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CEP Level 1

Just wondering if anyone else is working towards the CEP Level 1 test in November.

I am terrible at self study and thought maybe a weekly conference call would benefit anyone interested. I know it would help me to stay on a good study path.

If anyone has already taken the test and would like to offer study hints, that would certainly help too!!!

Post if you are interested or have any tips, thanks!

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A few tips for everyone preparing for Level I.

1. Read and outline the sample plan documents in the maroon binder.  Know them well.  There used to be approximately 25 questions on the plan docs, not sure if that's still the case.

2. Read and outline the Baksa / Sparks article on ESPP in the binder.  Make sure you can work through the numerical examples on tax treatment: DDs vs. QDs, etc.

3. Read all three books at least once and underline key terms and definitions.

4. Tab key terms and definitions in the Stock Options and Beyond the Basics books.  This will help you answer questions faster when taking the test.

5. When taking the test:

- You have four hours to answer 100 questions.  Pace yourselves.  Make sure you are working through approximately 25 questions per hour.  If you are stuck on a question, skip it and come back to it later if you have time.  You don't want to be stuck with one hour to go and 50 unanswered questions...

Good luck!


I am also preparing for Level 1.


John - thank you.  Your tips are very helpful.


The CEP offers Exam Overview Webinars for every level which are very good.  The speakers are well educated and very known within the industry. 

The NCEO also offers exam prep test questions followed by webinars to discuss the answers. You have to pay for this, but I thought it was well worth it.

Good Luck!  Wendy

I found study guides from the CEPI, NCEO, and FRS (Equity Strategies) to be helpful.  I printed all of the presentation slides, inserted them in the notes area of the binder,  and tabbed those for quick reference.  Also, make sure when you tab your books that you include a tab for the index and glossary.  Good luck!

Just a couple of points to share... I am the Director of the CEPI.

Study groups are very helpful.  Upon exam registration you have the opportunity to select to have your name released to others who are interested in study groups.  After the exam registration closes (this Friday), the CEPI will release name and email for all interested candidates.  Angela - you did not select this upon registration. If you would like me to change your selection, I would be happy to do so.

Above, John referenced the Baksa/Sparks article in the binder... this article was incorporated into "Selected Issues in Equity Compensation" as Chapter 9.

All of the above recommendations are good ones.  Another suggestion that I would add is to use the Reading List.  The Syllabus assigns all the readings, but the Reading List (which follows it in the binder) specifically identifies where particular topics are in the reading assignments.  It is an extremely helpful tool.  For example, if you need to brush up on the Securities Act of 1934, the reading list will direct you to the specific areas of the assigned reading that cover that topic.

Good luck studying!

Hi Emily,

I just re-read your response.

YES! please change my selection if it is not too late.


A couple of other test taking tips.  I have actually volunteered to do the NCEO's review for Level 3 for the past several years.  The tests are all fair, but very few people pass them without great preparation.

1. Understand any obviously "wrong" answers and cross them out so they do not distract you.  That way if you have to guess as time runs out, you are only guessing from the possible correct answers

2. Try starting from the back of the test.  This simple technique can change help your brain look at things from a new direction and may help trigger answers.

3. IF YOU ARE A QUICK READER.  Answer the easy questions first.  Read every question quickly and only answer those you can answer in 30 seconds or less.  If you can answer it quickly (either you know the answer or know exactly where to find it) then answer it and move on.  If the answer requires research, mark it and come back later.


5.  Create and Index of Indexes.  Make copies of all of the indexes from your books and organize them into one document.  Even better if you create your own Index of Indexes in a spreadsheet.  This will give you a quick resource that directs you where you need to go.

6. Bring scratch paper and write every math-based question down in a format that works for you. Some people like tables, similar to Excel.  Some people like algebra-based formats (one-long horizontal equation.  Some people like stacking number, similar to a cash resgister receipt.  The act of writing math questions triggers tha part of your brain than helps solve them.  For best results, write things down BEFORE you start using you calculator.

7. Understand your weak areas and send more time marking up those texts.  Remember that things that seem arcane to you, may be common-place to others, so make sure you know where to find rules like 13d, 162m, 701, sub-sections of Section 16 IRC 423, 280g, etc.  Not all of these will be on Level 1, but knowing where they are will limit your search time.

8. Draw out timelines for date-based questions. If you are given a problem with multiple dates and prices, write it out as a timeline so you can get a visual of where the dates are and when the prices occurred.

9. Consider writing out the data for questions in a format similar to reports that you commonly use.  If the question is askig you to detemine the options remaining after a grant, exercise and sale, put the data (roughly) in the format of one of the reports you look at nearly everyday

10.  READ THE PLANS.  MARK UP THE PLANS.  LIVE THE PLANS.  BE THE PLANS.  Trying to find information in the plans always trips people up.  make a copy of the plans at 75% of their normal size and fill the white area remaining with notes that turn plan language into your language.

11.  BONUS TIP.  Sometime today look at a clock and do absolutely nothing for 2 minutes and 20 seconds.  Trust me, it is hard. This is about the amount of time you have for each question.  Some of your anxiety will leave when you realize how long that amount of time actually is.  Then, start the clock again and look up everywhere the test resources refer to Section 16a. You will find that the time flies by.  This will help you understand if your mark-ups and notes are ready for the test.


Thanks to all for the very helpful tips posted thus far.

I'm wondering if anybody here has used the Level 1 Prep Course offered by the NCEO, specifically the "Laminated CEP Institute Exam Quick Reference Guide" - is this quick reference guide very useful, or is it similar to what we as test-takers are likely to be composing on our own during our exam prep?  Is there any way to purchase this guide by itself, without having to enroll in the entire NCEO Prep Course?

Many thanks!



I am not familiar with the laminated guide, but I took the NCEO practice tests online and found them to be very helpful.  Probably worth the cost, especially if your employer will reimburse you : )

Good luck!



I would suggest you send a message, via this site, directly to Corey Rosen at the NCEO.  Corey ihas run the NCEO since the '80s and is both very nice and extremely knowledgeable has authored many books as well). He can probably get your questions answered and is just a great resource to know.

My personal experience is that the NCEO guides work for many people and provide a good foundation for others to create their own resources.


The NCEO has received very positive response from candidates about the laminated quick reference guide.  You do have to sign up for the prep course to get the guide (level 1 cost is $110 for NCEO members, $150 for nonmembers).  http://www.nceo.org/training/cepstudy.html

Also, if you have questions about the course or other questions for the NCEO you can email equitycomp@nceo.org.

Good luck studying and with the exam!


Hello Everyone,

Thanks again to all those who have offered advice and suggestions; you have been most helpful.

I've purchased the NCEO guide, and recommend it to all candidates.  The guide can be used for Levels 1, 2, or 3.  The quick card is very useful, and I am looking forward to the webinars that will be available this week.  The online quizzes are also a great aid with study prep. 

Question regarding the reading materials - are there any sources that stand out as most important, as far as the number of test questions derived from it?  I've read Consider your Options, and most of Selected Issues in Equity Comp, but still have to spend some more time on getting through the Stock Option Book.  It seems that Consider your Options is more of an introduction, and I can't really see it containing any information that is not in the other 2 books (although it may serve to prepare the student for the more advanced discussions in those books).  Does anyone have any suggestions as to which of the 3 should be the primary focus?

Also, the two exhibits in the binder; ESPP and Option Plan samples - are these heavily tested?  My guess is yes. 

Thanks again to the mentors, and best of luck to fellow candidates.

Profile Image for Pam C. Pam
  • Tue, Oct 28, 2008 11:37 AM

Hi Michael,

The stock plans in the binder do tend to be pretty heavily tested in the exams. I teach the Level 1 and Level 2 Webinars for the NCEO's Prep Course for the CEP exam. We will walk through the stock option and ESPP provisions in Friday's Level 1 Webinar. (We'll go through the restricted stock provisions in Wednesday's Level 2 Webinar.)

Even if much of "Consider Your Options" is more basic than you need, be sure to read the chapters on the alternative minimum tax in that book. Otherwise, I'd give roughly equal weighting to "The Stock Options Book" and "Selected Issues" in terms of study time.


I agree with Pam.  The Plan docs are essential.  My suggestion is to copy them at 75% and put "plain English" notes in the margons.

Consider Your Options is an excellent reference tool simply because the chapter are so direct and short.  While it is too basic for a long term reference on most topics, the sections on AMT, 83(b) and other less frequented transactions are a good source for both questions and answers.

Best of luck on the exam!

I actually found that OUTLINING the plans, so I didn't have to read the text to know what the plan said about termination grace periods (or whatever) was really helpful.

But then I took the test eons ago (only a slight exaggeration) so if others disagree, I'm perfectly willing to cede this point.

Firstly, thanks again to all for being so forthcoming with helpful tips and comments. 

Hopefully, since I will be taking the test in about 30 hours, this will be my final go at brain-picking...

Dan had some interesting points in his test-taking-tips post earlier in this thread.  One of his suggestions was to try starting from the back of the test.  Is the test built around any sort of curve with where the difficult questions are positioned? (i.e. Series 7 exam has the easier questions at the beginning and the end of the test, with the difficult questions in the middle).  Is there any kind of similar structure with the CEP?  Also, are the questions grouped together by topic (questions 1-15 deal with ESPP, 16-30 with NQ and ISO, etc...), or are the topics spread randomly around the test?

Emily brought up the Syllabus and Reading List, and I found both to be great tools to let you know in what chapter of which book certain subject matter is discussed.  One question on this - there are a few chapters in each book that are not listed in either the Syllabus or Reading List; is it safe to assume that those chapters will not be tested at all in Level 1, therefor making this material unnecessary to learn until Levels 2 and 3? 

Finally, the NCEO webinars that Pam conducted were really great and very informative - if anyone has signed up for this prep course but was not able to attend the live session, I strongly recommend viewing the recorded tutorials that are available on the website.

As Wendy suggested, I will be doing just that with the CEPI Exam Overview Webinars tomorrow (as a very-last-minute refresher).

I think that is all for me.  Thank you everybody.



I am responding to the question referring to my response.  I am sure others will respond to theirs.

My suggestion to start from the back was more psychological than physical.  There is no specific evidence that CEP exams are weighted to have more difficult questions at the end.  In fact, many times the opposite is true.  The technique of starting at the back is especially good for anxious test takers.  It simply forces you to think differently and therefore can get you to answer you know, but might not have found otherwise.

The topics are randomly scattered throughout the test.  You may swing between three or four topics in the space of 10 questions.

I wish you the best of luck.  With all of your preparation I am sure you will be ready and able to pass the exam.


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