Most Frequently Asked Questions About the Level II CAIA^® Exam

Posted by: Kaplan Schweser
Updated: February 9, 2021

So you passed the Level I CAIA® exam—the first milestone on the way to becoming a Chartered Alternative Investment Analyst℠. You’ve become part of an elite group, but now comes Level II. This article will answer the most common questions we receive from people preparing to take the next step toward becoming a CAIA Charterholder.

What is the difference between the Level II CAIA^® exam and the Level I exam?

The Level I CAIA exam tests your understanding of the tools used to analyze alternative investments. Level II tests your ability to apply these tools to analyze and invest in alternative investments. Like Level I, Level II has a multiple-choice portion; however, Level II also has essay questions, called the constructed response portion.

What is the Level II CAIA^® exam date?

The Level II exam is offered twice a year in March and September in a period called a “window.” The 2021 windows are March 8–19 and September 13– 24. Note: Normally, the exam is held in testing centers. However, to address safety concerns related to COVID-19, CAIA is offering all March 2021 exam candidates an online proctoring option. All the details are in this FAQ.

What is the Level II CAIA^® exam format?

The Level II CAIA exam is a 4-hour exam composed of 100 multiple-choice questions and three sets of constructed-response (essay-type) questions, all of which measure your knowledge of the CAIA Level II curriculum. The multiple-choice questions count for 70% of your score, and the constructed response questions count for 30%. You have two hours to complete the multiple-choice question section and two hours to complete the constructed-response section.

What are the Level II CAIA^® exam subjects?

The world of alternative investments is fluid, and new regulations or even deregulation are common. So, just like CAIA Level I, the topics of the CAIA Level II exam can change from year to year. However, CAIA Association has announced that the March and September 2020 Level II CAIA exam will cover the following subjects:

• Ethics, Regulation, and ESG
• Models
• Institutional Asset Owners and Investment Policies
• Risk and Risk Management
• Accessing Alternative Investments
• Methods for Alternative Investing
• Due Diligence and Selecting
• Volatility and Complex Strategies
• Current and Integrated Topics

What are the Level II CAIA^® exam topic weights?

The weights of the Level II exam topics can also change from year to year. For the March and September 2021 Level II exams, the topics are weighted as follows for the multiple-choice questions:

• Models: 8–12%
• Institutional Asset Owners and Investment Policies: 8–12%
• Risk and Risk Management: 8–12%
• Accessing Alternative Investments: 8–12%
• Methods for Alternative Investing: 8–12%
• Due Diligence and Selecting Strategies: 8–12%
• Volatility and Complex Strategies: 8–12%

For the constructed response section, weights are as follows:

• Ethics, Regulation, and ESG: 10%
• Models: 0–10%
• Institutional Asset Owners and Investment Policies: 0–10%
• Risk and Risk Management: 0–10%
• Accessing Alternative Investments: 0–10%
• Methods for Alternative Investing: 0–10%
• Due Diligence and Selecting: 0–10%
• Volatility and Complex Strategies: 0–10%
• Current and Integrated Topics: 10%

How much time does it take to study for the Level II CAIA^® exam?

CAIA Association reports that the average Level II candidate studies for at least 200 hours. It’s important that you do your studying over a period of several months, and that is why registration opens five months before the exam window opens. Cramming in the last few weeks for the exam won’t work. 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. In addition, you need time to practice for the constructed response questions because, although they are “essay questions,” they are not like those in college exams.

How hard is the Level II CAIA^® exam?

The Level II exam is intense, and the constructed response portion only adds to the difficulty. You will need every bit of your 200 hours or more to prepare…and practice is key. Some self-directed and motivated candidates are able to pass the Level II CAIA exam using a course of self-study, but many use an exam prep package or classes to stay organized and ensure they are prepared for exam day.

What is the Level II CAIA^® exam pass rate?

The pass rate for the Level II CAIA exam is on the decline. It was as high as 70% a few years ago, but the latest report from 2018 is 62%. Although more people pass than fail the CAIA Level II exam, it’s not by much. You can greatly improve your odds of success by learning from other candidates’ experiences and avoiding common study mistakes.

How much does the Level II CAIA^® exam cost?

The cost to sit for the Level II CAIA exam varies depending on when you register. The fee for each level ranges from $1,150 to $1,250, based on the exam registration period. If you want to retake the exam, the fee is $450.
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Are you ready for the next step? Check out our CAIA exam prep study packages for all learning styles now. Or, learn more about why you should pursue the CAIA charter here.