounded Returns
    Annualized and Continuously Compounded Returns (CFA Level 1): Why Annualize Returns?, Geometric Annualization Basics, and Effective Annual Rate (EAR). Key definitions, formulas, and exam tips.
  • Comparison of Major Return Measures
    Comparison of Major Return Measures (CFA Level 1): Universe of Return Measures, Holding Period Return, and Arithmetic Mean Return. Key definitions, formulas, and exam tips.
  • Nominal vs. Real Interest Rates
    Nominal vs. Real Interest Rates (CFA Level 1): Nominal Interest Rates, Real Interest Rates, and Fisher Equation. Key definitions, formulas, and exam tips.

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Chapter 2: Time Value of Money in Finance