Quantitative Methods covers the mathematical and statistical toolkit used across all CFA disciplines. At Level I the focus is time value of money (TVM), descriptive statistics, probability theory, and an introduction to hypothesis testing and simple linear regression. Questions tend to be calculation-heavy but formula-driven, making this one of the most reliably learnable topics once the formulas are memorised.
TVM with the financial calculator: set P/Y and C/Y correctly for every problem. The most common errors are sign errors (PV and FV must have opposite signs) and failing to clear the calculator between problems.
Hypothesis testing: know the four steps (state hypothesis, select significance level, identify test statistic, decision rule). Type I error = rejecting a true null (α); Type II error = failing to reject a false null (β).
Normal distribution properties: 68-95-99.7 rule. Know the z-scores for the four most common confidence intervals.
Sampling distributions: the central limit theorem states that sample means are approximately normally distributed for n ≥ 30 regardless of the population distribution.
Using nominal rates when periodic rates are required — always convert: r_periodic = r_annual / m before entering into TVM formulas.
Confusing the Roy's Safety-First ratio (SFR = [E(R_p) − R_T] / σ_p) with the Sharpe ratio — SFR uses a threshold return, not the risk-free rate.
Treating kurtosis of 3 as "excess kurtosis of 3" — excess kurtosis is kurtosis minus 3, so a normal distribution has excess kurtosis of zero.
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