Must-Know Formulas for the CIPM Level 1 Exam – Don’t Walk in Unprepared!

The Certificate in Investment Performance Measurement (CIPM®) Level 1 exam demands a strong grasp of performance evaluation, attribution, risk measurement, and benchmarking. To help you succeed, we’ve compiled the must-know formulas that frequently appear in the exam, along with explanations to ensure you fully understand their applications. Formulas for the CIPM Level 1 Exam, CIPM Level 1

1. Performance Measurement Formulas

Holding Period Return (HPR) Formulas for the CIPM Level 1 Exam, CIPM Level 1

Measures the total return over a specific period:

Portfolio Rate of Return

Aggregates the return of multiple investments in a portfolio:

Time-Weighted Rate of Return (TWRR)

Neutralizes the impact of external cash flows:

Money-Weighted Rate of Return (MWRR)

Accounts for cash inflows and outflows:

Annualized Return

Converts periodic returns into an annualized format:

2. Return Attribution Formulas

Brinson-Hood-Beebower (BHB) Model

Decomposes portfolio excess return:

3. Risk Measurement Formulas

Standard Deviation (Total Risk)

Measures overall volatility:

Beta (Systematic Risk)

Measures sensitivity to the market:

Tracking Error

Measures deviation from the benchmark:

4. Performance Appraisal Formulas

Sharpe Ratio

Evaluates risk-adjusted performance:

Final Tips for CIPM Exam Candidates

Understand Formula Applications – Memorizing formulas isn’t enough; understand how and when to apply them.
Practice Calculation-Based Questions – Many exam questions require manual calculations.
Review Ethical Guidelines – Ethics is a crucial part of the CIPM curriculum.
Manage Your Time – Practice under timed conditions to ensure efficiency on exam day.

Next Steps

Boost your chances of success in the CIPM Level 1 Exam with the right preparation—explore our exclusive study materials and resources to excel in your certification journey!