Posted by: Kaplan Schweser
Updated: January 4, 2021

By this point, you’re a CFA® exam veteran. After passing the Level I and Level II exams, your confidence is strong. That confidence is an asset, but don’t take your foot off the gas just yet. Passing Level III is going to take some work. We answer questions every day from candidates preparing to sit for Level III of the CFA exam, and we developed this article based on the most common ones, giving you all the information you need as you take this final step in your mission to earn the CFA charter.

What makes Level III of the CFA® exam different?

The Level III exam is markedly different from the previous two levels. The most significant difference is that you have to write. It’s no longer just multiple-choice questions. If you learn, and can recall, the appropriate factoids, you’re going to pass the exam. Level II is the one that charterholders typically say is the most difficult. The multiple-choice questions for Level II are math-based, and the solutions are deterministic. But CFA Institute really throws you for a loop on Level III by changing the format of the test. Level III CFA exam questions are more like case studies. There’s math involved, but it often can’t be reduced to a single equation. Level III essentially tests your ability to effectively do what employers will expect of you as a CFA charterholder.

Because the exam is so different, you also need to drastically adapt your preparation strategy in order to pass. Not adopting a Level III-specific preparation strategy is a primary reason candidates who did well on the previous two levels struggle when they get to Level III.

What is the format of Level III of the CFA exam?

Like the previous two levels, Level III is computer-based and includes both a morning and afternoon session. The morning session consists entirely of eight to fifteen essay-style questions (they’re called constructed response), with multiple parts to help you organize your answer. The questions test your real-world application of the curriculum by presenting you with a scenario that you must solve or advise on. The afternoon session features item sets, similar to Level II. Each item set begins with a case statement, and then asks four to six multiple-choice questions related to the statement.

When is Level III of the CFA exam offered?

Like the Level II exam, beginning in 2022, Level III will be offered twice a year, but the months differ. You can learn more in this article about CFA exam dates.

Can I postpone my CFA exam after I’ve registered?

You can only postpone your CFA exam after you’ve registered in specific circumstances, mostly related to medical reasons. It’s easier to withdraw, but unless you withdraw within three days of registering, you will have to pay the registration feeds again and re-register. Read this article to learn all the options you have if you think you can’t take the exam on the scheduled date.

What subjects are tested on Level III?

Candidates preparing for the Level III exam are not tested on all the topics that were part of the Level I and Level II exams. Here’s what you will be tested on:

  • Ethics
  • Economics
  • Equity Investments
  • Fixed Income
  • Derivatives
  • Alternative Investments
  • Portfolio Managemen

The topic that is most tested on the Level III CFA exam is Portfolio Management.

What are the topic weights for the exam?

Each year, Level III exam topic weights are subject to change at the discretion of CFA Institute. Here are the topic weights for the 2021 Level III exam:

TopicExam Weight
Ethics10 - 15%
Economics5 - 10%
Equity Investments10 - 15%
Fixed Income15 - 20%
Derivative Investments5 - 10%
Alternative Investments5 - 10%
Portfolio Management35 - 40%

How much time should I spend studying for Level III of the CFA exam?

While CFA Institute recommends candidates spend a minimum of 300 hours preparing for each level of the CFA exam, a June 2017 survey found that candidates actually spent an average of 335 hours preparing for Level III.

How difficult is the Level III exam?

The Level III CFA exam is challenging because, as detailed previously, the exam format is quite a bit different than the Level II and Level I formats.

What is the Level III CFA exam pass rate?

The pass rate for the June 2019 Level III exam was 56%, and it usually falls within the 50-57% range. It’s important to remember that everyone sitting for Level III has already passed the first two levels. So these are the best of the brightest candidates, and still only slightly more than half passed.

How is the Level III exam graded?

CFA® exam grading is done by machines and charterholders. CFA Institute then uses a methodology to determine a minimum passing score that is applied to each exam. Read this article for a breakdown of how the whole process works.

How much does it cost to sit for Level III?

What you’ll pay to sit for Level III of the CFA exam varies depending on when you register. If you enroll before the early registration deadline, you will pay $700. The cost for registering by the standard deadline is $1,000. Registering early means you have extra money to invest in CFA exam prep materials. You’ll also have a longer time frame over which to spread your preparation.

Hopefully this article answers most of your questions about Level III of the CFA exam. If you have additional questions, please reach out to our Student Support team. When you begin planning to sit for the exam, we strongly suggest watching Kaplan Schweser Level III manager Stuart Jackman’s video How to Pass Level III of the CFA Exam as a starting point.

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