The Best Way to Study for the CAIA® Exam
While everyone hears about the difficulty of the CAIA® exam, very few believe it until they experience it for themselves. Slightly more than half of those who take the exam pass it, which is a better average than the CFA® Program exam and the FRM® exam. However, neither level of the exam is exactly a walk in the park. Pass rates have been declining since the exam was first offered, and only 40% of those who register for the exam end up passing both levels. People who are studying for the CAIA exam are smart, driven, and want to pass just as much as you do. That means it is crucial that you have a study plan and adhere to it.
We asked over 100 of our former CAIA Program students, who now hold CAIA charters, what advice they have for candidates just getting started in their studies. We compiled some of their advice for this article to help you figure out the best way to study for the exam.
Get into a Study Routine Early
Many successful CAIA charterholders credit their study routine for their success in taking the CAIA exams. Not only do you need to study the material, but you also need to be able to apply what you learned to scenarios on the exam. This level of understanding and practical application takes time to develop. Therefore, you should get into a study routine early and stick to it.
We recommend following the Prepare > Practice > Perform® method of studying. In the prepare stage, you absorb information through reading and listening to lectures. In the practice stage, you start working through practice problems. In the perform stage, you simulate exam conditions to assess your level of readiness. As you develop your study plan, we typically advise spending:
30–40% of your time preparing
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Successful charterholders note that practicing was critical to their success. Richard Chan, a former Kaplan student who has earned the CAIA charter says, “Be sure to work on as many practice questions as possible. The exam preparation journey is full of knowledge and insights. Try to treat it as a course, not merely a scramble for the passing grade.”
Focus on the Exam Topics and Weights
You should have a solid understanding of the CAIA Program curriculum and how each topic is weighted. The curriculum is updated every exam cycle, with Level I focusing on six core topics, while Level II focuses on nine. Exam weights vary by level and can change slightly from year to year, so it is good to be clear on what the weights are for the exam you are taking.
Level I Topic
Approximate Exam Weight
Professional Standards and Ethics
Introduction to Alternative Investments
Level II Topic
Ethics, Regulation, and ESG
Institutional Asset Owners and Investment Policies
Risk and Risk Management
Accessing Alternative Investments
Methods for Alternative Investing
Due Diligence and Selecting Strategies
Volatility and Complex Strategies
Apply Concepts to Real Situations
Some candidates rely too heavily on simply reading the curriculum and study products multiple times and neglect practice questions and mock exams. These candidates may understand the concepts, but they may not be able to recall their knowledge in an exam setting when a concept is tested in an unfamiliar format.
Learn how to apply your knowledge to real-life scenarios: Memorizing vocabulary and concepts will not be enough to pass both levels of the CAIA exam. Each exam level tests your ability to apply what you know to situations you are likely to encounter when serving clients. So keep that in mind and try to think about how you might use the concepts you’re learning about.
Learn How to Take the Exam
Learning the material is critical, but so is learning how to take the exam. CAIA Mock exams help you practice taking the exam in realistic exam-like conditions in the last four weeks of studying. Because it mimics the pressure of exam day, the mock exam helps you develop familiarity with the testing conditions and gives you the confidence to go into exam day fully prepared.
By taking mock exams, you get a solid understanding of where the answer comes from, the calculations required, and what terms they are testing you on. You can fill in your knowledge gaps and get an idea of how you should pace yourself during the actual exam. Mock exams are not a substitute for practice questions or tests, and practice questions and tests are not a substitute for mock exams. Each has its own purpose and uniquely prescribed usage. To further confuse the issue, some exam prep providers market practice tests as mock exams. Do your research to ensure you’re getting the product you’re expecting when you purchase a mock exam.
The appropriate timing for a mock exam is typically a few weeks before you sit for the actual exam. Taking a mock exam too early will not give you an appropriate understanding of how much information you’ll actually retain on exam day. If you take a mock exam too late, you won’t have ample time to improve your performance in identified areas of weakness.
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