Day 5: CFA Level I Quant Study Plan: Rates, Compounding, and TVM Practice - 90 Days to CFA

Day 5 of the CFA Level I study plan is focused on rates, compounding, and mixed time value of money practice. The goal today is not to memorize more formulas. The goal is to learn how to identify the problem type before touching the calculator. You have already worked through present value, future value, annuities, and cash-flow timing. Today, the focus is on rates, compounding, discounting, and mixed time value of money questions.

Disclaimer: This is a study-plan blog post, not official CFA curriculum material. Use it to organize your preparation, then rely on your CFA materials, notes, or question bank for the actual readings and problem sets.

Checklist before starting

Spend 10 minutes setting up before you begin.

• Calculator reset: Clear TVM memory. Check decimal places, payments per year, compounding periods per year, and BEGIN/END mode.
• Formula sheet: Open the section on effective annual rate, periodic rate, present value, future value, annuities, and perpetuities.
• Flash Cards - Keep them nearby, ready to fill or filled ones
• Timeline habit: Keep one blank page only for cash-flow timelines.
• Question bank filter: Select time value of money questions that mix single sums, annuities, rates, and compounding.
• Timer: Use three blocks: 40 minutes study, 35 minutes questions, 15 minutes review.

Your prep goal today is simple: reduce mechanical errors before they become repeated habits.

Daily Ethics reading and prep

Spend 10-15 minutes on Ethics before the Quant block.

Today’s Ethics focus: integrity and professional judgment.

Read one short scenario involving an analyst who receives pressure from a supervisor, client, or colleague. Ask yourself:

• Is the analyst being pushed to ignore evidence?
• Are facts and opinions clearly separated?
• Is the recommendation based on reasonable analysis?
• Is there any misleading communication?
• What should the analyst do before acting?

Then complete 5 Ethics warm-up questions or review 5 Ethics flashcards. Log any mistake as a Concept gap or Reading error.

Main study block

Today’s Quantitative Methods focus is mixed time value of money practice.

Study these subtopics:

• Nominal rate: The quoted annual rate before adjusting for compounding.
• Periodic rate: The rate applied each period.
• Effective annual rate: The annual rate after compounding is considered.
• Compounding frequency: Annual, semiannual, quarterly, monthly, or continuous compounding.
• Discounting: Moving future cash flows back to the present.
• Compounding: Moving present cash flows forward to the future.
• Perpetuities: Level payments that continue indefinitely.
• Mixed TVM questions: Problems where you must decide whether to solve for PV, FV, PMT, N, or I/Y.

Today’s main skill is diagnosis. Before calculating, ask: “What variable is the question really asking me to solve?”

25-question practice target

Complete 25 questions today.

Use this breakdown:

• 4 questions: Nominal, periodic, and effective annual rates
• 4 questions: Compounding and discounting single sums
• 4 questions: Ordinary annuity and annuity due review
• 3 questions: Perpetuity calculations
• 3 questions: Mixed TVM variable identification
• 2 questions: Calculator setup and sign convention checks
• 5 questions: Ethics warm-up or scenario questions

For each Quant question, write down the unknown variable before solving: PV, FV, PMT, N, or I/Y. This one step can prevent many wrong answers.

Five-question review checkpoint

End the session by answering these five questions:

1. Can I explain the difference between nominal, periodic, and effective annual rates?
2. Did I identify the unknown variable before solving each TVM problem?
3. Which caused more errors today: rate conversion, cash-flow timing, or calculator input?
4. What was my accuracy on the 20 Quant questions and the 5 Ethics questions?
5. Which TVM concept should I revisit before moving into statistics and probability?

Mistake log - As we have been doing so far, create a mistake log book. It will be easy to refer back to those

After practice, record every missed or guessed question using these four labels:

• Concept gap: I did not understand the question's underlying idea.
• Formula gap: I understood the idea but forgot the correct formula or setup.
• Calculator error: I entered values incorrectly, used the wrong mode, forgot to clear memory, or made a sign error.
• Reading error: I misunderstood the wording, timing, rate, or variable being asked.

For Ethics mistakes, use mainly Concept gap or Reading error.

Day 6 begins the next Quantitative Methods block: descriptive statistics, measures of central tendency, dispersion, probability foundations, and distribution basics.