Browse CFA Level 1

Chapter 13: Back‑Testing and Scenario Analysis

Chapter 13: Back‑Testing and Scenario Analysis (CFA Level 1): Practical explanations of core ideas, with key terms, formulas, and common exam pitfalls.

In this section

  • Principles of Back‑Testing in Finance
    Principles of Back‑Testing in Finance (CFA Level 1): Back‑Testing Process, Avoiding Overfitting Pitfalls, and Data Cleaning and Preprocessing. Key definitions, formulas, and exam tips.
  • Scenario Analysis for Risk Assessment
    Scenario Analysis for Risk Assessment (CFA Level 1): Why Scenario Analysis Matters, Scenario Analysis, and Macroeconomic Shocks. Key definitions, formulas, and exam tips.
  • Stress Testing Portfolio Performance
    Stress Testing Portfolio Performance (CFA Level 1): Purpose of Stress Testing, Key Steps in Stress Testing, and Types of Stress Tests. Key definitions, formulas, and exam tips.
  • Limitations and Pitfalls of Model‑Based Testing
    Limitations and Pitfalls of Model‑Based Testing (CFA Level 1): Overreliance on Historical Data, Non‑Stationarity Problem, and Abrupt Breakpoints. Key definitions, formulas, and exam tips.
  • Historical Simulation Approaches
    Historical Simulation Approaches (CFA Level 1): Key Concepts in Historical Simulation, Using Actual Past Return Data, and Ranking Outcomes to Estimate Potential Losses. Key definitions, formulas, and exam tips.
  • Extending Scenario Analysis to Macroeconomic Stress
    Extending Scenario Analysis to Macroeconomic Stress (CFA Level 1): Macroeconomic Stress Testing, Key Elements of a Macroeconomic Method, and State-Dependent Modeling. Key definitions, formulas, and exam tips.

Important Notice: FinancialAnalystGuide.com provides supplemental CFA study materials, including mock exams, sample exam questions, and other practice resources to aid your exam preparation. These resources are not affiliated with or endorsed by the CFA Institute. CFA® and Chartered Financial Analyst® are registered trademarks owned exclusively by CFA Institute. Our content is independent, and we do not guarantee exam success. CFA Institute does not endorse, promote, or warrant the accuracy or quality of our products.

Chapter 12: Time-Series Analysis
Chapter 14: Multiple Regression and Model Extensions