FORMULAS FOR THE WIN: A+ CFA LEVEL 1 EQUATION MASTERY GUIDE – 2026–2027

FORMULAS FOR THE WIN: A+ CFA
LEVEL 1 EQUATION MASTERY
GUIDE – 2026–2027



Time weighted return - THE CORRECT ANSWER-
[(1+HPY1)(1+HPY2)(1+HPY3)]^(1/n) - 1


Harmonic Mean - THE CORRECT ANSWER-[N/(sum of (1/sample
means))]


Position of observation - THE CORRECT ANSWER-(n+1)*(k/100)


Excess kurtosis - THE CORRECT ANSWER-Sample kurtosis - 3 (3 is
normal kurtosis)


Mean absolute deviation - THE CORRECT ANSWER-sum of: (mean -
sample mean)/n-1


Variance - THE CORRECT ANSWER-(x-mean)^2/N (population) and
divided by (n-1) for a sample


Coefficient of Variation - THE CORRECT ANSWER-Sample standard
deviation/sample mean

,Sharpe Ratio - THE CORRECT ANSWER-Risk of portfolio - risk free /
Standard deviation of portfolio


Joint Probability - THE CORRECT ANSWER-P(AB) = P(A|B) * P(B)


Addition rule - THE CORRECT ANSWER-P(A or B) = P(A) + P(B) -
P(AB)


Multiplication rule - THE CORRECT ANSWER-P(A and B) = P(A)*P(B)


Total Probability Rule - THE CORRECT ANSWER-P(A) =
P(A|B1)*P(B1)...+P(A|B2)*P(B2)


Expected Value - THE CORRECT ANSWER-P(x)*(x)


Covariance - THE CORRECT ANSWER-P[(Ra - E(Ra) * (Rb - E(Rb)] -
sum for all probabilities that sum to 1 OR
[SDa*SDb*correlation)


Correlation - THE CORRECT ANSWER-Covariance(A,B) / SDa*SDb


Portfolio expected return - THE CORRECT ANSWER-weight times the
E(R) of each stock


Portfolio variance - THE CORRECT ANSWER-Wa^2*SDa^2 +
Wb^2*SDb^2 + 2WaWb*SDa*SDb*Corr(a,b)

, Baye's formula - THE CORRECT ANSWER-P(new info) / unconditional
probability of new info*prior prob of event


Combination binomial - THE CORRECT ANSWER-nCr - order doesn't
matter


Permutation binomial - THE CORRECT ANSWER-nPr - order matters


Binomial probability - THE CORRECT ANSWER-nCx * p^x * (1-p)^(n-
x)


Binomial Expected value - THE CORRECT ANSWER-nP


Binomial variance - THE CORRECT ANSWER-np(1-p)


90% confidence interval - THE CORRECT ANSWER-+/- 1.645 SDs


95% confidence interval - THE CORRECT ANSWER-+/- 1.96 SDs


99% confidence interval - THE CORRECT ANSWER-+/- 2.58 SDs


Z score - THE CORRECT ANSWER-(x-mean)/SD


Roy's safety first ratio - THE CORRECT ANSWER-(E(Rp) - Rtarget)/SD


Mean sampling error - THE CORRECT ANSWER-mean - miu