Deep Dive: CFA® Level I Prep 2026

Timber, farmland, and commodities join the alternatives toolkit. Contrast land-based investments (farmland, timberland) with commodity futures rolls. Dive into supply-and-demand drivers, storage costs and seasonality. Explore inflation-hedging properties and where natural resources fit alongside real estate in the real-asset bucket. Perfect if you’ve ever wondered why soybeans and gold dance to ve...

Bricks, mortar & bridges. Compare the cash-flow engines ofincome-producing property and long-lived infrastructure projects. Equity vs. debt vs. REIT structures for property exposure. Greenfield, brownfield and secondary-stage infrastructure—how risk and return step down each stage. Inflation linkage, GDP sensitivity and diversification traits of each sub-asset. After this module you’ll know wh...

From start-ups to leveraged buy-outs. Map the spectrum of private equity (VC, growth, buy-out) and private debt (direct lending,mezzanine, distressed). Key terms: committed vs. called capital, exit routes, GP/LP economics. Risk–return expectations and why valuation lags can mask volatility. Diversification benefits and where private capital slots into a broader portfolio. Essential listening befor...

Measuring performance is trickier here. Longer life-cycles,irregular cash flows, leverage and complex fees mean IRR and MOIC trump simpletime-weighted returns. See capital commitment → deployment → distribution phases and the infamous J-curve . Work through fee waterfalls: management, incentive, hurdles, high-water marks, clawbacks. Calculate before- and after-fee returns and spot survivorship bia...

Why alternatives? They promise higher expected returns and lower correlations —but at the cost of liquidity, longer holding periods andspecialised know-how. This module: Distils the three big categories  — private capital, real assets and hedge funds. Compares fund , co-investment and direct routes, showing how control, fees and effort shift across methods. Explains ownership & compensati...

Construct a simple up/down binomial tree to price a European call. Learn risk-neutralprobabilities, replicate pay-offs with ∆-hedged portfolios, and generalise theframework for any derivative where pay-off depends on one period of pricemovement.

Employ put–call parity to replicate forwards, build collars, and decompose equityvalue into debt + option components. Extend to forward parity for off-marketstrikes and see how corporate finance uses these identities.

Break option value into intrinsic and time components, test moneyness, andstudy six core inputs (spot, strike, time, rate, volatility, income). Use arbitrage andreplication arguments to bound fair prices before jumping into models later.

View a plain-vanilla swap as a strip of forward contracts: solve for the par swaprate that sets initial value to zero, then track mark-to-market gains as rates move. Covers fixed-for-float interest swaps, currency swaps and the impact of clearing.

Derive fair-value futures prices at inception, then follow daily variation margin tosee how gains/losses crystallise. Compare futures with equivalent forwards, explorerate-futures versus FRAs, and note how central clearing reshapes counter-partyrisk.

Price and mark-to-market forwards between trade date and expiry—first fornon-income assets, then for instruments with cash flows. Extend the logic tounderlyings that have their own term structures (rates, FX), and master forwardrate agreements (FRAs) as a special case.

Link spot and forward prices through no-arbitrage. Build synthetic forwards bycombining cash positions with borrowing/lending, then adjust for dividends,storage, or FX rate differentials in the cost-of-carry . Understand why forwardprices can trade above or below spot—depending on net carry.

See how issuers hedge earnings, how investors gain cheap leverage or preciseexposures, and where dangers lurk: basis, liquidity, counter-party and systemicrisk. Real examples show futures lowering funding needs and swaps smoothingcash-flow volatility—alongside cautionary tales of excessive leverage.

Firm promises vs. flexible rights: dissect forwards, futures and swaps(linear pay-offs) then contrast them with options and credit derivatives(non-linear, buyer-only choice). Learn how margin, daily settlement and embeddedleverage shape risk, and why put–call parity lets you build a synthetic forward fromtwo options.

Quick tour of the derivatives universe: define what makes a contract aderivative, classify popular underlyings (equities, rates, FX, commodities, credit),and compare OTC versus exchange-traded markets—including how centralcounterparties (CCPs) reduce default risk. By the end you’ll know where eachinstrument trades, why standardisation matters for liquidity, and how margin keepsthe system safe.

From pass-throughs to CMOs we unpack prepayment mechanics, tranche types and commercial vs. residential differences. Understand PSA curves, extension risk and how agencies wrap credit.

Explore structural credit enhancement, tranche waterfalls and trigger tests. Compare classic asset classes—autos, cards—and newer niches like solar leases and whole-business deals.

Follow the pipeline from loan pool to special-purpose entity to tranche. See how credit- and time-tranching reshape risk for issuers and investors, plus the economic case for securitization.

Dive into business risk, moats, management and detailed financial ratios. Finish with recovery analysis across the capital stack and why ratings can lag the market.

Blend qualitative governance checks with quantitative debt, growth and external-balance ratios to rank sovereign default risk. Contrast with sub-sovereign and supranational analysis.

Define default, recovery and credit migration. Walk through structural vs. reduced-form models and see how ratings, leverage and cyclical forces feed into spread moves.

Swap from yield-shift to curve-shift analytics: key-rate durations, twist & butterfly exposures, plus empirical (regression) duration when cash-flow data are messy.

Add curvature to your risk toolkit. Topics: standalone bond convexity, duration-plus-convexity price estimates and building target-duration/convexity portfolios.

Compute modified, money duration and price-value-of-a-basis-point for bullets, zeros, floaters and perps. See how convexity tweaks the linear estimate.

Break total return into income, reinvestment and price change. Link Macaulay duration, investment horizon and curve shifts to work out when rising rates can still boost realised return.