CAIA Level 1 2025: Formulas and Equations to Focus On
- Dimitri Dangeros, CFA, CAIA
- 2 days ago
- 2 min read
The CAIA Level I exam covers a broad range of alternative investment topics — from professional ethics to private equity, hedge funds, and digital assets. But when it comes to calculation-heavy content, there’s one truth every candidate needs to know: fewer than 30% of the exam questions require calculations.
In practice, this means that while most of your points will come from conceptual knowledge, mastering the essential formulas is non-negotiable. These are the questions where the answer is definitive — if you know the equation and apply it correctly, you can bank the marks. CAIA Level 1 Formulas and Equations to Focus On
Below is a structured guide to the key CAIA Level I formulas and equations you should focus on for the 2025 exam, along with practical advice on how to prepare for them.
Why Formulas Matter in the CAIA Exam
Unlike conceptual questions, calculation problems have clear right or wrong answers. They reward precision and practice. With the exam capping calculation questions at less than 30% (around 40 questions on average), scoring well on them can be the difference between passing and failing.
Two key points to remember:
No formula sheet is provided — memorization is essential.
Some complex or less standard formulas will be given in the question, but you cannot rely on this.
Exam Preparation Strategy for Formulas
1. Create a Condensed Formula Sheet
Distill the above into a single-page cheat sheet for quick daily review. Group formulas by topic (risk, return, fixed income, derivatives, performance metrics).
2. Drill With Practice Questions
Work through past questions or high-quality practice problems using these formulas. Time yourself to simulate the pressure of switching between qualitative and quantitative questions.
3. Use Active Recall
Cover the formula and try to write it from memory. Check accuracy immediately. This builds retrieval strength.
4. Practice Without a Calculator (Sometimes)
While you’ll have a calculator in the exam, practicing mental approximation can improve speed and reduce careless errors.
5. Prioritize by Exam Weighting
Ethics and Professional Standards, Quantitative Methods, and Risk & Return topics often contain a higher density of calculation questions.
CAIA Level I Formulas and Equations to Focus On
Final Thoughts
The CAIA Level I exam may limit calculation questions to fewer than 30%, but those points are highly “gettable” if you’ve prepared. Mastering the formulas above will not only help you secure those marks but also strengthen your conceptual understanding — which feeds directly into better performance on non-math questions.
Start your formula work early, revisit them often, and combine memorization with application. By test day, your goal should be instant recall and confident execution — turning every calculation question into a scoring opportunity.
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