CFA Program Level I — Quantitative Methods & Economics flashcards

10 of 78 cards free to study here · 13 topics · the whole deck is built into Willys

Time value of money, return measures, statistics, probability and Bayes, distributions, sampling and simulation, hypothesis tests and regression, then elasticity, market structures, cycles, policy, inflation, FX quotes, parity and trade.

Get the app All CFA Program Level I decks

Learn deck · part of CFA Program Level I · written against: CFA Program Level I curriculum topics; Standards of Practice Handbook, 12th edition (2024), including Standard I(E) Competence. Updated 2026-10-10.

Study the free sample

10 cards from the deck as they are. Flip, rate yourself, filter by topic; your progress stays in this browser.

The 10 sample cards as a list

What is the future value of 1,000 dollars invested for 3 years at 5% compounded annually?

About 1,157.63 dollars. In symbols, $FV_N = PV(1 + r)^N = 1000(1.05)^3$ ⁠.
Time Value of Money
A stock bought at 40 dollars pays a 2 dollar dividend and is sold for 44 dollars. What is the holding-period return?

15% — the price gain plus income, divided by the starting price. In symbols, $HPR = \frac{P_1 - P_0 + D_1}{P_0} = \frac{44 - 40 + 2}{40}$ ⁠.
Returns
An analyst assigns EPS of 3 dollars a probability of 0.5, 2 dollars 0.3, and 1 dollar 0.2. What is expected EPS?

2.30 dollars — each outcome weighted by its probability: 1.50 + 0.60 + 0.20. In symbols, $E(X) = \sum P(x_i) x_i$ ⁠.
Probability
Which properties define a normal distribution?

It is symmetric (skewness 0, mean = median = mode), fully described by its mean and variance, and has a kurtosis of 3, with tails that extend without limit.
Distributions and Sampling
What is a Type I error, and what sets its probability?

Rejecting a null hypothesis that is true; its probability is the significance level, $\alpha$ ⁠.
Hypothesis Testing
A 10% price rise cuts quantity demanded by 5%. What is the own-price elasticity, and is demand elastic?

−0.5, so demand is inelastic (its absolute value is below 1). In symbols, $E_P = \frac{\Delta Q / Q}{\Delta P / P}$ ⁠.
Demand and Elasticity
In perfect competition, how is price set, and what economic profit do firms earn in the long run?

Firms are price takers, producing where price = marginal revenue = marginal cost, and free entry drives long-run economic profit to zero.
Market Structures
In what order do the phases of the business cycle run?

Recovery, expansion, slowdown, contraction, then the next recovery; recovery covers the trough and slowdown covers the peak.

Watch out: many economics texts call the phases trough, expansion, peak and contraction instead.
Business Cycles
What are a central bank's main monetary policy tools?

The policy interest rate, reserve requirements and open market operations.

Example: selling government securities drains bank reserves and tightens policy.
Monetary and Fiscal Policy
In the quote USD/EUR 1.10, which is the base currency and which is the price currency?

EUR is the base, USD is the price currency: 1.10 US dollars buy one euro.

Watch out: quote conventions vary; read A/B as units of A per one unit of B.
Currencies and Trade

Unlock the whole deck

You are studying a free 10-card sample. All 78 cards of CFA Program Level I — Quantitative Methods & Economics, the other 6 CFA Program Level I decks, and spaced-repetition scheduling are built into Willys. 14-day free trial, then $14.99 a year.

Get the app

In Willys, tap Exam Library at the top of your Decks (or Browse Exam Library… under the + button), find the exam on its shelf or by search, tick it and tap Add.

More CFA Program Level I decks

Financial Reporting & Corporate Issuers Equity, Fixed Income, Derivatives & Portfolio Ethical & Professional Standards Quick Drills: Formulas Practice Questions, Part 1 Practice Questions, Part 2

← All CFA Program Level I decks, with the study guide and topic outline.

About these cards

Review status: Second-reader reviewed, with corrections applied.

Checked against:

Checked against standard texts: Brealey, Myers & Allen, Principles of Corporate Finance; Wooldridge, Introductory Econometrics; and Mankiw, Principles of Economics (reference only; no text copied).
OpenStax Principles of Economics 3e, consulted as a reference; no text copied.

These are independent study notes written for Willys. They are not official exam material, may contain mistakes, and are no substitute for your course, your teacher or the exam owner's own publications. Found an error? Tell us — corrections ship as a new version of the deck.

Not financial, tax or legal advice. These cards prepare you for an exam; rules and figures change, so check current standards before relying on any of it.

CFA Institute does not endorse, promote, or warrant the accuracy or quality of this product. CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.

Use of these pages is covered by our Terms of Use.