How to Pass the CAIA® Level I Exam

By: Kaplan Schweser
January 24, 2023
A photograph representing people who learned how to pass the CAIA Level 1 Exam

So, you’ve decided to earn the Chartered Alternative Investment AnalystSM designation. Congratulations on taking a big step toward a worthwhile career. The first hurdle you have to clear on the path toward earning your designation is to pass the CAIA Level I exam, which is given twice a year in March and September. The good news—there are no education prerequisites to take the exam, although you will be expected to have an understanding of finance concepts.

You can register for the exam as early as 5 months before the exam window at, which also offers a CAIA candidate handbook, study materials, calculator information, orientation sessions, policy review, and additional study programs offered by other prep providers.

Level I tests your ability to think under pressure almost as much as it tests your knowledge of alternative investment concepts and topics. That can surprise candidates who might not be familiar with this type of testing. But, if you follow these tips, you have a great chance of passing the CAIA exam with flying colors.


Tip #1: Familiarize Yourself With the CAIA® Exam Format

The CAIA exam format for both levels is 200 multiple-choice questions. The exam length is four hours. There are 100 questions in the first two hours, followed by a break, and then 100 more questions in the last two hours. There are seven topics, weighted as follows:

  • Professional Standards and Ethics: 15–25%
  • Introduction to Alternative Investments: 20–28%
  • Private Equity: 12-20%
  • Real Assets: 11–17%
  • Hedge Funds: 11–17%
  • Structured Products: 10–14%

The exam is computerized, and questions are served up in topic batches, although you won’t get all questions on one topic at once. Now that you know the format, you can see that you aren’t likely to pass the exam if you don’t pass those with weights over 15%. And, the topics you really want to nail are Professional Standards and Ethics and Introduction to Alternative Investments.

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Tip #2: Start Studying Early

The CAIA Association recommends that candidates spend 200 hours studying for the CAIA exam. So, you need to commit to starting to study as soon as you’ve registered for your exam and scheduled your appointment. Cramming in the last few weeks for the exam won’t work because you are going to be tested on your ability to read a question, analyze it, and apply concepts to it.

Although most exam takers occasionally run into questions that at first don’t appear to relate to anything they’ve studied, those who cram can be overwhelmed by them. The topics you’re being tested on require a type of knowledge that can only be gained over a structured, careful course of study—not last-minute, frantic reviews of core materials.

Tip #3: Don’t Try to Study for the CAIA® Exam All on Your Own

The CAIA exam pass rate for Level I in September 2021 was 51%. The pass rate for the CAIA exam compared to the CFA® exam is pretty high; however, it could probably be even higher if more people took advantage of study programs.

Although there are self-directed and motivated candidates who are able to pass the CAIA exam by studying on their own and taking a few practice exams online, most do not. To ensure you pass the CAIA exam, enroll in prep courses (either in class or online) and take as many practice exams as you can. You also need to keep up-to-date on information that is being published on your CAIA exam topics because the exam relies on that material. Plus, the curriculum changes frequently to keep up with industry changes.

Tip #4: Focus on Technique, Not Just Concepts

As you prepare, remember that exam technique is as important as attacking the underlying curriculum. So, you need to make sure you practice answering questions at a high speed. When you sit for the exam, you only have 72 seconds to answer a question before it’s time to move on. That’s just over a minute, and it isn’t easy. So, you should sit for plenty of mock exams and attempt to do 100 questions in two hours, 50 questions in an hour, or 25 questions in 30 minutes.

Your goal should be to get to the stage where, when you do your question practice, your score is hovering around the high-70s to 80 (the passing score for the exam varies by a few percentage points, but the CAIA Association says to think of it as 70). With those numbers, you can go into the exam feeling very confident. You know you’ve prepared enough. This enables you to spend the day before the exam reviewing your notes calmly, having a good meal, and going to bed early.

Tip #5: Don’t Panic on Exam Day

When you pass the CAIA exam, you become a representative for the CAIA Association…an ambassador of sorts. So, they want to know that you’re of sound character and good under pressure. Therefore, on exam day, they test your mettle along with your knowledge of the concepts. Don’t panic. Instead, tell yourself that panicking will spoil all the good work you put in. For example, you need to read questions carefully so that you don’t miss phrases like most likely or least likely, and panicking can cause you to misread the questions.

Here are a few tricks to keep the panic at bay. First, during your break between the two parts of the exam, rest your brain. Also, take the time they give you to read the exam instructions and sign disclosure agreements to take a deep breath and get in the zone. This will help you use a technique that is essential to passing the exam: the process of elimination. Quite often, it will seem like none of the answer choices are completely correct.

So, first, eliminate those that you know are the least correct. As you work your way through, you might see one answer that is likely correct 90% of the time, but you can think of a case where it would not apply. The temptation is to eliminate it too, but you shouldn’t. The fact that it will work most of the time means it is probably the right answer. When you’re in the zone, this will become second nature and the likelihood of passing the CAIA exam increases.

Increase the Likelihood You’ll Pass the Level I CAIA® Exam

Although passing the exam is ultimately up to you, you don’t have to prepare or study alone. Participating in classes (online or in-person), practice exams, and study groups increases the likelihood that you’ll pass the exam. Investing in CAIA exam prep is one of the best things you can do to make sure that you’re on to the next step…Level II.

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