What Do You Need To Know About CFA® Levels And How To Study Each Level?


About CFA Level 1, Level 2 and 3

Get to know the features of each CFA level and how to conquer them with the first try. Are they that difficult or people just do not know how to pass?

CFA Level 1

Content

The pass rate of CFA level 1 exam and CFA level 2 exam are around 30% – 40%. The pass rate of CFA level 3 exam is a little bit higher. We have the same curriculum books, the same exam, and sometimes, the same course and material. So why more than half of CFA candidates fail every year?

The answer may be in the strategy each people have for their CFA study. To have the best strategy for each CFA level exam, it is necessary for getting to know them. Here are what we need to know.

CFA Level 1 and How to Study CFA Level 1

What do you need to know about CFA Level 1?

Topic exam weight and study sessions

Ethical and Professional Standards – Exam Weight: 15% – Session 1

Quantitative Methods – Exam Weight: 12% – Session 2 – 3

Economics – Exam Weight: 10% – Session 4 – 5

Financial Reporting and Analysis – Exam Weight: 20% – Session 6 – 9

Corporate Finance – Exam Weight: 7% – Session 10 – 11

Portfolio Management – Exam Weight: 7% – Session 12

Equity – Exam Weight: 10% – Session 13 – 14

Fixed Income – Exam Weight: 10% – Session 15 – 16

Derivatives – Exam Weight: 5% – Session 17

Alternative Investments – Exam Weight: 4% – Session 18

Test details
  • Format: multiple choice question
  • Structure: 240 MCQs, two 3-hour sessions, around 1.5 minutes/question
  • Morning session (3 hours): 120 MCQs, cover all topics
  • Afternoon session (3 hours): 120 MCQs, cover all topics
  • Knowledge and skill area: knowledge of the ethical and professional standards, comprehension questions mostly on investment tools, analysis questions.

How to Study CFA Level 1?

  • Register for a test period: December or June. Only CFA level 1 exam have one more run in Pick your exam time first and foremost.
  • Examine the weight of each topic and focus most on heavy topics
  • Choose the materials or course that work for you: we have another post on choosing learning method and material for CFA study.
  • Build a learning schedule: based on the time you decide to take the test, the material you want, and the exam weight of each topic, build a plan that focuses on the most important issue.
  • Study the updates of the curriculum: every year, there are changes in the curriculum. Do not neglect them.
  • Do as much as mock exams and questions as possible: practice will help you understand the theory better. And you will be more familiar with the time pressure of 1.5 minutes/question.
  • Spend the last two week for reviewing. Perfect material for reviewing is CFA Mind Maps. It is short and systematic that will force you to understand and memorize the content.

Six steps above will apply to all CFA level study.

  • CFA level exam 1 requires you to work with your calculator a lot. So, pick a good one and be familiar with it.
  • Answer all questions, even with guess They do not minus point of the wrong answer.

CFA Level 2 and How to Study CFA Level 2

What do you need to know about CFA Level 2?

Topic exam weight and study sessions

Ethical and Professional Standards – Exam Weight: 10-15% – Session 1 – 2

Quantitative Methods – Exam Weight: 5-10% – Session 3

Economics – Exam Weight: 5-10% – Session 4

Financial Reporting and Analysis – Exam Weight: 15-20% – Session 5 – 6

Corporate Finance – Exam Weight: 5-15% – Session 7 – 8

Equity Valuation – Exam Weight: 15-25% – Session 9 – 11

Fixed Income – Exam Weight: 10-20% – Session 12 – 13

Derivative Investment – Exam Weight: 5-15% – Session 14

Alternative Investments – Exam Weight: 5-10% – Session 15

Portfolio Management – Exam Weight: 5-10% – Session 16 – 17

Test details

  • Format: item set questions
  • Structure: 20 item set questions, two 3-hour sessions, 120 items total, 3 points/item
  • Morning session (3 hours): 10 item set questions, 6 items/question
  • Afternoon session (3 hours): 10 item set questions, 6 items/question
  • Knowledge and skill area: more complex analysis, focus on valuing assets

How to Study CFA Level 2?

Similar to CFA level 1 study, for level 2 you will also:

  • Examine the weight of each topic and focus most on heavy topics
  • Choose the materials or course that work for you
  • Build a learning schedule
  • Study the updates of curriculum
  • Do as much as mock exams and questions as possible
  • Spend the last two week for reviewing.
  • Understand the concepts and relations: CFA level 2 exam tests in sets of 6 items. In many cases, the answer to the next question is based on the result of the previous. So, you need to understand what you learn, not just memorize them.

CFA Mind Maps provide you with keyword and connections between them. You will have to make sense of those connections or, in other words, understand the relationship between them. It is super useful in this CFA level 2 exam.

  • Answer all questions, but try to get the first question of each set right!

CFA Level 3 and How to Study CFA Level 3

What do you need to know about CFA Level 3?

Topic exam weight and study sessions

Ethical and Professional Standards – Exam Weight: 10-15% Session 1 – 2

Behavioral Finance, Individual Investors, and Institutional Investors – Exam Weight: 5-15% – Session 3 – 6

Capital Market Expectations – Exam Weight: 5-15% – Session 7

Asset Allocation – Exam Weight: % – Session 8 – 9

Fixed Income and Equity Portfolio Management – Exam Weight: 10-20% – Session 10 – 12

Alternative Investments, Risk Management, and the Application of Derivatives – Exam Weight: 5-15% – Session 13 – 15

Portfolio: Execution, Evaluation and Attribution, and Global Investment Performance Standards – Exam Weight: 40-55% – Session 16 – 18

Test details:

  • Format: item set and essay questions
  • Structure: 10 item set questions, 8-12 constructed response questions
  • Morning session: 8-12 constructed response questions with subparts, 180 points
  • Afternoon session: 10 item set questions
  • Knowledge and skill area: synthesis, analytical methods, portfolio management and wealth planning.

How to Study CFA Level 3?

First of all, do these below preparations as you do for CFA level 1 and CFA level 2:

  • Examine the weight of each topic and focus most on heavy topics
  • Choose the materials or course that work for you
  • Build a learning schedule
  • Study the updates of curriculum
  • Do as much as mock exams and questions as possible
  • Spend the last two week for reviewing.
  • Study the synthesis of all concept and analytical methods. Try to connect everything you learn in each session. It is important here to understand be able to restate it in the test.
  • Practice writing constructed response (essay). You need to follow the answer ad essay guidelines from the CFA Institute. There is no other material better at this task than the CFA curriculum.
  • Review intensively. CFA level 3 readings are challenging and more in-depth. It is impossible just to memorize the concepts. Even if you can remember, you will fail to form an essay answer. You have to train your brain to catch the connection between concepts That is what a mind map can do best. Looking at a mind map, we have to recall the relationship between concepts in the boxes.

Conclusion

Even if three CFA levels are different on many points, there is one common thing: you have to try your best. Plan your study carefully. Strictly follow the schedule. Study hard and stay focus. But always remember to take care of yourself and do not stress yourself. CFA exam is difficult; however, with effort, determination, and right plan and materials, we can conquer it.

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