V1 Module 1 Errata: Returns of Financial Assets and Instruments

1. Equation 9 Uses One Too Many Terms in the Log-Return Sum

Curriculum location: Financial Returns, Continuous Compounding, Equation 9, p. 18.

${\tilde{r}}_{0,T}={\tilde{r}}_{0,1}+{\tilde{r}}_{1,2}+{\tilde{r}}_{2,3}+\cdots +{\tilde{r}}_{T-2,T-1}+{\tilde{r}}_{T-1,T}={\sum }_{t=0}^T{\tilde{r}}_t$

From time $0$ to time $T$, the displayed expansion contains $T$ one-period intervals. The terminal sum instead includes $T+1$ indices and drops the second endpoint needed to identify each interval.

Correct reading: ${\tilde{r}}_{0,T}={\sum }_{t=0}^{T-1}{\tilde{r}}_{t,t+1}$.

Candidates otherwise risk carrying an off-by-one bound into the additive log-return formula.

2. Option A Prints 10.51% While the Solution Computes 10.52%

Curriculum location: Financial Returns, Ørsted A/S Continuously Compounded Returns, Question 1 option A, p. 20.

"A. 10.51%"

Curriculum location: Financial Returns, the same question's solution, p. 20.

${\tilde{r}}_{t,t+1}=\ln \left(\frac{\mathrm{DKK}765.40}{\mathrm{DKK}689.00}\right)=10.52\%$

Curriculum location: Financial Returns, the following annual-return explanation, p. 20.

"Note that adding the continuously compounded price return for the period 1 January 2020–30 June 2020 of 10.51% to the continuously compounded price return for the period 30 June 2020–31 December 2020 of 48.53% yields 59.04%, which is equivalent to the direction calculation."

The first subperiod return is $10.515730\%$, which displays as $10.52\%$. The unrounded subperiod values sum to $59.044399\%$, which displays as $59.04\%$, but the displayed values $10.52\%$ and $48.53\%$ add to $59.05\%$.

Correct reading: Use $10.52\%$ for option A. State that the unrounded subperiod returns sum to $59.04\%$, while the displayed rounded values sum to $59.05\%$.

Candidates otherwise cannot apply one consistent rounding rule to the option, solution, and follow-on explanation.

3. The Risk-Premium Rearrangement Prints ∓ Instead of −

Curriculum location: Common Return Measures, Knowledge Check: Historical Asset Class Returns, Question 3 solution, p. 24.

$r{p}_i\approx r_i\mp r_f$

The risk premium is obtained by subtracting the risk-free rate. The lower sign would add it, contradicting both the rearrangement and the immediately following calculation.

Correct reading: $r{p}_i\approx r_i-r_f$.

Candidates otherwise risk using the wrong operation in a basic risk-premium calculation.

4. The Solution Calls a DKK Capital Gain a Price Return

Curriculum location: Common Return Measures, Ørsted A/S Before- and After-Tax Total Return, Question 1 solution, p. 30.

"The realized capital gain is the realized price return,"

A realized capital gain is a currency amount per share. A realized price return is that gain divided by the initial price. The two quantities therefore cannot be identified with each other.

Correct reading: Call the currency difference the realized capital gain per share. Call the gain divided by the initial share price the realized price return.

Candidates otherwise risk substituting a monetary amount where a return rate is required.

5. The Options Case Switches between One 100-Share Option and 100 Options

Curriculum location: Common Return Measures, Case Study: Leverage through Options, opening position, p. 34.

"Instead of purchasing the stock directly, the investor buys a call option with a strike price of DKK50, expiring in three months, for a premium of DKK5 per share. This option gives the investor the right, but not the obligation, to buy 100 shares of Vista A/S at DKK50 per share before the option expires."

Curriculum location: Common Return Measures, the same case's investment comparison, p. 34.

"Whether the investment is unleveraged (investing $100\times \mathrm{DKK}50$ per share for a total of DKK5,000) or leveraged (investing $100\times \mathrm{DKK}5$ per option for a total of DKK500) has an impact on the returns."

Curriculum location: Common Return Measures, the same case's DKK60 outcome, p. 36.

"As each call option allows the investor to buy one share at DKK50 when the market price is DKK60, there is an immediate profit of DKK5 per option"

Curriculum location: Common Return Measures, the same outcome's position total, p. 36.

"Then for 100 options, the investment is DKK500 and the return is similarly DKK500."

The opening describes one option covering 100 shares, while the later mechanics use 100 options covering one share each. Those are different quantity conventions.

Correct reading: Use 100 call options, each covering one share, at a DKK5 premium per option. The total premium is DKK500 and the position controls 100 shares.

This is the case's internally consistent quantity convention, not a universal statement about option contract multipliers.

Candidates otherwise risk mixing a contract multiplier, the number of contracts, and a per-share premium.

6. Exhibit 18 Labels Profit/Loss as Payoff

Curriculum location: Common Return Measures, Exhibit 18 top-panel title, p. 35.

"Payoff of Stock and Call Option"

Curriculum location: Common Return Measures, Exhibit 18 top-panel vertical axis, p. 35.

"Payoff (DKK)"

The call line is $-\mathrm{DKK}5$ at and below the strike. A long-call payoff at expiry is $\max (S_T-K,0)$ and cannot be negative; subtracting the premium produces profit or loss.

Correct reading: Label the top panel “Profit/Loss of Stock and Call Option” and the vertical axis “Profit/Loss (DKK).”

Candidates otherwise risk subtracting the premium inside the payoff formula instead of distinguishing payoff from profit.

7. The Options Case Uses DKK 5 Instead of DKK 55 for Break-Even

Curriculum location: Common Return Measures, Case Study: Leverage through Options, Exhibit 18 interpretation, p. 35.

"Gains accrue only after surpassing the break-even point: the cost of the option, the premium."

The premium is the initial cost. For a long call held to expiry, the break-even underlying price is the strike price plus the premium.

Correct reading: Here, break-even is $\mathrm{DKK}50+\mathrm{DKK}5=\mathrm{DKK}55$.

Candidates otherwise risk answering DKK5 when asked for the break-even stock price.

Complete Module 1 Body-Text Errata Index

Scope: Module 1, pp. 5–38 (printed page numbers).

What this review covers. Errors in the printed curriculum that would change a candidate's answer or understanding: wrong numbers, wrong formulas, reversed logic, and statements that contradict the module's own data. It does not list spelling mistakes, equation-numbering slips, or wording that is loose but defensible.

References

• CFA Institute: Pricing and Valuation of Options
• CFA Institute: Options Strategies
• CFA Institute: Capital Market Expectations, Part II

This article is an independent candidate-focused analysis of confirmed errors in the CFA Level I 2027 Curriculum, Volume 1 Quantitative Methods, Module 1 Returns of Financial Assets and Instruments. It is not an official CFA Institute errata notice, and inclusion here must not be read as CFA Institute confirmation, endorsement, or approval.