How to Pass the CFA^® Exam

For most CFA candidates we recommend spending 6 months preparing for the Level I exam, so it’s understandable why you’d want to optimize your study order. Each candidate may have a unique ideal study order, but in general, you can follow this structure to prepare for the Level I exam.

What Order Should You Study Level I Topics?

Ideally, you should study the curriculum in the order presented below, as some topics will build on others. For example, asset valuation builds on the time value of money concepts covered in Quantitative Methods. However, if you already have this knowledge, then the order may not really matter and you may wish to change the order. The key is prior knowledge and being conservative. Don’t overestimate your ability in a given topic area. Of course, if you do not have any knowledge in these areas, then we recommend you stick to this order.

1. Quantitative Methods (8-12% topic weight)
2. Economics (8-12% topic weight)
3. Financial Statement Analysis (13-17% topic weight)
4. Corporate Issuers (8-12% topic weight)
5. Equity Investments (10-12% topic weight)
6. Fixed Income (10-12% topic weight)
7. Derivatives (5-8% topic weight)
8. Alternative Investments (5-8% topic weight)
9. Portfolio Management and Wealth Planning (5-8% topic weight)
10. Ethical and Professional Standards (15-20% topic weight)

Assess your baseline knowledge of the Level I CFA Program curriculum with a free CFA diagnostic exam

1. Quantitative Methods

Level I Topics to Study for Quantitative Methods

• Time value of money
• Organizing, visualizing, and describing data
• Probability concepts
• Common probability distributions
• Sampling and estimation
• Hypothesis testing and linear regression basics

During the time you prepare for quants, make sure you familiarize yourself with the CFA exam calculator policy. Once you have an approved calculator (Texas Instruments BAII Plus or Hewlett Packard 12C) spend time getting to know the basics of setting up your calculator. 

2. Economics

Level I Topics to Study for Economics

• Demand and supply analysis
• Firm and market structures
• Aggregate output, prices, and economic growth
• Business cycles
• Monetary and fiscal policy
• Geopolitics
• International trade and capital flows
• Currency exchange rates

Keep track of your progress by downloading our free 6-Month Level I CFA study progress tracker that can be customized to fit your needs.

3. Financial Statement Analysis

Level I Topics to Study for Financial Statement Analysis

• Financial reporting statements for income statements, balance sheets, and cashflow statements 
• Financial analysis techniques
• Inventories such as long-lived assets and income taxes
• Non-current (long-term) liabilities
• Financial reporting quality
• Different applications of financial statement analysis

When you get to preparing for financial statement analysis, learn how to use advanced TI BAII Plus calculator functions.

4. Corporate Issuers

Level I Topics to Study for Corporate Issuers

• Corporate structures and ownership
• Corporate governance and other ESG consideration basics
• Business models and risks for capital investments, working capital and liquidity, cost of capital basics, and capital structures
• Measures of leverage

5. Equity Investments

Level I Topics to Study for Equity Investments

• Marketing organization and structure
• Security market indexes
• Market efficiencies
• Equity securities basics
• Concepts and basic tools of equity valuation

6. Fixed Income

Level I Topics to Study for Fixed Income

• Defining elements of fixed-income securities
• Issuance, trading, and funding in fixed-income markets
• Fixed-income valuation basics
• Asset-backed securities basics
• Fixed-income risks and returns
• Fundamentals of credit analysis 

7. Derivatives

Level I Topics to Study for Derivatives

• Derivative instruments and derivative market features
• Forward commitment and contingent claim features and instruments
• Derivative benefits, risks, and issuer and investor uses
• Pricing and valuation of forward contracts and for underlying and varying maturity
• Pricing and valuation of futures contracts
• Pricing and valuation of interest rates and other swaps
• Pricing and valuation of options
• Option replication using put-call parity
• How to value a derivative using a one-period binomial model

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8. Alternative Investments

Level I Topics to Study for Alternative Investments

• Categories, characteristics, and compensation structures
• Performance calculation and appraisals of alternative investments
• Private capital, real estate, infrastructure, natural resources, and hedge funds

9. Portfolio Management and Wealth Planning

Level I Topics to Study for Portfolio Management and Wealth Planning

• Basics of portfolio management
• Portfolio risk and returns
• Basics of portfolio planning and construction
• Behavioral biases of individuals 
• Risk management basics
• Basics of technical analysis
• Fintech in investment management

10. Ethical and Professional Standards

Level I Topics to Study for Ethical and Professional Standards

• Ethics and trust in the investment profession
• Code of ethics and standards of professional conduct
• Basics of global investment performance standards (GIPS)
• Ethics applications

During your final week of studying, browse through each standard and its corresponding guidance in the CFAI Standards of Practice Handbook. This is a prominent portion of the exam that should not be overlooked. Spend your study time wisely in this section and take many practice questions.  

Alternate Order To Study Level I Topics

If you are actively searching or just curious for another way of approaching the material, our experience has found that some candidates have used this order to successfully pass the Level I exam. 

1. Quantitative Methods (8-12% topic weight)
2. Portfolio Management and Wealth Planning (5-8% topic weight)
3. Financial Statement Analysis (13-17% topic weight)
4. Economics (8-12% topic weight)
5. Equity Investments (10-12% topic weight)
6. Fixed Income (10-12% topic weight)
7. Derivatives (5-8% topic weight)
8. Alternative Investments (5-8% topic weight)
9. Corporate Issuers (8-12% topic weight)
10. Ethical and Professional Standards (15-20% topic weight)

Once again, the order is up to you. As you progress through the material you will discover what works best for you and uncover your strengths and weaknesses. With that said, there are no shortcuts. You must be totally committed and disciplined in your studies to pass this difficult exam. 

When To Start Practicing Multiple Choice Questions?

50% of your total study time should be spent practicing multiple-choice questions. So after you spend time preparing for quants, start practicing multiple-choice questions related to this topic area.

Try Today’s Level I CFA Question

When To Take Mock Exams?

You should start taking mock exams about eight weeks from exam day. This will give you plenty of time to learn how to take CFA exams. Throughout the eight weeks try to take at least four mock exams. Give yourself enough time after each mock exam to evaluate your performance and solidify your test-taking skills on a computer-based exam.

Assess your baseline knowledge of the Level I CFA Program curriculum with a free CFA diagnostic exam

What To Do If You Fall Behind Studying?

The simple answer to this question is: don’t! If you fall behind in the first couple of months, you might be able to add a few more hours per week to your study plan over the course of the six months to get you back on track. 

If you fall behind in the last month of your prep and spend little time practicing multiple-choice questions and taking mock exams, you will definitely go into the CFA exam unprepared and stressed. You may consider requesting a deferral and pay the fee to postpone your scheduled exam to a future exam window.  

To avoid falling behind in the first month of your exam prep, build out a study progress tracker and stay committed to your plan. Remember, you only have to study two times: when you want to, and when you don’t.

Level I Time Management Tips

Tip 1: Start Preparing Early

Set expectations about how much time you are going to need early on in the process. The CFA Program is one of the highest distinctions in the investment management profession. The curriculum for each level is extensive and it’s important to be extremely honest about your knowledge, availability, and test-taking skills.  

Tip 2: Use A Study Progress Tracker

Using a study progress tracker will keep you organized and help you plan for the future. There are ten topics and you’ll need to dedicate a minimum of twelve hours each week preparing for every topic. For most topics, you should give yourself two weeks or twenty-four hours of preparing and practicing time.

Tip 3: Stick To Your Study Plan

Sooner or later you’re going to feel run down and a little burned out. The thought might even cross your mind that maybe the CFA charter isn’t right for you.

This is a good time to take a short break. Don’t answer any practice questions or open a book. Do something you love unrelated to the CFA Program. Taking time for yourself is important to stay focused. 

By giving yourself a few days off, you’ll be surprised at how energized you’ll feel. If you have clear goals and objectives for taking the exam, you’re likely to find yourself strongly motivated to get back to studying, so you can successfully pass.

How to Pass the CFA Exam While Working Full Time >>

Tip 4: Practice Concepts

Even if you have the required technical knowledge, you still need to practice a significant amount of multiple-choice questions, think thousands, in order to apply your knowledge to exam-based questions. The more you can practice, the stronger you will become in applying your knowledge. Answering questions incorrectly outside of the testing center, and identifying why you answered them wrong, may help prevent you from making the same mistakes on exam day.

Ready To Start Preparing for the CFA Exam?

The CFA exam pass rate is low because it is a challenging exam with three levels. The percentage of people who pass all the levels is small, especially when you consider that the passing rate for Level 1 is less than half. Let’s look at the data, and discuss what you can do to increase your chances of passing.

CFA^® Exams Passing Rate

CFA® exam grading is done yearly by machines and charterholders. CFA Institute then uses a methodology to determine a minimum passing score that is applied to each level of the exam. That score is not made public. Pass rates for CFA Level I and Levels II and III are given out for each exam window.

Recent CFA Level I Exam Pass Rates

Recent Level I pass rates continue to be below the all-time Level I average of 41%. The July 2021 pass rate of 22% was the lowest in history, which was the beginning of a trend that has only slightly corrected since. The angst in the CFA community is clearly high and rightly so; candidates made a huge investment of time and money only to yield a devastating result. 

The CFA Institute hasn’t provided much information as to why the Level I pass rate is so much lower than previous exam administrations, and we won’t speculate on that topic here. Rather, we want to focus on providing guidance and support to our CFA candidates, both successful and unsuccessful.

Recent CFA Level II Exam Pass Rates

The Level II all-time average pass rate is 46%. Recent results have varied, and the latest pass rate for November 2022 continues to demonstrate the difficulty of the Level II exam.

Recent CFA Level III Exam Pass Rates

The August 2022 Level III exam pass rate was 48%, which continues the low pass rate trend we've seen in 2021. Recent results are above the 2021 average Level III pass rate, which is a positive sign for future Level III pass rates.

Similar to the Level I and Level II results, it is unclear why pass rates have been so low for recent exams, but our goal remains the same—to help you become a CFA charterholder. 

For those who passed, congratulations. For those who did not, we will help you take the next best step forward and are dedicated to helping you achieve your professional goals.

Whatever your exam result, the obvious question now is, “What do I do now?” If you received your results and failed the CFA Exam, we lay a tactical plan for what your next steps should be.

Why are Recent CFA Exam Pass Rates So Low?

You probably noticed 2022 scores beginning to get closer to all-time averages. In early 2021 and late 2020, there were all sorts of speculation about the reasons for the low scoring. As expected, scores are beginning to normalize but continue to remind candidates to take exam prep seriously. If you haven’t taken the exam yet and these scores concern you, this is a good time for you to consider a CFA exam prep package, which can increase your odds of being in the passing statistics.

Considering taking the CFA exam? Download our free eBook, Before You Decide to Sit for the CFA^® Exam, to get advice and tips from past exam-takers.

How Hard is the CFA Exam?

Be prepared for a challenge at any level. As you can tell based on the recent passing rates, the CFA Exams are widely considered to be difficult exams. For Levels I and II, you are expected to know the major concepts related to these topics and how they are applied:

• Ethical and Professional Standards
• Quantitative Methods
• Economics
• Financial Statement Analysis
• Corporate Issuers
• Equity Investments
• Fixed Income
• Derivatives
• Alternative Investments
• Portfolio Management and Wealth Planning

CFA Level Difficulty: Which CFA Exam is the Hardest?

No level of the CFA exam is easy. Each level is progressively harder. In the end, the number of candidates who pass all three levels is a small percentage of those who register for Level I and stick with it. That said, the general consensus of those who have taken all three levels of the CFA exam is that Level III is the most difficult because of the constructed response questions, which are in the format of essay questions.

For those who have gotten used to the multiple-choice format, writing answers can be difficult. Also, there is a tendency for some candidates to think that constructed response questions should be treated like essay questions on a college or graduate school exam, but they are completely different.  

Study Tips: How to Increase Your Odds of Passing the CFA Exam

You should be prepared to allocate at least 300 hours to studying for each level. These tips will help you develop the knowledge and confidence necessary to increase your odds of passing:

• Create your CFA study plan, and start studying early. 
• Focus on the Learning Outcome Statements (LOS) from CFA Institute because they detail exactly what you are expected to do on exam day. 
• Sign up for a CFA exam preparation class.
• Develop a steady, regular study routine. 
• Balance your studying between reading and practicing with breaks in between to enable concepts (and their application) to percolate.
• Build your confidence daily by signing up for a CFA question of the day. Take at least one CFA mock exam. The best mock exams simulate the actual Prometric computer-based exam. They help you assess your mastery of everything you’ll be expected to know and do when you sit for the actual CFA exam, along with how well you handle the pressure of a timed exam.

Next Steps for CFA Candidates

Learn more about the CFA Exam if you are interested in becoming a Chartered Financial Analyst. If you are interested in taking (or re-taking) the exam, check out our CFA study materials.

While everyone hears about the difficulty of Level I of the CFA® I exam, very few believe it until they experience it for themselves. To pass the exam, you will need to achieve at least the minimum passing score (MPS) set by the Board of Governors of CFA Institute after each exam. The all-time average CFA Level I pass rate is only 42%, and 2021 pass rates have been even lower. People who are studying for the CFA 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.

TABLE OF CONTENTS:

• Start Your CFA Exam Level I Prep Early
• How Much to Study for CFA Exam Level I 
• Review CFA Institute's Learning Outcome Statements
• Know CFA Level I Exam Topic Weights & Curriculum
• Recommended CFA Level I Prep Breakdown
• Learn How to Take the CFA Level I Exam
• Apply CFA Level I Exam Concepts to Real Life
• Can You pass CFA Level I with Self Study

Develop and Begin Your CFA Level I Exam Prep Routine Early On

Ideally, your Level I CFA exam prep should begin about six-to-nine months before your exam day, and be finished three months out from your exam date. Many successful CFA charterholders credit their study routine for their success in taking the CFA 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, it is crucial that you get into a study routine early and stick to it.

Begin your journey to becoming a successful CFA candidate by downloading our free CFA Program fundamentals eBook

How Long To Study for the Level I CFA Exam

CFA Level I candidates should spend at least 6 months studying for the Level I exam. 6 months is the industry standard and is actually why CFA Institute implemented the requirement that candidates cannot sit for an exam within 6 months of a previous attempt. CFA candidates can certainly try to study in less time, but the best way to prepare for the Level I exam comes down to giving yourself ample time to study.

How to Study for the CFA Level I Exam in 6 Months >>

Is 1,2,3,4, or 5 Months Long Enough To Study For Level I?

No, studying for any CFA exam in less than 6 months will not give you enough time to adequately prepare unless you have a relevant background in the curriculum.  According to CFA Institute, candidates study on average 348 hours for the Level I exam, 364 hours for the Level II exam, and 365 hours for the Level III exam. 

How Many Study Sessions Do You Need for CFA Level I Exam Prep?

You should engage in 80-100 study sessions across your six-to-nine months preparing for the Level I CFA Exam. We arrived at this range because most CFA Candidates prefer to prep for a few hours, almost every day of the week. If your preference is to take more frequent days off from your prep, you can engage in fewer study sessions than that. However, keep in mind that if you were to only engage in 60 study sessions, then you will need to average 5 hours per study session in order to meet the minimum suggestion of 300 total hours studying. The more often you sit down for a study session, the less demanding each individual study session will be.

CFA Level I Study Progress Tracker >>

Review CFA Institute's Learning Outcome Statements (LOS)

Your focus should be on the Learning Outcome Statements from CFA Institute because they detail exactly what you are expected to do on exam day.

The Learning Outcome Statements (LOS) and core concepts are built from the Candidate Body of Knowledge, developed by the CFA Institute. They have devised study sessions and LOS to help candidates figure what should be gained from each reading. Be sure to develop your prep plan around these, as they will help you focus on the right topics for the exam.

Focus on the CFA Level I Exam Topic Weights and Curriculum

You should have a solid understanding of the CFA Program curriculum and how each topic is weighted for the Level I exam. The curriculum is updated every exam cycle, and all three levels of the exam focus on the same core topic areas. 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.

The curriculum for Level I of the CFA exam covers 10 topics, each of which is weighted. The topics and weights change regularly, but these are the most recent topics and weights shared by CFA Institute in 2022:

• CFA Level I Ethical and Professional Standards: 15-20%

• CFA Level I Quantitative methods: 8–12%

• CFA Level I Economics: 8–12%

• CFA Level I Financial statement analysis: 13–17%

• CFA Level I Corporate issuers: 8–12%

• CFA Level I Equity investments: 10–12%

• CFA Level I Fixed income: 10–12%

• CFA Level I Derivatives: 5–8%

• CFA Level I Alternative investments: 5–8%

• CFA Level I Portfolio management and Wealth planning: 5–8%

Although the weights are variable (which means they are subject to change), you can see that the one with the most weight is ethics, financial reporting and analysis, equity investments, and fixed income. Make sure you are really on top of those four topics. Otherwise, it will be more difficult to pass the exam.

When deciding how much time to allocate to the different topics, each candidate will have strong and weak areas. Dedicate time to each area accordingly, but don’t lose sight of the syllabus weightings. Two topics, Ethical and Professional Standards, and Financial Reporting and Analysis, are worth more marks on the day of the exam than Economics, Derivatives, and Alternative Investments combined. As interesting as the world of derivatives is, you can’t afford to wallow in it for weeks on end for only 6%.

Recommended CFA Level I Exam Prep Breakdown

We recommend following the Prepare > Practice > Perform® method of studying. In your prep stage, you absorb information through reading and listening to lectures. In the practice stage, you start working through practice problems. In your perform stage, you simulate exam conditions to assess your level of readiness.

Read more about what exactly your Level I CFA Exam Study Plan should look like.

CFA Exam Level I Prep: Reading & Lectures [PREPARE]

To increase your odds of passing, you should spend up to 40 percent of your study time preparing, which involves absorbing information by reading and listening to lectures.

CFA Exam Level I Prep: Practice Questions [PRACTICE]

On top of that, you should spend up to 50 percent of your self-study time on practice questions. Research studies have shown that practice is the most effective way to prepare for Level I.

For too many candidates, this means taking a brief quiz, marking it, and moving on. When practicing Level I CFA questions, you should spend an average of 90 seconds answering the question. However, you should spend significantly more time thoroughly debriefing the question and answer.

Sign up for our question of the day and get a CFA question sent directly to your inbox every day to help you practice.

Debriefing is a Critical CFA Level I Exam Question Strategy

Start your debrief by making sure the questions you got right were correct for the right reasons. Guessing right on exam day is a bonus. Up until then, it’s just another question that you need to review. For all wrong answers and guesses that resulted in a correct answer, it is crucial to find the area of the curriculum that let you down. If it’s a missed calculation, find at least five examples of that type of calculation. CFA Program Examiners are masters of hitting calculations from every angle. Just correcting the single instance which that question hit may not address the deeper issue. Your aim is to repeat the calculation multiple times until you can do it backward (which is incidentally a popular CFA examiners’ trick). Kaplan Schweser’s CFA Level I Qbank is a great way to learn question debriefing.

Different Forms of CFA Level I Exam Question Debriefing

If it’s a narrative point, find the explanation in the curriculum and see if it’s an isolated fact, part of a list, or a piece of analysis on a calculation. Isolated facts need learning. Little and often is the best way. Five minutes a day, squeezed in whilst lining up for your lunchtime burrito, can make a huge difference.

Lists are more common. Most relate to a model or a theory. It’s much easier, therefore, to learn them in the context of that model. For instance, low barriers to entry in perfect competition? It means zero economic profits in the long run. Tie facts together where you can, your brain is wired to remember stories. Cause and effect will stick a lot better than disorganized memorization.

And what if it’s a piece of analysis on a calculation? Go back and find an example of the calculation. Make up your own numbers if you need to. For example, we would recommend always having a simple balance sheet and income statement handy to help with ratio analysis. If you can’t figure out why the answer was an increase, decrease, or neither, put some numbers through your simple statements and calculate the result. This approach fits with the classic definition of analysis: a detailed examination of the elements or structure of something, typically as a basis for discussion. You can’t hope to get the discussion questions right if you don’t do the detailed examination.

If you’re using something like the SchweserPro™ QBank, then you’ve got thousands of questions to attempt to cover the whole syllabus. It’s a big ask to do that, but an effective use of the questions should ensure you cover the majority of every CFA exam topic.

CFA Exam Level I Prep: Practice Tests/Mock Exams [PERFORM]

When taking Level I CFA Exam Practice Tests, your focus should be on the Learning Outcome Statements (LOS) from CFA Institute because they detail exactly what you are expected to do on exam day.

Learn How to Take the CFA Level I Exam

There’s a difference between learning the material and learning how to take the exam. Be sure you practice taking the exam in realistic simulated exam conditions in the last four weeks of studying. CFA Level I mock exams offer realistic simulated exam conditions that can really help you in your last weeks of studying.

CFA Institute will give you one mock exam, and you can purchase others with exam prep providers like Schweser. The Schweser Online Level I Mock Exam includes an exam sim mode that uses the same interface as the actual computer-based exam. It also includes a multimedia tutorial that takes you through each question and helps you understand where the answer comes from, the calculations required, and what terms they are testing you on. This helps to fill in your knowledge gaps and give you an idea of how you should pace yourself during the actual exam.

If you make a mistake, you can use it to your advantage. You can train your brain to recognize that this is the kind of mistake that can be made. Then, you’re less likely to repeat it. Successful CFA charterholders have told us they spent the entire last month working and reworking exams and focusing on the main issues.

Assess your baseline knowledge of the Level I CFA Program curriculum with a free CFA diagnostic exam

A Concurrent Option: Earn a Masters of Science in Financial Analysis (MSFA) while you Prep for the CFA Exam

Certain Masters of Science in Financial Analysis degree programs like the MSFA offered by the College for Financial Planning®—a Kaplan Company are aligned to the learning outcomes of the CFA Institute’s CFA Program, enabling students to earn an MSFA while concurrently preparing for the CFA exam. The College for Financial Planning's MSFA program also includes access to Kaplan Schweser’s CFA Essential Study Package to prepare for the CFA exam.

Apply CFA Level I Exam Concepts to Real Situations

Just knowing the material isn’t enough to pass the CFA exam. You must be able to take the knowledge and apply it to real situations. Most questions are not asking you to regurgitate memorized material. They are asking you to use problem-solving skills and apply knowledge to situations you may encounter on the job.

Many CFA charterholders advise you to always tie back what you are learning to the real world. Saqib Baig, CFA, recommends, “As you are going through the learning outcomes, keep asking yourself questions as to why you are learning this and how you are going to use this in your work.” The more you can make the study material real to you, the easier it will be to remember it.

Following these tips will ensure you are as prepared as possible for Level I of the CFA exam. Now that you know the best way to study, learn how to prepare an effective CFA Program study plan and pass the CFA Level I Exam. ​​Join Dr. Doug Van Eaton, CFA, as he discusses the CFA Program Level I curriculum and study strategies that have been proven to work.

Can I pass CFA Level I with Self Study?

Ready To Start Preparing for the CFA Exam?

Looking for more guidance on how to prepare for Level I of the CFA® exam? Enroll in one of our CFA Level I Premium study packages to receive expert instruction, CFA Program study materials, and more. Give yourself the best chance to prepare, practice, and perform on the CFA exam.

Taking mock CFA exams is an important step in the process of preparing for a CFA exam. Surprisingly, some CFA candidates do not use them, but those who do, report being much more confident in their knowledge and skills when it comes time to sit for the exam.

TABLE OF CONTENTS:

• What is a mock CFA exam?
• When should CFA candidates take a mock CFA exam?
• How to choose the right mock CFA exam?
• What is a good mock CFA exam score?
• Mock CFA exam grading process
• How many mock CFA exams should candidates take?
• Mock CFA exam vs actual exam
• Differences between practice questions and mock exam

What is a Mock CFA Exam?

A mock CFA exam is a simulated test-taking experience provided by CFA prep providers for CFA candidates. Mock CFA exams are designed to build candidates' confidence by immersing them in realistic testing conditions and exposing them to the format, difficulty, and length of the CFA exam.

When Should CFA Candidates Take a Mock CFA Exam?

CFA candidates should start taking mock exams a few weeks before sitting for the actual exam. If they have access to multiple mock exams through their prep provider, they can consider taking one a little bit earlier to begin identifying their strengths and weaknesses but should avoid taking one too early. If they take a mock exam too late, they won’t have enough time to improve their performance in identified areas of weakness.

Assess your baseline knowledge of the Level I CFA Program curriculum with a free CFA diagnostic exam

How to Choose the Right Mock CFA Exam For You

Each CFA prep provider will offer a slightly different mock exam experience and content. When considering which mock exam is right for you, look for information about how closely they simulate the testing conditions. Most candidates won’t be able to simulate exact testing room conditions because they won’t be able to travel to the testing location and take a practice test in that room but they do have control over which mock exams they use to prepare for exam day.

CFA Expert Tip: Check with a local CFA society to see if they offer in-person mock exams.

One basic feature candidates should look for when choosing a mock CFA exam should be if the exam is an online computer-based exam. Then they should look for information about how closely the interface imitates the actual CFA exam interface. 

Another important feature to investigate is figuring out if the mock exam experience mimics the actual experience candidates will face during the exam. One of the most important experience factors is time.  Candidates should make sure the mock CFA exam provider offers an experience that imitates the actual time limit candidates will face on exam day. 

Candidates should also look for important features like breaks and completion constraints. Will they be allowed to take a 15-minute break in between sessions similar to how the actual CFA exam is administered? Also what happens if they don’t finish the mock exam in the allotted time? Will they be able to go over the time limit to finish? The answer should be yes to all of these questions.  

Once those features have been satisfied, candidates should make sure the mock exam gives them access to explanations about why the answer is correct or wrong, and scoring and performance tracking by topic area. This feature is what candidates should use to identify curriculum knowledge gaps and improve testing-taking skills. 

Start a free trial to see how our core study tools will help you prepare for the CFA exam

How to Strategically Use CFA Mock Exams While Working Full-Time

If a candidate is working full-time they may not have spare time to waste on the topics or skills they have already mastered. Using a mock CFA exam is a great way to do a last-minute check on how far along they are in mastering the curriculum and skills needed to pass the exam. Mock CFA exams should give candidates performance tracking by topic area and that information should be used to turn weaknesses into strengths. 

How to pass the CFA exam while working full-time >>

Computer vs. Paper-Based Mock CFA Exams

Remember, all CFA exams are administered through computer-based testing. So if a candidate decides they want a printed copy of a mock exam that is fine. When it comes to answering questions in a mock exam, candidates will want to make sure they use a computer-based format that mimics the actual interface they will encounter on exam day.

What is a Good Mock CFA Exam Score?

On any mock CFA exam, candidates should be scoring above 65%. Some levels require a higher score and that’s because the minimum passing score is different for each level and gets adjusted after each administration. Assuming all mock exams are equally difficult, which they may not be, below are general mock CFA exam scores candidates should aim for.

Achieving these target mock exam scores should make candidates feel very confident sitting for the CFA exam.

Sign up for our question of the day and get a CFA question sent directly to your inbox every day to help you prepare.

How To Use Mock CFA Exam Scores To Improve a Study Plan

A mock CFA exam should be used to test candidates' knowledge of the curriculum and expose them to the testing interface. Mock exams should be used in the last few weeks of preparation so, if a candidate takes a mock exam and scores lower than the recommended target score, they should start by using the mock exam software analytics to identify what is holding them back and focus on the issues. 

Another option is to ask questions about your performance in an online forum or directly to a CFA prep instructor. They may be able to quickly point you in the right direction to keep you on track for exam day.

How are Mock CFA Exams Graded?

Mock CFA exams are usually graded by the software used to take the mock exam. Results are quickly calculated and candidates are given a percentage score that indicates if they passed or failed. Mock exam scoring systems are good indicators of how candidates will do on the actual exam and the process for grading mock CFA exams is much simpler than how CFA exams are graded.

How Many Mock Exams Should Candidates Take Before the CFA Exam?

For each level, CFA candidates should take a minimum of 5 mock CFA exams. Level III candidates should take more than 5 CFA Level III mock exams because this will help them fully prepare for the writing skills that are needed to answer constructed response questions.

For level I candidates this will be their first introduction to the exam testing experience so they should make sure to get fully acclimated to the interface.

CFA Expert Tip: There is such a thing as too much practice, so candidates should remember to use mock exams strategically and purposefully.   

Does CFA Institute Provide a Mock Exam?

Yes, CFA Institute provides a mock CFA exam as part of their Learning Ecosystem. These mock exams can be available to registered candidates within two months of their exam date.

Mock CFA Exam vs. Real Exam

Every CFA prep provider’s mock exam experience can be slightly different but candidates should expect the mock exam to be as close to the real exam as possible. 

A Kaplan Schweser mock CFA exam offers a “Sim Mode,” which simulates the interface, format, difficulty, and length of the actual CFA exam from Prometric.*

This mode is timed using the same time limits and built-in breaks of the CFA exam that serve as guidelines so candidates can replicate exam day as close as possible. Once the timer hits zero, they don’t have to stop the exam, however. They can continue completing the mock exam including flagging, skipping, and filtering questions just like they can at the official testing center.

What’s the Difference Between CFA Exam Practice Questions and a Mock CFA Exam?

CFA mock exams are designed to assess your mastery of everything you’ll be expected to know and do when you sit for the actual CFA 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.

Nearly all CFA exam review providers incorporate practice questions and tests into their curriculum. For instance, Kaplan Schweser offers the SchweserPro QBank® as our question practice, and our study packages include practice exams that mimic the types and order of questions on the exam. These tools are meant to be used throughout your preparation to ensure you have an understanding of what you’ve already studied and are prepared to move to the next topic.

Try Some Free CFA Flashcards to Study on-the-go

Best Mock CFA Exam Simulator for Practicing

If you want to put an exclamation point on the time you’ve spent preparing for the CFA exam and give your chances of passing an extra boost, a mock exam is a worthwhile investment.

*Kaplan Schweser and the Mock Exam Simulation are neither endorsed by nor affiliated with Prometric.

You’ve invested the time and the money in preparing for the CFA exam. Now is not the time to let poor last-minute planning affect your odds of success. This guide will help you ensure that you have everything you need to put your knowledge and skills to the test on CFA exam day.

Key Takeaways

1. You are allowed one approved calculator in the exam room but you can leave a second calculator or an extra set of batteries in your testing center locker.
2. Food and drinks are not allowed into the testing room so plan accordingly.

TABLE OF CONTENTS

• When To Arrive At The Testing Center
• CFA Exam Duration
• Items To Bring To CFA Testing Center
• What To Expect On Exam Day
• Items Not Allowed In Exam Room
• Level I Morning Session Tips
• Level I Afternoon Session Tips

When To Arrive At The Testing Center

Plan to arrive at the CFA testing center 30 minutes before your test time and remember to dress comfortably.

CFA Exam Duration 

The length of time you’ll be at a testing location to take each CFA exam will be 5.5 hours. Each exam is broken up into a morning and afternoon session with a 30-minute optional break in the middle.

Items To Bring To The CFA Testing Center

1. A valid international passport

The only form of identification that will be accepted for the CFA exam is a valid international passport. It doesn’t matter if you’ve never traveled outside the country. It doesn’t matter if you have a government-issued license or ID. If you show up to the exam with any ID that is not a valid international passport, you will be turned away.

Unfortunately, the passport is one of the most commonly forgotten items on exam day. Plan ahead, get your passport and ensure that it’s part of your exam-day arsenal.

2. Calculator

Along with your admission ticket and your passport, you absolutely need an approved calculator like the TI BAII Plus. Also, consider bringing extra calculator batteries or even a spare calculator.

3. The “nice-to-haves”

Forgetting the following items won’t prevent you from being able to sit for the CFA exam, but you’ll be at your best if you are comfortable and well-prepared for anything that comes your way on exam day. These items include

• A sweater or jacket. You can always take a layer off if you get too warm. But if you don’t come prepared for an exam room that’s a few degrees below your comfort zone, you may be caught off guard.
• Earplugs. This is an “expect the unexpected” situation. A headset is provided to reduce any noise in the exam room but you may prefer some during your break as well.

Learn About The CFA Curriculum With Our Free Copy Of The CFA Program Fundamentals eBook

What To Expect On Exam Day

Get prepared ahead of time for the check-in process and have a plan for what to do during your exam break.  

CFA Testing Center Check-In Process

Each testing center’s check-in process may be slightly different but most likely after you enter the testing site, you will need to provide your passport to the receptionist at the front desk and confirm your exam type and time. You will be provided with a locker key. This key will be placed on your workstation along with your passport and calculator. 

Then, you will be asked to sit in the waiting room until you are called back for your exam. After being called to go back, you will be required to read the policies of the testing center. Next, you will present your passport, which will be scanned, and your index fingers for electronic fingerprinting.  You will sign your name in a log book with the current time.

Then, you will be offered two pencils and scratch paper (front and back of two pages). Depending on your testing center, you may be provided with an erasable writing tablet instead. To get additional scratch paper, you must use all available sides on the one previously provided to you. These items must be returned at the end of the exam (not at the break).

Before entering the test room, you will be asked to turn your front pockets inside out, raise your sleeves, and lift your pant legs above your ankles. The attendant will use a wand scanner and scan your front. After which, you will be asked to turn around and place your hands in your back pockets and the attendant will complete another scan. This process will occur anytime you leave the test room, including the break. 

Next, you will be escorted to your workstation. You should have plenty of space between you and the next person. A headset is provided to reduce/eliminate any noise. You should only have your locker key, passport, two pencils, scratch paper, and calculator on your desk. At this point, the attendant will ask you to verify your name and test type on the monitor. You will use a mouse to navigate around the screen and be instructed to raise your hands to alert the attendant if you need more paper or pencils or have some other issue. 

CFA Exam Breaks

You will be asked to take an optional 30-minute break after the morning session. When you are ready to exit the room, notify the attendant, and gather your locker key and passport. Go to your locker and grab your snack and drink. You will not be allowed to eat or drink in the testing center. Take this period to decompress and visit the restroom.

CFA Expert Tip: Try to reduce your anxiety during your break and avoid studying or looking up questions from the morning session.

After your well-deserved break, head back to the testing center. Place any personal belongings back in your locker and check in with the attendant. You will need to be scanned and fingerprinted again to enter the testing room. You will be escorted back to your workstation by the attendant. When ready, click to exit the break and begin the afternoon session.

Post-Exam Survey

After submitting your final responses, you will be asked to complete a brief survey about the testing center and your overall experience.

Items Not Allowed In Exam Room

There are several items you may not realize CFA Institute strictly prohibits from your desk area on exam day. Those items include

• Food and drinks. Get your caffeine and nutrition needs met before walking into the testing center
• Study materials. Keep your SchweserNotes™ at home or in your backpack in the personal belongings area
• Tech tools. This includes mobile phones, cameras, computers, tablets, and other technology that have become a part of daily modern life
• Highlighters, correction fluid or tape, and rulers
• Baggage of any kind. This includes pencil cases and large purses. A small wallet or money purse is permitted
• Scratch paper, calculator manuals, or present/future value tables
• Any type of desk clock or timer
• Jewelry (except for wedding or engagement rings) hair clips, cufflinks, bracelets, 

Level I Morning Session Tips

After entering the exam, you will have the opportunity to go through a brief tutorial that demonstrates how to use the interface. This is highly recommended as this will help you become familiar with the test environment and may help to calm any nerves before starting the actual exam.

Start by completing all Ethics and GIPS questions. This should take about 30-45 minutes. 

Next, complete all recognition/recall questions and those more challenging questions you can answer within a reasonable amount of time (e.g., under 1 minute). 

You may wish to skip any calculations and save them for last as these can take time to complete and break the momentum. You can see on the test interface those questions you skipped and/or flagged for review. 

Avoid running out of time without answering all of the questions and do not leave any incomplete. When completed, you will need to submit the exam. You will not be able to go back to this session once you submit the exam.

How to Use a Mock CFA Exam to Sharpen Your Testing Skills

Level I Afternoon Session Tips

First, complete all recognition/recall questions and skip those requiring time-consuming calculations.  Know that all questions are scored the same, so get the easy ones out of the way. The test interface will show you which ones you have not answered or were flagged for review. 

Second, after completing a pass through all 90 questions, go back and complete the calculation questions. Hopefully, you will have close to an hour to complete those questions you skipped and/or flagged. If the calculation seems too daunting, flag it, and move on to the next one. Keep circling back to complete all of the questions within the time limit. 

CFA Expert Tip: Remember that you can change your answers until you submit your exam.

When complete, you will need to submit the exam. Make sure you are 100% positive that you are finished. Once you exit the exam, you will not be able to go back.

• What CFA Candidates Are Using To Prep
• CFA Prep Courses
• CFA Prep Study Tools
• Free CFA Prep Resources
• CFA Prep Books
• CFA Prep Study Packages

What CFA Candidates Are Using To Prep & Why

CFA candidates want high-quality, comprehensive support when preparing for an exam. Prep packages should contain performance trackers and activity feeds to help them stay on track. Questions are bound to come up and most candidates spend about 3-6 months preparing, so access to CFA experts who have already taken and passed the exam is crucial.

Before beginning to prep consider

• When would you like to take an exam?
• What type of studying works best for you?
• Will you have enough time during the week to prepare or will you spend most of your time studying over the weekend?
• How long do you intend to spend studying?

Once you’ve determined your prep needs and developed a timeline for when you plan to take the exam, you can begin to weigh different prep options.

CFA Exam Dates >>

Best CFA Prep Classes

These CFA prep classes and workshops have helped thousands of candidates become CFA charterholders. Each prep option is designed to provide the structure candidates need to stay on track and learn the CFA curriculum. 

“In the U.S., Kaplan Schweser is the brand most likely to be used to prep for Level I.”*

CFA Self-Paced OnDemand Classes

Studying at home with OnDemand classes gives candidates the ability to learn new things on their own and at their own pace. OnDemand classes are great for self-study candidates who work full-time and need to supplement their existing study tools. 

Kaplan Schweser’s CFA Level I OnDemand Classes provide access to 50+ hours of in-depth video lectures from CFA experts. The OnDemand classes also contain workbooks to help you review problem examples and practice answering exam-like questions.

CFA Live Online Classes

Preparing for a CFA exam with live online classes allows candidates to benefit from a traditional classroom at home. Studying with an expert CFA instructor in a live virtual classroom will give you the ability to ask questions in real-time and focus on weak areas.  

Kaplan Schweser’s CFA Live Online Classes provide access to highly reputable expert CFA instructors in 15 weeks of online classes, totaling 45 hours of classroom study time. 

CFA Review Workshops

The CFA curriculum is extensive and candidates are expected to demonstrate that knowledge efficiently throughout the 4+ hours of each exam. Getting ‘exam ready’ with a CFA review workshop is perfect for practicing exam-taking skills and speed.

Kaplan Schweser offers CFA Review Workshops Live and OnDemand. Depending on study preferences, OnDemand students have access to 55 hours of question review, and Live Online students get together with expert instructors for 3 full days of intensive review. 

Best CFA Prep Study Tools

If you’re looking to piece together your own CFA prep rather than taking a course or using traditional study books, consider using these self-study tools. 

Mock Exams

The CFA exam is computer-based and you should be familiar with how to use test-taking software like the official exam software. CFA candidates should look for mock exams that simulate the actual Prometric interface. We suggest beginning to take mock exams a few weeks before sitting for the exam to solidify your mastery of the curriculum and compare your scores with other candidates. 

Kaplan Schweser offers CFA Mock Exams for candidates to practice the computer-based test before exam day. Users get personalized performance assessments broken out by curriculum topic and comparisons from fellow CFA candidates.

How to Use a Mock CFA Exam to Sharpen Your Testing Skills

Question Banks

CFA Qbanks are databases of exam-like problems that candidates can use to practice anywhere, anytime. Not all question banks are created equal and candidates highly value ones that actually mimic the real exam. Candidates use Qbanks to keep exam topics top of mind and dig deep into answer explanations as they work through issues.

Kaplan Schweser’s Level I QBank provides CFA candidates with thousands of practice questions that reflect the actual exam so you don’t get surprised or overwhelmed on exam day.  

“U.S. CFA Level I and Level II candidates consider Kaplan Schweser to be among the highest quality, most comprehensive, and easiest to use CFA exam prep providers in the industry.”*

Flashcards

CFA flashcards give candidates the ability to quickly practice key exam topics to sharpen their skills ahead of exam day.

Kaplan Schweser level I flashcards help candidates memorize CFA exam-specific content and prioritize curriculum topics based on their proficiency levels.

Try Some Free CFA Flashcards to Study on-the-go

Best Free CFA Prep Resources

CFA candidates care about cost and free CFA prep materials get used often. Low-quality free resources should be avoided and instead, candidates should look for materials that enhance their existing study tools. Using a trusted prep provider ensures each free resource was developed by a CFA expert.

Free CFA Program Question of the Day

Receiving daily CFA practice questions in your inbox will allow you to practice solving new questions every day leading up to your exam.

Sign Up >>

Free CFA Program Free Trial

With Schweser’s Free Trial, you can experience how the core study tools complement each other, giving you concise and comprehensive coverage of the entire CFA Program curriculum.

Get Started Today >>

Free eBook: Before You Decide to Sit for the CFA Program Exam

Over 100 CFA charterholders who have successfully gone through the CFA Program, advise on what it takes to earn the charter and succeed in the investment industry.

Get The Guide >>

Free eBook: CFA Program Fundamentals

In-depth fundamental information about each CFA Program topic is included in this free eBook. Each chapter concludes with a sample of multiple-choice questions, complete with answers and explanations.

Get The eBook >>

Schweser’s Monthly Candidate Guide

Each month, Kaplan Schweser’s Candidate Guide provides fresh CFA content including industry updates and timely tips to help stay on track for exam day.

Sign Up >>

Free CFA Program Webinars

Join Kaplan Schweser’s expert instructors for a series of free CFA webinars discussing the CFA Program, the process of earning the charter, how to effectively prepare for the exam, and the benefits to your career.

Best CFA Prep Books

Some candidates prefer to start studying with a prep book, which is a great tool for diving deep into the CFA program curriculum. High-quality books provide time for candidates to perform content reviews, practice questions, and read answer explanations.

SchweserNotes™

SchweserNotes get delivered in bite-sized modules and include reviews and quizzes for each CFA exam topic. Available in print, online, and eBook formats, SchweserNotes helps candidates stay organized while studying.

Schweser's Secret Sauce® (eBook & Online)

Kaplan Schweser's Secret Sauce was designed for the final months of preparation. Available in print, online, and eBook formats, Schweser Secret Sauce helps candidates learn exam-day strategies and get prepared for the final review process. 

Highlights include

• Tips and tricks to apply curriculum knowledge
• Strategies and time management techniques 
• Study plans for the last week before exam day
• Topic-by-topic listings of high-probability exam topics
• Analysis of level-specific question styles

Best CFA Prep Study Packages

It’s common for candidates to spend slightly over 300 hours on average preparing for Level I with most choosing to study with an exam prep provider, CFA prep packages are a great way to ensure candidates receive the highest quality and expertise available when attempting to pass each exam. Study packages are designed to optimize the exam preparation experience by combining training and study tools to improve your success on the exam.

“U.S. CFA Level I and Level II candidates consider Kaplan Schweser to be among the highest quality, most comprehensive, and easiest to use CFA exam prep providers in the industry.”*

CFA Essential Exam Prep Package

Kaplan Schweser’s Essential Exam Prep Package turns your self-study path into a guided tour with concise study notes to help you master each exam topic,  SchweserPro™ QBank to increase your content retention, and Mock Exams that gauge your readiness.

CFA Premium Exam Prep Package

Kaplan Schweser’s Premium Exam Prep Package contains everything you need to be successful on exam day. Along with access to all of our study tools, you will get access to convenient OnDemand Classes and Review Workshops. You will learn the entire curriculum directly from expert instructors who have the charter and know exactly what it takes to pass the exam the first time. You’ll start with a personalized Activity Feed that schedules weekly tasks based on your study time frame and exam date. Each task is strategically placed to follow our proven study plan that covers the entire curriculum.

In addition, formal instruction with an expert instructor in the form of OnDemand courses and review workshops are provided to help along the way. Once you’ve learned the material, you’ll be able to test your performance with our Mock Exams to measure your readiness for the actual CFA exam.

CFA Premium Plus Exam Prep Package

Kaplan Schweser’s PremiumPlus™ CFA Prep Package is an all-inclusive study package that contains the same tools found in the Premium Package but allows you to select a Live Online option for your Instruction and Review. Learn, ask questions, and engage with expert instructors in a live classroom environment with a set schedule to enhance the structure and guidance during your CFA prep.

Start a free trial and see how Kaplan Schweser’s core study tools will help you prepare for the CFA exam

* These are the findings of a quantitative survey conducted by Kaplan between June 30 and August 30, 2021. For this survey, a sample of 313 U.S. CFA Level I and Level II candidates was interviewed online. The survey was fielded to subscribers of 300Hours.com and AnalystForum.com.

The Level III CFA exam is a considerable step up from the Level II exam so having a CFA study plan and understanding the differences between Level II and Level III will help ensure you are prepared to pass the Level III exam. To pass the exam, you will need to achieve at least the minimum passing score (MPS) set by the Board of Governors of CFA Institute after each exam. The all-time average CFA Level III pass rate is only 56%, and 2021 pass rates have been even lower. That means you must have a study plan and adhere to it.

TABLE OF CONTENTS:

• Start CFA Exam Level III Prep Early
• How Long To Study for CFA Exam Level III
• Review CFA Institute’s Learning Outcome Statements (LOS)
• Know CFA Exam Level III Weights and Curriculum
• Learn the CFA Exam Level III Question Format
• Recommended CFA Exam Level III Prep Breakdown
• Learn How to Take the CFA Exam Level III
• Apply Level III CFA Concepts to Real Life
• Last-Minute Level III CFA Exam Study Tips
• Can You pass CFA Level III with Self Study

Start Your CFA Exam Level III Prep Early

Starting early to prepare for the Level III CFA Exam means beginning to prepare six-to-nine months before your exam day, and be finished three months out from your exam date. Many successful CFA charterholders credit their study routine for their success in taking the CFA exams. Not only do you need to study the CFA Level III notes and materials, 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 must get into a study routine early and stick to it.

How Long to Study for CFA Exam Level III?

Across the six-to-nine months that you should spend studying for the CFA Level III exam, you should plan to devote at least 344 total hours (the average study time) to your Level III prep. If that number seems daunting to you, then consider spreading your studies across nine months instead of six. That way, you would only need to devote roughly 1 hour and 25 minutes per day (on average) to your Level III prep (versus closer to 2 hours per day). Prep for longer periods on certain days to earn yourself an occasional day off from studying.

How Many Study Sessions Do You Need for CFA Level III Exam Prep?

You should engage in 80-100 study sessions across your six to nine months preparing for the Level IlI CFA Exam. We arrived at this range because most CFA Candidates prefer to prep for a few hours, almost every day of the week. If your preference is to take more frequent days off from your prep, you can engage in fewer study sessions than that. However, keep in mind that if you were to only engage in 60 study sessions, then you will need to average 6 hours per study session to meet the minimum suggestion of 344 total hours studying. The more often you sit down for a study session, the less demanding each study session will be.

Review CFA Institute’s Learning Outcome Statements (LOS)

Your focus should be on the Learning Outcome Statements (LOS) from the CFA Institute because they detail exactly what you are expected to do on exam day.

Sign up now to receive a Kaplan Schweser CFA® practice question for your exam level directly in your inbox each day! Daily questions will continue until CFA Exam Day.

Know CFA Exam Level III Curriculum and Weights

Level III is a computer-based, 4 hours and 24 minutes, split into two equal sessions of 2 hours and 12 minutes, with an optional break in between. The first session of the CFA Level III exam is comprised of 8 to 11 vignettes followed by several questions that require a written response.  There will be some multiple-choice questions in this session, as well.  There also may be some numerical entry questions, where only a number is required, with no opportunity to show work.  The majority of the questions though will be traditionally essays. 

The topics covered, with their exam weights, are:

• Economics: 5–10%
• Derivatives: 5–10%
• Fixed Income: 15–20%
• Equity Investments: 10–15%
• Alternative Investments: 5–10%
• Portfolio Management and Wealth Planning: 35–40%
• Ethical and Professional Standards: 10–15%

Learn the CFA Exam Level III Question Format

The big difference with Level III is the format of the exam. It contains both the vignette-style item set questions seen at Level II, but also includes constructed response (essay) sets. In these question sets, you may be asked a multiple-choice question to select the portfolio (A, B, or C) that meets a particular objective, followed by an essay question to justify that response. Candidates’ responses to constructed response questions require a higher degree of specificity.

The constructed response question sets have a variable number of parts, and each part varies in length. The point of this format is to test your ability to apply and use judgment and follow a prescribed path, which is what CFA charterholders have to do for their clients and firms. No client is going to benefit from your ability to recall factoids from memory; they are relying on you to make the right decisions for them based on their situations and needs and your knowledge of finance and investment.

You might have noticed how much weight is on the portfolio management and wealth planning topic. If you don’t pass it, you aren’t likely to pass the exam. Here’s an important tip to remember for structuring your study: except for ethics, all of the topics relate to portfolio management and wealth management. It means that up to 100% of the constructed response parts of the exam could be portfolio management and wealth management.

Recent Level III Exam Format Changes

Recommended CFA Exam Level III Prep Breakdown

Level III CFA Exam Prep: Reading & Lectures [PREPARE]

Level III CFA Exam Prep: Practice Questions [PRACTICE]

Debriefing Is a Critical CFA Level III Exam Study Strategy

Start your debrief by making sure the questions you got right were correct for the right reasons. Guessing right on exam day is a bonus. Up until then, it’s just another question that you need to review. For all wrong answers and guesses that resulted in a correct answer, it is crucial to find the area of the curriculum that let you down. If it’s a missed calculation, find at least five examples of that type of calculation. CFA Program Examiners are masters of hitting calculations from every angle. Just correcting the single instance which that question hit may not address the deeper issue. Your aim is to repeat the calculation multiple times until you can do it backward (which is incidentally a popular CFA examiners’ trick). Kaplan Schweser’s CFA Level III Qbank is a great way to learn question debriefing.

Different Forms of Level III CFA Exam Question Debriefing

CFA Exam Level III Prep: Mock Exams [PERFORM]

The CFA Institute will give you one mock exam, and you can purchase others with exam prep providers like Schweser. The Schweser Online Level III Mock Exam includes an exam sim mode that uses the same interface as the actual computer-based exam. It also includes a multimedia tutorial that takes you through each question and helps you understand where the answer comes from, the calculations required, and what terms they are testing you on. This helps to fill in your knowledge gaps and give you an idea of how you should pace yourself during the actual exam.

Learn How to Take the CFA Exam Level III

Looking for more help passing Level III of the CFA exam? Check out our Level III study packages.

Apply Level III CFA Exam Concepts to Real Life

Last-Minute Level III CFA Exam Study Tips

Use these last-minute study tips to keep you feeling motivated and prepared during the last few weeks leading up to the exam.

1: Practice Constructed Response Questions

If you haven’t already started practicing Level III constructed response questions, now is the time. These types of questions require test-takers to provide longer, written answers vs. multiple-choice answers. It is a unique question format that you will only face on the Level III exam. 50% of the Level III exam consists of constructed response format so this is crucial to your success.

2: Pay Attention To How You Are Feeling

You’ve spent a lot of time getting to this point and this last exam can test your mental stamina in ways you haven’t experienced before. Don’t let your fatigue take control and convince you to start taking shortcuts or lose focus. If you feel this happening, stop, take a day off and do something you enjoy. Allow yourself to reset and remember, that you are almost there.

3: Focus on Time Management

When you start taking CFA mock exams, keep track of how long it takes you to read vignettes and answer questions. If you notice you're taking too long to read the question, try skipping ahead to find one that you understand right away. Answers those ones first and then go back to the ones that were giving you a hard time. 

4. Use Mock Exams to Test Your Readiness

Take a CFA mock exam a week out from your actual exam to simulate what taking the exam will be like and what your score could be. If you own the brink of a minimum passing score, pay special attention to Portfolio Management and Wealth Planning. It can put you over the top due to its large topic weight (35-40%). 

5: Keep Summary Notes

As you evaluate your practice exam performance, try using a spreadsheet to keep track of the questions and topics you are struggling with. Create a column on this spreadsheet for summaries about what you were thinking that led you to this incorrect answer and use this data to help you identify which topics you still need to work on. 

6: Don’t Be Afraid to Ask For Help

It’s understandable to feel overwhelmed and anxious about preparing for the Level III CFA exam. This exam can really test your readiness and stamina. If you don’t understand how to do something or just need some advice contact Kaplan Schweser. 

Candidates that take advantage of Kaplan Schweser instructor-led review workshops can get direct expert guidance all the way up to exam day.

Can I pass CFA Level III with Self Study?

Ready To Start Preparing for the CFA Exam?

When preparing to retake a CFA exam it can be difficult to determine where to start. This guide will help you learn how to identify the areas you need to work on the most and develop a plan to successfully retake the CFA exam.

Key Highlights

1. Use your band number and topic score percentage as the foundation for your strategy for retaking the exam.
2. Depending on your topic score percentage, your plan should focus on three areas: curriculum knowledge, practice questions, and exam-taking techniques. 

TABLE OF CONTENTS

• CFA Fail Bands
• Bands 10-8
• Bands 7-5
• Bands 4-1
• Tips For Topic Performance Percentages

What Are CFA Fail Bands?

If you failed a CFA exam you’ll receive an email containing a band number and a percentage range for each exam topic. That band number will indicate how far you were from passing the CFA exam. Band numbers are provided from a 10-1 range. Higher band numbers indicate you were close to passing, while lower numbers indicate you were further away from passing. 

Included with your band number, you’ll also get a score in each topic area. The score for each topic area is expressed in three ranges: less than 50 percent, between 50 and 70 percent, and more than 70 percent.

CFA Exam Score Grading Process >>

Step 1: Review Your CFA Fail Banding

Since there are 10 different banding numbers possible it can be difficult to identify which topics or exam-taking strategies you need to focus on for your next exam sitting. If you spent 6 months preparing for the CFA exam and still got a band score of 10-8 you’ll need to dig deep to identify where things went wrong for you during your CFA exam prep. 

Start by reviewing your Ethics score. CFA Institute explicitly states that your score on the Ethics portion will determine if your overall score is around the marginal passing score (MPS). So, if you get placed in bands 10-8, and scored poorly on Ethics, you probably know the cause of your fail.

Next, check whether you completed all the necessary practice questions. When we say “completed,” it is important to note that we don’t just mean answering the question, but also reviewing the answer. Reviewing the solution is of particular importance if you are to learn from your mistakes and improve your mastery of the curriculum.

What To Do If You Received Bands 10, 9, or 8

Being in the 10th banding means you were a fraction away from passing. Sometimes, being so close is more frustrating than missing a pass by a long shot. On the positive side, this means you were only a few correct questions away from passing, indicating that you do not have fundamental deficiencies in your knowledge or technique.

Typically, your retake plan will consist of bringing any weaker areas up to speed and maintaining your core knowledge with the primary focus being on practice questions. Good prep provider question banks contain thousands of questions and allow you to custom-build exams around specific exam topics. You can also use online question banks to replicate mock exams.

If you are in bands 10-8, we would recommend initially focusing on self-study and then adding a review course later in your studies, especially if you feel you would benefit from a refresher on both technical content and exam technique.

Planning Your Retake Strategy? Consider Adding a CFA Exam Review Workshop to the Plan.

What To Do If You Received Bands 7, 6, or 5

If you receive bands 7-5 after failing the CFA exam, this indicates you were outside the top 30% of unsuccessful candidates. Bandings in these ranges indicate that either your knowledge or exam technique was insufficient to pass the exam.

First, you need to analyze what caused you to fall into one of these categories. The most common reason will be that you ran out of time to properly prepare and knew that you had weak areas going into the exam. Candidates falling in these categories due to technical deficiency often benefit from attending weekly CFA exam prep classes again. Next time in class, you will know exactly where you need to focus.

If you felt that it was not the technical difficulty of the curriculum that caused you to fail, then it is more likely to be an issue of insufficient question practice, which, in turn is normally caused by running out of study time. Candidates falling into this category will need to predominantly focus on question practice and will benefit from attending a review course.

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What To Do If You Received Bands 4, 3, 2, or 1

If you scored in bands 4-1, unfortunately, you were in the bottom 40% of those failing the exam.

Before considering a retake, you really need to focus on the reason for this result. If you didn’t have the time needed to prepare for the exam properly, then a lesson has been learned. 

How to Pass the CFA Exam While Working Full Time >>

If you studied in excess of 300 hours, then this is a little more worrying. First, you need to question your study technique. In particular, studying the technical material with insufficient question practice can cause failure, no matter how many hours you dedicate to preparation. We find that the majority of students can cope with the technical nature of the curriculum, but those who struggle with applying quantitative material may require more than the 300 hours average. Remember, 300 hours is just a guideline and an average. Speaking to thousands of candidates, we do know that a large number will take far more than this to prepare.

7 Tips for Effectively Using Your 300 Hours >>

The majority of candidates who receive bands in the 1-4 range will have both technical weaknesses and poor exam technique. Technical deficiencies can be improved by studying the CFA Institute curriculum and prep provider materials. Taking CFA mock exams and attending review seminars can improve exam technique.

Step 2: Review Your Topic Performance

The next step is to identify your strong and weak areas. When designing your retake plan, we suggest starting with the areas in which you clearly underperformed. Be very careful that you do not ignore your stronger areas entirely; otherwise, you may find that you have just substituted weak areas for previously strong areas.

Any area where you scored less than 50% in the exam is considered a weak area. These areas are where you should begin studying. Next, review your moderate areas (50–70%) before reviewing the areas you performed well in the exam (>70%). This now forms an outline of the order in which you will tackle the subjects for a retake.

Interpreting Your CFA Exam Results >>

Step 3: Put Together a Plan for Each Topic

Based on your topic performance scoring percentage, you can develop a new plan for each topic.

If You Scored <50% in a CFA Topic

It is best to start restudying these areas from first principles. Start by reading and reviewing both CFA Institute and prep provider materials. It is a good idea to review the CFA Institute material to see if it helps improve your understanding, especially if you only studied from prep provider materials for your first sitting.

Once you reach the end of each reading, tackle both the prep provider and CFA Institute end-of-chapter questions. You are looking for significant improvement to be reflected in your scores. If you are not noticing an improvement in certain areas, it is worth using a CFA question bank to design tests covering only these readings. Once you are scoring above 70% when tackling questions on a specific reading, move to the next.

Download our CFA Program Fundamentals eBook to help prepare for your next exam.

If You Scored 50–70% in a CFA Topic

The frustration is that you won’t know exactly how close to 50% or 70% your performance was in these areas. It is best to start with a quick review of the study material within your prep provider notes or CFA Institute texts. While reading, you should be asking yourself the question, “Do I feel comfortable with this material?” Then, tackle end-of-chapter questions in both the CFA Institute texts and prep provider notes. Scores below 70% indicate you have yet to master the material, and more in-depth study and question practice is needed.

If You Scored >70% in a CFA Topic

The good news is that your performance on the previous exam indicates you had a good understanding of these areas and can translate that knowledge into correct answers on the exam. The main danger with these areas is that you give them very little time and attention and, as a result, what was a strong area becomes a weak area.

Our advice would be to start with the end-of-chapter questions from CFA Institute and your prep provider, rather than reading the material again. Poor performance on these questions indicates that you should go back and review the material. Most of what you need to refresh and maintain in these areas should come from question practice.

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Step 4: Start Studying Early

Don’t start your retake plan too late. You want to have plenty of time to tackle the material you find technically challenging. The earlier you start, the less invasive the study becomes in both your home and work life. Enroll for the exam early to get the lowest possible exam entry fee. Plan to leave a minimum of one month for review of topics and mock exams.

We wish you all the best in achieving a successful result in your exam retake. Good luck in your studies. With effort and applications, you can pass the CFA exam.

CFA Level I 6-Month Study Guide >>

Starting your Level I CFA exam prep early will give you enough time to develop an effective study plan and find enough time to study regardless of your situation. In this guide, we will share some of our insights with you on the study practices that can give you the best chance for success on the Level I exam.

Key Takeaways

1. You need to start early and be consistent by putting in the time and effort each week.
2. Once you create your plan, you need to be disciplined and stick to your schedule.   
3. You need to cover all of the material in the curriculum as all learning outcome statements are fair game.
4. You should follow the three key stages of learning: Prepare, Practice, and Perform®.

TABLE OF CONTENTS

• Topics and Weights
• 6-Month Study Guide
• Study Progress Tracker
• Study Planner Calendar
• Tips For Studying With a Job
• Study Guide Essentials

CFA Level I Topic Weights

Month 1 Sample Calendar

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Months 2-4 Sample Calendar

• finished reading the entire Level I curriculum,
• completed and reviewed multiple choice questions covering all topics, and
• completed and reviewed your first mock exam.

Months 5-6 Sample Calendar

CFA 6-Month Study Guide: Final Week

We recommend you go back and take a look at Ethical and Professional Standards and Financial Statement Analysis as these two topics comprise about one-third of the Level I exam.  Pick up the Standards of Practice Handbook and skim through each standard, corresponding guidance, recommended procedures for compliance, and application of the standard. 

This activity is especially important on the day before your exam. Along with these two topics, you should go back and briefly review any others that are giving you trouble. Also, you can review terminology, if needed. For example, the Economics topic has many memorizable terms that could help you grab a few points on the exam.

Lastly, try to get a good night's sleep the night before the exam. Wake up refreshed, eat a sensible breakfast, and head off to the testing center. Good luck!

[ RELATED: CFA Program Review Workshops ] 

Final Week Sample Calendar

CFA Level I Study Progress Tracker

Keep track of your progress by downloading our free 6-Month Level I CFA study progress tracker that can be customized to fit your needs.  

As you know, each CFA level exam is difficult and requires many hours of preparation. So, congratulations on passing your exam! Being a part of the percentage of CFA candidates that pass should make you proud. We recommend taking a moment to celebrate and share the good news with your family and friends.

When you are ready, think about what contributed to your latest achievement. Share that advice with other candidates and help them in their pursuit of becoming a CFA charterholder.

• I Passed Level I of the CFA Exam
• I Passed Level II of the CFA Exam
• I Passed Level III of the CFA Exam

Takeaways from Recent CFA Exam Pass Rates

Recent CFA pass rates have continued to demonstrate the importance of preparing. There are many contributing factors, however, being aware of what's next and knowing exactly how to prepare for your exam is the most important factor to focus on. It’s important to reflect on your most recent exam preparation experience and assess what worked and what needs to be improved.

If you have been utilizing Kaplan Schweser’s JumpStart Materials to get ahead on the curriculum, then you are in great shape. You can sign up for the next exam and take advantage of the momentum you’ve already built.

If you have not yet begun studying for your next exam, it is important to reflect on your most recent exam preparation experience and assess what worked and what needs to be improved. Reflect on these insights, your personal/professional goals, and the various exam window options offered by CFA Institute to determine when you will take your next exam. Once you have selected an exam window, it is imperative to create a structured CFA study plan and commit to sticking to it.

I Passed the CFA Level I Exam

If you recently passed Level I of the CFA Exam, we suggest starting your CFA Level II prep early and beginning to familiarize yourself with strategies to help you pass your next exam. 

As you begin to research what to expect when taking the Level II Exam, pay close attention to:

• Weight variances for each curriculum topic 
• New question formats
• Testing time differences
• Advanced techniques needed to answer questions

Top 10 Differences between CFA Level I and Level II »

What jobs can I get after passing CFA Level I?

If you’ve only passed Level I, you may have a slight advantage when looking for an internship in the financial industry. However, we highly recommend you continue to pursue the CFA charterholder qualification by preparing for the CFA Level II Exam.

Jobs after CFA Level I »

When To Register for Level II of the CFA Exam

It’s recommended that you spend 6-9 months preparing for the CFA Level II exam, so first, find out when the next CFA Level II Exam window is. Then, begin creating a structured CFA study plan around that date.  Don’t rush yourself, and be sure to give yourself enough time to prepare.

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I Passed the CFA Level II Exam

If you recently passed Level II of the CFA Exam, we suggest starting your CFA Level III Exam prep early and beginning to familiarize yourself with strategies to help you pass your next exam. 

As you begin to research what to expect when taking the Level III Exam, pay close attention to:

• Constructed response questions
• Writing skills needed
• Curriculum topic differences
• Weight variances for each curriculum topic

CFA Level III Exam FAQs »

What job opportunities are there after passing CFA Level II?

When To Register for Level III of the CFA Exam

You should plan on committing 6-9 months to prepare for the CFA Level III Exam.   Find out when the next CFA Level III Exam window is and then begin creating a structured CFA study plan building toward that date.  You are so close to the finish line, but don’t rush yourself on this last exam.

I Passed the CFA Level III Exam

You did it, you’ve put in the hard work and passed all three CFA exams! And now, you're wondering how to officially become a CFA charterholder so you can start putting the CFA designation after your name. You’ll first need to look into applying to become a CFA charterholder with the CFA Institute.  

Applying to Become a CFA Charterholder

In order to officially become a CFA charterholder after passing the Level III Exam, you’ll need to have already completed at least 4,000 hours of relevant work experience in a minimum of three years, apply to become a regular member of the CFA Institute, and join a local CFA Society.

Your CFA Regular Membership application should include the following:

• 2-3 professional references
• Payment of $275 USD
• A brief description explaining how you meet the relevant work experience requirement

Updating your CFA status

Once you are a CFA member who has earned the CFA qualification, you can begin using CFA marks on your resume and social media as long as you continue to be an active member of the CFA Institute.  

How To Show CFA Designation on Resume and Social Media »

Stand Out Amongst CFA Charterholders with an ESG Certification

What Jobs Do I Qualify For After Passing Level III of the CFA Exam?

After passing the Level III CFA Exam, you will not qualify for jobs until you have officially registered with CFA Institute as a CFA charterholder. Becoming a CFA charterholder is a prestigious designation that will help you stand out in a crowd of applications for positions such as:

• Investment Manager
• Hedge Fund Manager
• Investment Banking Analyst
• Corporate Financial Analyst
• Stock Analyst

If you decide to pursue a job in one of these fields and have trouble, consider getting more relevant work experience and pursuing an additional financial designation such as the Chartered Alternative Investment AnalystSM (CAIA).

In recent sittings, CFA Institute has changed the way a candidate’s exam performance is reported. The new format of the CFA^® exam results gives a wealth of information on performance overall, performance compared to the minimum passing score, performance compared to other candidates, and performance by specific topic. Used properly, this breakdown can be a vital tool in organizing your studies for the road ahead.

CFA Minimum Passing Score

The minimum passing score of the CFA exam is illustrated with a dashed line and is the most important piece of information. Your exam score will be represented as a blue solid line, and if that’s above the minimum passing score, then congratulations, you’re on to the next level or filling out your membership application.

If your score is not above the minimum passing score, there’s a lot of other useful information in the report that you can, and absolutely should, use to plan your CFA exam re-take strategy for the next attempt.

What is the CFA Exam Confidence Interval?

The CFA exam confidence interval represents the range by which your score may have been affected by favorable or unfavorable testing factors and is illustrated by a light blue sharing around your exam score. The light blue shading around your exam score is a 90% confidence interval.

The top end of the confidence interval represents the score you could expect if everything went exactly as you’d hoped on the day of the exam—you felt great, the right questions came up, and the candidate next to you had no distractingly annoying habits.

The bottom end of the confidence interval pretty much signifies the opposite. This represents the score you could expect if your weakest areas were examined and you had a bad day during the exam.

In the example below, it’s likely the candidate would have failed even with an ideal set of circumstances. Even the top end of the confidence interval is below the minimum passing score. In this case, we’d recommend critically re-examining the whole approach to CFA exam prep.

The most common reason people fail the CFA exam is simply the time commitment. If life got in the way, and you didn’t put the hours in, it’s an extremely difficult exam to pass due to the sheer volume of information you need to retain.

Almost as common, however, is a lack of question practice. Many candidates read the materials for four months, practice questions for a few weeks, and do a mock exam or two. Undoubtedly, this will leave areas of the syllabus that you’ve read, but on which you’ve not practiced enough questions. This will hurt in the exam. If you don’t know how a reading is typically tested, you’re likely to be met with unexpected and hence tricky questions on exam day.

Our recommendation is questions, questions, questions from the outset. If you have a two-hour study session planned, an hour of it should be question practice, starting on day one. Your last month should be saved almost exclusively for mock exams.

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CFA Exam Percentiles

The final aspects of the overall score report for the CFA exam are the 90th and 10th percentiles. Only 10% of candidates scored higher than the 90th percentile. If your mark is anywhere up there, it’s safe to say you crushed it. At the other end of the interval, 90% of candidates scored better than the 10th percentile. If you find yourself dipping down there, again it’s a sign that you need to commit to significantly more study time or fundamentally alter your study approach.

CFA Exam Results Topic Breakdown

In addition to the overall pass or fail information, the CFA exam report also gives a breakdown by topic.

In this example, we have a typical breakdown for a theoretical Level I candidate who was an “almost pass.” The candidate has performed well on FRA, achieved over 70%, and set themselves up for a pass. But derivatives has dropped well below the level of reasonable mastery. FRA clearly deserves a lot of study at Levels I and II. It’s voluminous, often not intuitive, and represents a significant chunk of the exam.

But it’s important not to give it too much attention in your studies at the expense of other areas. A poor performance in several of the relatively smaller topics, such as derivatives and alternative investments at Level I, sometimes adds up to a narrow fail despite mastery of the bigger areas.

Often, we see candidates with results reports like this for a couple of reasons:

• The candidate spends too long trying to master 100% of the largest topic (you can’t and won’t).
• The candidate simply doesn’t make it to the end of the syllabus.

As a result, smaller topics get overlooked. “They’re too small to worry about’’ is a common argument against bothering with these areas. But add them up, and they often rival the weighting of the bigger areas for which candidates are willing to over-study.

The best way to address this next time around is to leave enough time for plenty of CFA practice exams. The last five or six weeks should involve practice exams and debriefs, along with short review sessions learning factual areas (via self-testing). The beauty of a practice exam is that it forces you to weigh the topics in the correct manner. You see every topic in its correct weighting, and a thorough review of the results should reveal the areas in which you’re exposed.

It’s also worth noting the position of the percentiles and the width of the confidence intervals. Smaller topics will inevitably have wider intervals (smaller sample size—Level I quant again). But it’s also worth noting that a lower 90th percentile and a higher 10th percentile, and a narrow confidence interval, indicate a harder topic. A reasonable mastery in these topics indicates a very strong performance.

CFA Results Interpretation Summary

We’re all hoping the thick blue line is above the minimum passing score. But if not, don’t ignore the valuable information you have here. An unsuccessful attempt is by definition a result of an unsuccessful study approach. Whether it was a lack of time, a lack of question practice, or a lack of focus in the right areas, you can assess what needs to be put right. With the most experienced and largest full-time faculty, Kaplan Schweser has the blend of CFA study materials, question practice, mock exams, and classes that can aid both your technical mastery and exam technique.

• Rules For Postponement
• Emergency Deferral Policy
• Paid Deferral Policy
• Deferral Policy Processing Time
• Withdrawing From The Exam
• Exam Rescheduling Fee

Rules of CFA Exam Postponement for Individual Candidates

If the CFA institute does not announce a postponement for all candidates, that means people can only reschedule in specific circumstances or pay a fee to postpone their exam date. They call this a deferral, and they decide whether to offer deferrals case-by-case. 

To be considered for the emergency deferral, you must notify CFA Institute using the CFA Institute Deferral Form. CFA Institute has a self-assessment tool you can use to determine whether you should request this deferral.

After reviewing your case, CFA Institute will determine whether you can postpone your scheduled exam to the next sitting. If your case meets the criteria, you will be offered a qualified deferral, and your enrollment and registration status will be deferred until the next sitting. However, you will forfeit any fees you paid.

The reasoning behind this policy is that the number of paid registrations determines the number of testing centers, computers, furniture, and other equipment to reserve in the testing centers. Paid registrations also determine the support services needed. In addition, CFA Institute says, a deferral creates an empty space that can’t be filled.

If you don’t qualify for a deferral and you are not able to take the exam on the scheduled date, you have the option of withdrawing from the CFA exam or purchasing a voluntary deferral.

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CFA Exam Deferral Policies

CFA Institute Emergency Deferral Policy Qualifications

• You or your immediate family member (parent, grandparent, sibling, spouse/domestic partner, or child) are suffering from a life-threatening illness.
• A member of your immediate family (parent, grandparent, sibling, spouse/domestic partner, or child) has recently died.
• You have been ordered to mandatory military deployment in the testing window.
• You are pregnant.
• Your exam has been rescheduled by Prometric and after contacting Prometric, you are unable to find a new acceptable appointment date.
• A government order was issued restricting travel due to the local pandemic situation. (Documentation must be issued to a specific candidate or location. Public guidance about general COVID protocols will not be accepted.) 

CFA Insitute Paid Deferral Policy

CFA Deferral Policy Processing Time

Withdrawing From the CFA Exam

Paid Deferral Deadline

Candidates have up until 3 days following the close of the exam window to purchase a deferral.

Emergency Deferral Deadline

If You Miss the Deferral Deadline

Rescheduling the CFA Exam: How to Avoid It

No one can predict the future and certainly not medical and other emergencies. However, it’s best if you can avoid postponing or withdrawing from the exam. This is especially true for Levels II and III since they are offered less often than Level I exams. Here are some tips that can help you be prepared for your scheduled exam:

• If you have a full-time job, before you register, look at your weekly schedule and think about what blocks of time you could realistically set aside to prepare for the exam. Err on the side of caution, and if the exam is six months away or less, consider a later sitting.
• If you are still in college, before you register, consider the implications of having conflicting priorities, such as an internship or looking for a job.
• If you have decided to sit for the exam, register during the early registration period.  Early registration for the CFA exams usually opens about nine months before the exam date, so start studying as soon as you register. If you get stuck on a topic and need extra time, you have a few more months to prepare.
• Treat 300 hours as the minimum you should study, and plan to study more. Successful charterholders often say that it took 350 hours or more to study, especially for Level III. An effective CFA study plan can help.
• If you have already registered, and you think you are falling behind, reassess your study plan. Think about your problem areas or the topics that have the higher weights, and focus your study on them.
• Know when the CFA exam is being offered.

CFA Exam Rescheduling Fee

There is a $250 USD fee from the CFA Institute if you need to change your CFA exam date.   

Want to Feel Confident About Taking the Exam on the Scheduled Date?

Our CFA study materials offer live instruction, practice questions, and more. They can help you stick to your study plan and show up on your scheduled exam day, feeling confident about your odds of passing.

Learn the basic functions of your Texas Instruments (TI) BAII Plus calculator that you will need for the CFA exam. In this article, you will learn how to:

• Set up the TI BAII Plus calculator
• Store and retrieve results
• Do combination and permutation calculations
• Calculate the time value of money
• Solve LN and e×
• Use extra CFA calculator settings

CFA Exam Calculator Basics 

In this volume of the Schweser Video Library, we’re going to look at the basic functions and setting up your Texas Instruments Business Analyst II Plus calculator for the CFA exam.

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Video Transcription

Now, there are two calculators that are permitted for the CFA exam. One of them is the HP-12c, the Hewlett-Packard, and then there’s an addition to that called the Platinum Edition, I believe, which is essentially the same in functionality. And also, this TI calculator.

If you are new to the financial calculator or a lot of the functions, we really suggest that you get the Texas Instruments calculator. We focus on that—it’s more intuitive. I’ve found over my years of teaching it’s easier for students to use and can catch on to. 

So, our examples in the SchweserNotes, although we have some for the HP for specific functions, most of our answers and explanations and examples are based on the Texas Instruments calculator.

Now there’s a plastic one, and then there’s this one called the Professional Edition. So, since I’m a professional, Schweser bought me this one some years back. And it has little rubber feet on it. It’s a little heavier, has a better feel, and the buttons feel cooler when you press them. 

In terms of functionality, there are a couple of functions that are on this Professional Edition that aren’t on the other one. Neither of them is very expensive. And as far as I know, they last forever. And never had trouble with one, never replaced the battery. Although I guess, it could happen if you were using it all the time. Mostly, we use Excel these days, so they don’t get used all that much. But you need to be familiar with it for the exam.

CFA Calculator Policy >>

Setting up the TI BAII Plus

So, let’s first talk about setting up your calculator. Now, there are 2nd functions to a lot of these keys, and you’ll see what’s written over the actual key itself. Across the top row, you see it says QUIT, SET, DELETE, INSERT, and all that sort of stuff. And those are the 2nd functions. 

Setting the Number of Decimals

So first off, we want to set the number of decimals. I set mine to four. The reason I do that is if I get a four-place decimal, then I’m getting what? Two places in percent, right? If I get.0522, I know I’ve got 5.22%. 

So, my accuracy or my precision, I should say, is to 1/100th of a percent. One basis point. And that’s usually, I think, adequate for anything you’re going to face on the exam.

 

Now the calculator itself is carrying, I forget, seven, eight, nine, digits in its brain, and they’re always there. You’re not changing or rounding anything except what’s in the display. So if you’re using four decimal places, and you get to a problem where for some reason you need the 5th and 6th decimal place, you can just go times 100, it’ll move that over, it’ll move the decimal point, but you’ll see those next two digits just that easily. 

So use that 2nd key and find the format key. That’s the 2nd function for the decimal point in the middle of the bottom row. And if I do that, mine reads DEC equals four. If you want something else in there than what you have, then put it in; put four in, for example, and then press ENTER, and then you can clear the display, and that’s how it’s going to display all the time after that.

Setting Payments to the End of the Period

Next, we need to set payments to the end of the period. I think that’s the default on the calculator when it’s new, although I’m not sure. It’s been a while since I had a new one. But use that 2nd key and then the BEGIN key. 

Now, that is right above the PAYMENT key in the third row. So, if I go second and then hit that PAYMENT key, mine says N, so I’m not going to change it. If yours says BEGIN, then press second, and then press that SET button. It’s actually the ENTER button in the upper-left corner there, and that’ll toggle between beginning and end.

When it’s in begin mode, there’s a little BGN that shows up in the upper right-hand corner here and lets you know you’re in begin mode. If it’s in end mode, since that’s the default, there’s no indication of that on the display. So, what you’re essentially telling it, well, there are four payments in this annuity, a little short four-payment annuity. 

In end mode, it assumes those payments, deposits into the account, or payments out of the account, are made at the end of each of the next four years or periods. If you put it in begin mode, it assumes that each payment comes at the beginning of those periods. So, the first payment would come today, which is the beginning of the first year or first period.

Setting the Number of Payments Per Period

Now we need to set up the number of payments per period. I think you should set it to one and just leave it there. If it turns out to be a monthly payment, we’ll use the monthly interest rate. And N will be the number of months.

 

If it's quarterly, why, we’ll use a quarterly interest rate. N will be the number of quarters. Our payment will be payment per quarter. So, really it says I/Y, but think of it as payments per period, and then we’ll just think in terms of whatever periods we have in the problem we have to deal with. So use the second key and then hit I/Y. The display will read payments per year or payments per period equals, then press one, ENTER, and then you can clear the display again.

Setting Modes of Operation: CHN vs AOS

Now there are two modes of operation. One is CHN, which I assume stands for chain mode, and AOS, which has to do with the order of algebraic operators. Now, take a look at this calculation here.

 

And let me find my magic teaching pen here. I’ll underline this. We’re looking at this right here. And so you understand the difference between these two…just look at the different answers you would get. 

Now, if we put in 3 plus 5 times 4…so this is what we’re putting in. I’m not putting in any of the parentheses. So, if I just put in 3 plus 5, when I hit times, that also does an equal function in chain mode. So, 3 plus 5 is 8, I hit the times, and then you’ll see 8 in the display, enter 4, enter equal, and you’ll get 32.

Now, if you are set to algebraic operations priorities, then it goes 3 plus 5 times 4. Well, the order of algebraic operations, if I remember, is exponents first, then multiplication and division, and then addition and subtraction. So since this times multiplication operator takes precedence, it multiplies 5 times 4 and then adds 3, so we will get 23.

Now, there are parentheses on this. In the middle there, you can see the left parentheses and the right parentheses, so even if you are set in chain mode, you can insert your own parentheses. So if I did 3 plus…well, if I were in chain mode, and entered this with the parentheses, then I’d get 23. And when you close those parentheses, you have to hit the equal sign after that. Closing the parentheses would give you this value, 20, and then the equal sign would get you to 23.

And you change those with that same format. If I go to the second format, I get my decimal. But I think if I do an up arrow, mine says CHN, which is where I want it. If you want it somewhere else, if you want it in algebraic operator mode, then press 2nd, and press that SET key, the Enter key, and that’ll toggle between Chain and AOS modes.

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The √x, x2, 1/x, and +/– TI BAII Plus Keys

So once we’ve got our calculator set up, now let’s take a look at some of the keys on there. The reason I’ve got these four keys separated out here is that these keys all operate on the number in the display before it does anything with it. And I’ll show you an example of that. 

Now, the usage of these is straightforward. If I put in 100 and then press that square root of x, it displays 10. Five and then I hit x squared, I get 25. If I hit the 1/X key, it gives me the reciprocal of that, so 5 1/X key gives you 1/5 displayed as a decimal as 0.2.

And then, so, those are all right across the fourth row there, and then at the bottom right, we have the plus-minus key, which just changes the sign of whatever is in the display. 

So, if we want to multiply times minus 5, then we put in 5, hit the minus sign, and then hit the times sign. It’ll be a multiplication sign. It’ll be multiplied by that number in the display, minus 5.

Let’s take a look at an example here. And you can see here that these keys operate on the number, and then it moves on. So look at that first example. 

If I want 0.89 divided by the square root of 2.17 times 7.3 squared, I just have to enter 0.89, then divide by 2.17. But before it divides, that's the important point here, and it’s really handy. Before it divides, it’ll take the square root of that. And then when I hit the multiplication, it’s multiplying that, the square root…dividing by the square root of 2.17. And then times, I hit 7.3, but I want to square that, so I do that, and then hit equals, and so it multiplies by that, 7.3 squared.

Now, we could do this a different way. Sometimes when there are a lot of things going on in the denominator, it’s easier to punch it in by doing the denominator first. So that’s what I’m illustrating here. I can put in 2.17, take the square root of that, and then hit the 1/X key, and then multiply by 0.89. Well, there's not much difference in work here, but imagine if you had a denominator that was 1.12 to the 7th power. Then it would be easiest to do 1.72 y to the x will take it to the 7th power, then hit the 1/X key, and then multiply by 0.89 or whatever’s in the numerator.

So, that’s just a handy trick. I think one thing you want to try and avoid is writing down any interim results. When you write down an interim result, and then have to put it back in the calculator, there’s always a chance for exam-taking error, dyslexia to take over, or whatever gremlins are in your head at the time. So the less you do that, the less chance there is for making mistakes. 

So, I try to do the calculations all kind of in a row within the calculator. If you have to save something, we’ll talk about saving something in the memory function here in just a bit. So, for 2 times minus 3.5, 2 times 3.5, change the sign to minus 3.5 and then equals to get the answer of minus 7. So a little bit of practice and you’ll be very comfortable with these.

TI BAII Plus Exponents yx

Okay, I mentioned taking something to the 7th power. We can’t do that with the x-squared key. With the x squared key, you can get x squared. If you press it twice, you can get X to the 4th. If you press it three times, you can get X to the 8th. But for these other exponents, we’re going to have to use the y to the x key.

So, here’s our example. We want to calculate 1.75 to the 5th power. So, we enter 1.75 and then hit that y to the x key, it’s just above the 9. And so, you hit the y to the x key, hit the 5, and then hit equal, and that’s what it gives you. It gives you 1.75 to the 5th power. So, here’s an example of how we might use that. The example here says, “A firm’s dividends have increased from $2.21 to $3.54 over the last four years. 

Calculate the annual compound growth rate of dividends over the period.” Well, first, if we’re going to say, “Well, we’ve got four periods of growth,” then we’re going to use the one-quarter power here. We’re going to take the 4th root.

So, 3.54 divided by 2.21, we want to take that to the 1/4 power. So what we could enter is y to the x, then enter 4, then enter 1/X. Your display will change to 0.25, which is what 1/4 is. And then hit equal, and we need to subtract 1, but we can find out that four periods of compound growth of 12.5% would get us from $2.21 to $3.54.

Now, if it’s pretty obvious what that fractional exponent is, as in this case, we know that 1/4 is 0.25, we could go 3.54 divided by 2.21, hit the y to the x key, put in 0.25, hit equals, subtract 1, and get 12.5% rate of compound growth that way. So, that’s pretty easy with 1/4 or 1/5. Even with 1/3, you can put in 0.3333333, but if it’s 1/7 or something like that, or to the 1/7 power, it’s just as easy to put in 7, hit that 1/X key, and get the decimal equivalent of 1/7.

Storing and Retrieving Results on TI BAII Plus

Now, storing and retrieving results, you’ve got ten memory registers on this, and we’re going to store them using the STO function, the store key, and retrieve them using the recall key. And so every one of those digits on your keypad, 0 through 9, identifies a different storage register. 

So, for example, this is a problem derived from the dividend discount model, the constant growth model. And so, what we’re going to do here is do it in pieces. We’re going to take that first piece and go 1 divided by 1.13 equals, and then hit the store, and then 1. And that stores that in register one.

So, for example, this is a problem derived from the dividend discount model, the constant growth model. And so, what we’re going to do here is do it in pieces. We’re going to take that first piece and go 1 divided by 1.13 equals, and then hit the store, and then 1. And that stores that in register one.

The next piece we want to do here is 1.1 divided by 1.13 squared. So, now we’re going to use that squared function right in line, hit equal, that’ll give you your answer, and then store that in the second register, and we’ll store that answer of 0.8615. 

For this third term here, I use the parentheses because remember, I’ve got this in chain mode. And so, I want to take 1.21 and then I want to divide that by 0.13 minus 0.05, 13% minus 5%. And then I want to divide that by 1.13 squared. And when I get that, I can store that in register 3 by hitting the store key, hitting the number 3, and that will store 11.8451.

Just as an aside, you notice that 1.21 divided by 0.13 minus 0.05, another way to do that in chain mode is to go…0.13 minus 0.05, and then hit equals…get 0.08, and then hit that 1/X key, and then multiply that 1.21, and then we can get that answer that way as well. And then we’d have to divide by 1.13 squared.

So, once we’ve got all these pieces, then we can just do, we’ve got in our display, that third one. We’ve got 11.8451 displayed even though we’ve stored it. And then we can just go plus recall 2, plus recall 1, equals, and come up with 13.5915.

Now one reason you might want to do problems like that is, say, you’re taking a multiple-choice test, and you get done with a calculation like this, and you look down, and there are no answer choices there that match yours to any significant degree. Well, now, you’ve got to troubleshoot this and find out where the error is. 

Well, if you did it all as a single calculation, you just have to start over. If you’ve got the pieces stored in three registers, you can check each piece against what you’ve got stored. When you find one that isn’t right, then store the new value and go plus recall one, plus recall the other one, and then get your answer. And hopefully, by then you’ll find one that’s one of the choices for that problem.

Now, the second memory function shows the value in memory register 0, and then you can use the arrow keys to go through all of those. So that MEM is actually the 0 key, so I’m going to go 2nd function, hit MEM, and it says M0, memory and register 0, and then use the up arrows to go to 9 or the down arrows to take them numerically, M1, M2, M3, M4, right on through. 

Now you can clear all these registers by doing 2nd, and then hitting clear work, which is that second function of the lower left-hand key down there. Now I’ve got Y there because I don’t know why you’d ever have to change them. As soon as you put something new into a register, it just overwrites whatever was in there before. So I’ve never had occasion to clear them, but you can if you like.

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TI BAII Plus Combinations

Okay, the next function we want to look at on this calculator is combinations. So, the idea of combinations is in this example.

 

How many different pairs can be made from the letters A, B, and C? 

Well, there should be three different pairs that we can make from that. And so that’s a simple example. It, of course, gets more difficult as, I say, how many pairs are there in 17 or something like that. But this nCr function, which is above the 2nd function above the plus key on the right-hand side there, that answers this question…uses the formula. 

This is one place in which the Texas Instruments calculator has a function that the HP does not.

So, we just go three, and then hit that second function and then the plus key to get that nCr, and then put in two. So you’ve really asked the calculator, “How many groups of two can I pull from an overall group of size three?” and that will display three, and those are our three pairs. 

Now, notice we don’t count AB and BA separately when we’re using the nCr, the combination function is there. So, let’s look at a different question. How many different pairs are there in four items? Well, if we enter four, take that nCr function, two equals, that gives us the answer of six.

Permutations

Now, when order does actually matter, then we’re talking about permutations. So, now we’re going to count AB and BA as two different pairs when we talk about permutations. 

Because with permutations, the order matters. Well, understand you’re going to get a bigger number with permutations than with combinations because we are double-counting each pair here in reversed order. 

So, all we have to do is, it functions exactly the same, enter three, take that 2nd function, nPr, and then two, and then equal to display six.

So, let’s take a look at an example of how that might come up. Well, this isn’t exactly a finance application but should help anyway. 

 

If there are seven runners in a race, how many different ways can runners finish 1st, 2nd, and 3rd? 

So now order matters, right? Three runners in this order in 1st, 2nd, and 3rd is a different outcome from those same three runners in a different order in 1st, 2nd, and 3rd place.

So, now we go, well, there’s seven runners, hit that permutations function, and then three, and that’ll tell us how many different groups of three there are in seven items. When each group of three can be different, if it’s the same items with a different order. 

So the question here, how many groups could win the first three places in any order? And seven 2nd nCr, the combination formula, gives us an answer of 35. 

And the difference between 35 and 210 is that we’ve multiplied by the different number of ways that we can reorder 3 people into 1st, 2nd, and 3rd. And so, that’s 35 times 6, so that’s the relation between the two.

Time Value of Money Keys on TI BAII Plus

Now let’s look at our time value of money keys. You’ll use these quite a bit. They’re in that third row there, and you see that there’s five of them. And really the logic of it’s pretty straightforward. 

If you put in any of those four values, and then you press on the fifth one and press compute, it’ll calculate it for you based on those values you put in for the other four. 

Now, sometimes, as a shortcut, people hit this clear time value of money, and that’s out there above the FV, future value key, it’s the second function of that.

Now, I don’t do that on my calculator because I’m always careful to put it in four and solve for the fifth. So if you’re doing that, you never have to worry about clearing it. But remember, the calculator remembers these values even after you turn it off. 

So just turning it off and turning it on doesn’t reset any of these values to 0. So, just be aware of that when you’re working problems. And I think it’s best practice to put in these four values. It makes you think about it too. Do I have a payment here? Is there a payment at the end I should put in as future value?

So, if you look at the mathematics here, what we’ve got is the present value of some end-of-period payments. If this is the end of the first period, that’s time one, one period from now. And this is time equals two. This is N periods from now, supposed to be equal to N there. And then this future value comes on that same date. 

So, you get a payment, payment, payment, then you get your last payment, and then anything that’s left in the account or anything that’s left to be paid, that’s the future value at that point in time.

So, we’re discounting these at our interest rate. This is the I/Y that we put into the calculator. This is N, the number of periods. Here’s the payment per period. It could be 0. And here’s the future value that could be 0 as well. 

Now if they’re both 0, of course, it’s 0. But you could have either payment, you could have a non-zero payment, a non-zero future value, or both, is what I’m trying to say. So, if you put in any four of these values in this equation, and you’re in end mode, then you can calculate the 5th. And that’s the essence of what’s going on with these keys.

Now let’s take a look at an example here.

 

We’ve got a security with a required return of 7%, so we’re adding 7% to one to discount…that makes 6 annual payments beginning 1 year from today, so that’s clearly end mode, and a payment of $1,000 after 6 years. 

Those of you with a little financial training are going to recognize this is like the payments on an annual pay 6% bond, or a semi-annual pay 12% bond. But we’ve got 6 payments here, so let’s think of it as a 6-year bond that pays $60 each year, and it matures at $1,000 on the last day, and that’s the same day that the last $60 payment is made.

So, notice that our discount factor is the same for the thousand in the last payment because they come on the same day. 

So with your calculator in end mode, just hit 6 and then N, hit seven and I/Y to tell it the discount rate is 7, hit 60 and then payment or enter 60 and then hit the payment key, put in 1,000 and then hit the future value key, and compute the present value. And it solves this equation right here. 

Notice that it comes back as a negative. The calculator understands, well, it doesn’t really understand, but it’s programmed to act as if it understands that if I put money into an account for a period of time, I can take money out at the end. 

In this case, if I’ve got a bond that’s going to pay me payments and pay me the face value…that’s why we put those in as positive…then the present value is what I’d have to pay out today to buy those. So, that’s why the difference in signs. And if you foul up the difference in signs, then many times you’ll get error message Number 5. And that’s just an indication that that’s exactly what you did.

 

So, as I said, entering any four of these values, present value and future value must usually have different signs or you’ll get this error message Number 5. So, you can think of it as a company issuing a bond. 

They take in the present value today and make those coupon payments and maturity payments, so they’d both be negative. Or a buyer of a bond pays out money today, a negative, and then gets the payment and the face value at maturity.

Now, sometimes we might want to put the calculator in begin mode. Try to avoid it, but sometimes you do. This is like a lottery payout, right? If you get a lottery payout, you win the lottery. I know most of us haven’t, but I still understand how it works if I do. 

And if I’m taking an annuity, a series of payments for my lottery winnings, the first one will be the day I show up there with my ticket. They’re not going to say, “Oh, you can have your first payment a year from now. Go think about being rich, okay?” No, they’re not that cold-blooded. They give you the first payment when you take your ticket in. So, that’s the beginning-of-the-year payment.

So now, if we have payments that start today, and we have N periods, then here’s our equation. I won’t get too much into mathematics right now, we’re supposed to be talking about how to run your calculator. 

But in this case, put your calculator in begin mode, put in 20 periods, a $200,000 annual payment, a 6% discount rate, and a 0 future value, right? After you get that last…say you got 20 payments for your lottery winnings…after you get that last payment, there’s no maturity value. They don’t owe you anything else. So put the future value in as 0, compute the present value, and hopefully, your display says negative $2,431,623.298, depending on what rounding you’ve got in there.

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LN and ex Keys on TI BAII Plus

A couple more keys for you that come up not real often but sometimes. Entering a value and then hitting the LN, that’s the natural logarithm, computes the natural log of that value. And how might we use this in finance? 

Well, if we have an investment, we say its holding period return for 1 year was 5.2%, what is the equivalent continuously compounded rate of return? So, that’s where this log key comes up in Level 1. 

So, if we’ve got 5.2% for our holding period return over the whole year, the value of our investment went up 5.2%, we’re going to put in 1.052…and then you see that in the fourth up on the left-hand side, hit that LN key, and I get 0.0507. 

So, a continuously compounded rate of 5.07% would increase the value of an investment or the value of an asset by 5.2% over the course of a year.

Now, what about that e to the x? Well, that’s the mathematical e, and e to the x says what power do I have to raise e to, to get this number. And that’s really just the opposite of the natural log. Because the natural log of e to the x is x, and then if I take e to the x, I get back to that number. 

So, now we have the continuously compounded rate of 5.07%, what is the effective annual rate? That is, with a 5.7% rate compounded continuously, by what percentage would a deposit grow over one year?

Well, it’s just the opposite of what we did before. We’re going to put in 0.0507. Now, this is the second function above the log key, hit that e to the X, so 2nd e to the x minus 1, and that gets us back to our effective annual rate of return.

So, these only come up in this context that I know of is with continuously compounded rates of return, which are used in continuous-time mathematics foundation to some of our options pricing and things at Level 2. So, that’s why it’s in Level 1.

More CFA Calculator Settings

A couple of miscellaneous keys here for you finally. That arrow key that’s right below the on/off, when you punch in a wrong digit, you hit 2nd, hit that arrow key, and…well, you don’t have to hit the 2nd. Sorry. It doesn’t matter if you do, but you don’t have to. Just hit that arrow key, and it goes back one digit at a time if you have to correct what you’ve entered there. 

Now, remember, again, even when the calculator is turned off, it remembers the entries in all these cash flow functions, time value of money functions, the memory registers, everything like that.

And one last key that you may find handy is the 2nd function for the equal key. If you hit 2nd and then hit that equal key, it goes back to the last answer you had. 

So, if you had an answer and you started to do something to it, divide it by something, or multiply it by something, and you say, “Oh, man, that’s not what I want to do.” If you want to get back to that, use the 2nd function, and then hit that equal key.

Okay, well, this is some of the setup and some of the basic things. There are some more calculator functions that we do in another video. It’s called the “Advanced Operation of Your Calculator.” But set it up that way. That way you’ll be in agreement with all our examples, the keystrokes we show, answering practice exam problems, and everything like that. So, that’s it for this.

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• Capital Budgeting
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• Mean, Variance, and Standard Deviation
• Covariance, Correlation, and Regression
• Depreciation

How To Use Advanced TI BAII Plus Calculator Functions for the CFA Exam

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Video Transcription

Things we’ll cover here have to do with capital budgeting. First off, that’s probably the most important here, and then we’ll show how you can use those cash flow keys to do uneven cash flow calculations, either present value or future values on those. Then we’ve got some statistical functions here…mean, variance, and standard deviation, covariance, correlation, and regression. And then finally, a couple of depreciation, straight-line, and accelerated depreciation methods.

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Capital Budgeting with TI BAII Plus

So let’s start off with capital budgeting first. The idea of capital budgeting is we’re going to make an expenditure today. And then we’re going to get returns from that over a number of periods in the future. 

Our initial outlay, that’s CF0 here. So that’s usually negative, an outlay and then in a simple project, we have all positive cash flows after that. So at some discount rate, here is our required rate of return on capital. We want to find out if we take the present value of all those future cash flows, and then subtract off the initial outlay…is that positive or not? 

If it is positive, that means the present value of those future expected cash flows are greater than the cost today of, say, the machinery of doing the project. Then we want to do it. It’s going to increase our expected wealth. 

And if it’s negative, that means that the present value of those future positive cash inflows is not greater than the cost today, so we shouldn’t do it. We’d reject the project.

In the basic calculator video, we talked about using the time value of money keys. There we had a payment, but it had to be the same payment every period. So we need to enter these expected cash flows. So here’s our initial outlay. That’s going to be CF0. We’ve got to enter that as negative. Then this will be our cash flow 1 here. And this is cash flow CF2, CF3, and CF4.

Now, one thing about entering these cash flow keys is we’re going to tell it how many of these in a row there are. So here, we’re going to have to enter in 1, 2, 3, and 4 because they’re all different. Let me just clear this off and give you an example.

Say that this cash flow was $100 instead of $75. So this would be cash flow 1, and this would be cash flow 2. And then we’d say the frequency of cash flow 2 is 2 because there’s 2 of these $100 payments in a row. And this would actually be cash flow 3 because that’s the third different cash flow out here beyond CF0, our -175.

So, clearing this off, we’ll see we’ve got four to enter, so let’s go through that entering procedure.

Hit the CF key there, and that’s the second key over in the second line, that enters cash flow mode. Hitting the second key and then that lower left key, CLEAR ENTRY, clears all the data that’s stored in there about cash flows.

Once we do that, we’ll see CFO there, cash flow 0, and we’ll put that in as 175. Hit the PLUS/MINUS key, and then enter that, and then scroll down to the next one. We’ve got a $25 cash flow at time 1, so that’s cash flow 1. Scroll down to the frequency. That’s already set to 1. And since there’s only one $25 cash flow in a row, scroll down past that. Enter cash flow 2 as 100. It also has a frequency of 1. 

So scroll back FO2, the frequency of the $100 cash flow, and by the same method, enter the 75. Scroll down and enter the 50 as our fourth different valued cash flow.

So now, hit NPV, and it enters our Net Present Value calculation. It’s going to prompt you on what discount rate you want to use. We want to use 10, so we enter that as a whole number and then press ENTER, and it shows 10. It will expand to the decimals you have it set for. 

Then scroll down and you’ll get to NPV, but that’s not your real NPV. That’s the old NPV. Zero if you’ve cleared everything. Now, hit COMPUTE, and you can compute that Net Present Value of $20.87. So that’s our Net Present Value calculation using the cash flow keys.

Now, the internal rate of return answers the question, “What discount rate will we have to put in there to make the Net Present Value equal zero?” 

We had a positive Net Present Value at a discount rate of 10%. So clearly, in order to get to a zero Net Present Value, we’re going to have to increase that. Our internal rate of return should be higher than that 10% because we had a positive Net Present Value when we use 10%.

So, same cash flows we want to use. Initial outlay 175 and positive cash flows after that 25, 175, and 50.

As far as entering those, this is exactly the same as what I showed you before. As a matter of fact, if you put those in, you don’t have to do this again because those cash flows are already entered in there. In that case, you can just press the IRR key. 

Once you’re in that cash flow mode, press the IRR key and then COMPUTE and find out that the internal rate of return here is 15.067%.

Now, another calculation that we can do here is the Payback Period and Discounted Payback Period. This is a measure of liquidity…how long does it take to get back the initial investment? 

So it’s not a measure of value. It ignores the time value of money, and it ignores any cash flows beyond however many years it takes to get the original investment paid back.

So, what we want to do here conceptually is say, “With Payback Period, how long does it take to get back $175?” If we get back 25 there, we have to get back 150. If we get back 100 there, we’ve got 50 to go. And since there’s 75 in this third period, we need 50 of that, which is two-thirds. So we’re expecting to get something like 2.67 as our Payback Period.

So, let’s enter all these cash flows. This is the same as we did before. We’re still using the cash flow keys. 

So we enter all those single cash flows, go into Net Present Value. Tell it the discount rate is 10, enter that 10, scroll down, and get to NPV.

 

Then we can also get to NFV, Net Future Value, and then finally to the Payback Period. 

Once we get to the Payback Period, if you want to compute that, press COMPUTE, and it will tell you it’s 2.67 years, as we suspected.

The Discounted Payback Period is how long it takes to get your original investment back in present value dollars, in discounted future cash flow dollars. So that’s going to be longer than two and two-thirds of the year. 

Go to scroll down with the arrow key until you see Discounted Payback. That will be the next one, in fact. Press COMPUTE and find out that that is 3.39 years. So again, once you’ve got the cash flows in, you really can’t go too far wrong here on calculating these.

Another measure from corporate finance that we might want to calculate is the Breakeven Quantity of Sales. This just says how many units you have to sell to just cover your fixed costs.

So if you use the second key and then hit 6, that gets you into the breakeven mode. Clear all the entries in there. 

First off, put in your fixed costs and don’t forget to hit ENTER. Put in your variable cost per unit. This is a total fixed cost, and this is variable cost per unit of $60. We said that the price will be 85, so enter that and then scroll down. You get the profit. We’ll scroll by that. Since we’re not using it right now, scroll down to quantity and COMPUTE and get 20,000 units.

That says, in order to just break even on an operating basis, we need to sell 20,000 units. That $25-unit difference between the price and the variable cost…that’s what goes to cover fixed costs. And at 20,000 units, we just generate the $500,000 necessary to cover our total fixed cost.

Calculating Uneven Cash Flows with TI BAII Plus

Now, we can use this for some uneven cash flows. Remember with our time value of money keys, we had to have equal payments every period. What if we got to a situation where we said, “Well, there’s some uneven cash flows.” 

Here’s what we expect to receive at the end of each in the next three years or at the end of this year and each of the next two years. Time 3, three years from now, it’s the end of the second or third year; however, you want to count them. But we’ve got payments at the end of the first period, the end of the second period, and the end of the third period.

So, we’re in end mode here, and we’re going to put those cash flows in just like we did for Net Present Value, except we’re going to leave CF0 at zero. Remember that Net Present Value function takes the present value of all those future cash flows and subtracts off CF0, our initial outlay. Actually, it adds to it. 

That’s why we enter it as negative. But if we just put that in as zero, then it’s subtracting off zero, and we’ll get the present value of all those future cash flows.

So again, we’ll enter 300 with a frequency of 1. So we can scroll by that. We’ll enter 600, which also has a frequency of 1. So we can scroll by the FO2, which is already set to one. 

We’ll enter that third cash flow and then enter the NPV, Net Present Value mode. Tell it that the interest rate is 10% again, hit ENTER, and scroll down, and then we get our Net Present Value. We’ve got to make it compute that, so we press COMPUTE, and we find out that the present value of those three cash flows is 9, 18, 86. 

So it was no different from Net Present Value except we put in zero for that initial cash flow. So nothing was subtracted off of that present value of those three future cash flows.

Future value of uneven cash flows, we’re just going to scroll down to future value and press COMPUTE. But I think you need to understand what we’ve got here. If we put $300 into a bank account that earned 10% compounded annually, after two years that time 3 here, the end of the third year, 300 would have grown to this amount here. 

The 600 grows for 10% for one period, so that’s going to be turning into 1, 6, or 660 one year out. And then we just add all these up to get the future value. So, if we’re making these deposits into the account of 300, 600, and 200, and it was earning an annual compound rate of 10%, at the end of that third year, right after we put in that last $200 deposit, the future value is what we would have in the account.

So again, the entry of this is exactly the same, and if you did it before, they’re already entered in your calculator.

So now go to Net Present Value mode. Tell it it’s 10. If you put that in before, it already knows that. So scroll down from Net Present Value to Net Future Value, then hit the COMPUTE key and find out that that amount we’d have at the end of the third year, end of year 3, $1223. Now, that Net Future Value, it’s only on the professional edition here. It’s not on the plastic one.

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Calculating Mean, Variance, and Standard Deviation with TI BAII Plus

So now let’s take it to look at some data entry and some statistical functions.

 

We want to look at the population mean and the sample mean, which are the same. It’s just the simple average of the values from our sample.

And so our population and sample mean, let’s say we’ve got three years with the data, six, and eight, and a four. We can pretty much do this in our head. But for more complex problems, you may want to use the calculator.

So calculate the mean return. We know it’s 6 because 6 plus 8 plus 4 is 18, divided by 3 equals 6. 

So how do we enter these? Second seven gets you into the data entry mode, and it just says data above the seven key. So we’re going to put this in, and first clear everything out and then put our first X variable in as six, hit ENTER and scroll down.

When you scroll down, it’s going to prompt you for Y, 01, the first value of Y. We only have one variable here, and we’ve got historical data. So we’re just going to skip past that. ENTER 8 for the second value of our X variable. 

ENTER 4 for the third value of our X variable. Scroll down and then enter the statistics mode, which is that second function on the 8 key.

Now, go to second, ENTER and keep pressing that until 1V appears. That is, we’ve got to tell the calculator, “Hey, we only told you one variable.” And then as you press the down arrow now from 1V, that’s really the set key when we’re doing second ENTER, second ENTER. We’re looking at all those different functions we might use. We get to the one that says single variable analysis. That’s the 1V. Once we get there, no more second function. Hit the down arrow and as that scrolls down, we’ll get the simple average of our three values of X, which is six as we knew.

Now, if we wanted to put probabilities in there…say we had a probability model that said, “If the economy is average, and there’s a 30% of an average economy, return is going to be 6%. If we have a great economy, there’s only a 20% probability of that, but the return would be 8%. 

If we have a crummy economy, there’s a 50% chance of that. Our return is going to be 4%.” So this is what I call a probability model, as opposed to just getting historical data from each year, or each quarter, or each month, or whatever it is.

So now, we’re going to enter these as whole numbers, 30%, 20%, and 50%, and calculate the mean return. If it’s a weighted mean return, or the other thing, it’s the expectation of X, the expected value of this. 

And so that, from a mathematical standpoint, we’re going to multiply each one times the probability and add them all up. Here’s our calculation here. And we’d take that sum, and that sum would be this weighted mean or expected value.

So, let’s go to our data entry mode again. And when we put in 6 this time, we’re going to put in 30 for Y. It’s not really a Y variable. It’s the probability. We’re going to let it know that that’s a probability by telling it we only have one variable. And it’s going to know, If they only got one variable, these others must be probabilities. Those probabilities also need to add up to 100 so you don’t get an error message. 

So, 6 has a probability of 30%, so we ENTER, scroll down. Eight, ENTER, scroll down, 20% probability, ENTER, scroll down. 

Four has a 50% probability, ENTER, scroll down twice, and then enter statistics mode. Now, again, we need to tell it that there’s just one variable. And when we do that, it will calculate that weighted average of those three values using those probabilities as weights as 5.4, and that’s 5.4%.

Now, what about our Sample Variance and Sample Standard Deviation? Our calculator will do the Sample Standard Deviation for us. Here, we’re dividing by N minus 1 to calculate the sample variance. And we use the sample variance when we don’t have every outcome in the whole population but just a sample.

So, here we go again, six, eight, and four. We can enter these as decimals or enter them as whole numbers.

Then we enter data entry mode, clear everything out of the data entry mode, and enter these. Since you already have these in, but you had them in with probabilities, maybe you want to redo it and leave nothing for those probabilities.

So then we go back to statistics mode, tell it it’s a single variable, and get our sample standard deviation of two, and we can square that. So it doesn’t give you the variance. It gives you the Standard Deviation. All you need to do is hit X2 to see what the variance is.

Now, when we want to calculate Population Variance and Standard Deviation, we’re really dividing by N. So notice as you scroll down through these…FX is Sample Standard Deviation. Sigma X, we reserve the Greek letter for the population. 

Now, what does it matter to you? If you’ve got a sample, you calculate sample standard deviation. If you have every possible outcome in the whole population, then you divide by N and calculate the Population Standard Deviation and square that to get the variance.

Now, what if we had one of these probability models? We can do that as well. We can enter them the same as we did before.

So we enter those probabilities as the Y’s, right here and right here. We enter the X values as the X’s, and then we tell it it’s one variable.

When we tell it it’s one variable, it knows that those Y values are probabilities. And we can go down and find the Population Standard Deviation, given that the probability model is 1.56%, and then we can square that to get 2.44 for our Population Variance.

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Calculating Covariance, Correlation, and Regression with TI BAII Plus

Now, let’s look at some other statistical functions here…covariance, correlation, and regression. 

Now we don’t do any regression at Level I, but you might as well learn it while you’re learning this. We do deal with correlation and covariance. 

So the idea here is we have three values for each of two variables, but each variable has a value for each period. So, in year 1, Stock 1 was up 5%, and Stock 2 was up 7%. In year 2, -2% of -4%, etc.

The mathematics is covariance. For each of these periods, we’re going to take the difference between…and I guess I could write this as X-bar…the expected value of X. We’ll take the deviation from the mean or the weighted mean. 

In this case, just the simple mean and multiply that times the difference over here, taking off the expected value of Y. So we multiply those together. We add them all up for each of the three periods and then, because it’s a sample covariance, we’re going to divide by N minus 1. In our simple example here, N minus 1 is just 2.

So, we enter the two values. Now, we’re going to enter X1 and Y1, the 5 and 7, the -2 and the -4 for X2 and Y2. And in the third period, our values were 12 for X and 18 for Y. So we enter those as well and just keep scrolling down. 

Now, we enter statistics mode and use that second set key, which is the second function or the ENTER key, and keep pressing until you get to linear regression. Now as we press the down arrows, it will give us our regression statistics.

So what is N? How many observations did we put in? We put in three. Here’s the mean of X…SX. Remember with the letter S, it’s the sample standard deviation of the X variable. 

Keep scrolling down. We’ll get the population standard deviation. That’s using the Greek letter Sigma, lower case Sigma and then the mean value Y, sample standard deviation Y, population standard deviation Y, intercept of our regression line, and gradient of our regression line. 

So if we had some data and fit a line that fits the best data, it would give us this point here. That would be our intercept of our best fit line. And the gradient of that is the slope of the line.

We don’t need these for Level I. It’s good to know they’re there. What we need is this correlation coefficient. This calculates the sample correlation between X and Y over the periods that we’ve got.

So, we’ve got the SX is seven. Sample standard deviation of X is seven. Sample standard deviation of Y is 11. We’re given a correlation. We had perfect positive correlation for X and Y and came up with one.

Now, your calculator is not going to tell you the covariance. But the definition of correlation coefficient is covariance over the product of the standard deviations. That’s the correlation coefficient. So in order to calculate the covariance from that, we use this correlation coefficient. Actually, it’s in there as R times the two sample standard deviations. 

So that’s what we’re doing here. RCL 1 is our 7, RCL 2 is our 11, and RCL 3 is our correlation coefficient. So here’s what we’re going to do. We’re going to multiply that correlation coefficient times the product of the two sample standard deviations. And that way, we can get to our covariance once we’ve entered our data.

Now, we also need to be able to calculate the covariance and correlation for a joint probability function. But there’s really no calculator function for that, because here we’ve got a probability model, and we’ve got two values for each one. We aren’t really set up to do that on the calculator. 

So you’ll have to follow the method that we give you in the SchweserNotes for calculating covariance and correlation from a joint probability function.

As long as we’ve got this in front of us, what it says, there’s a 15% probability that the return on A will be 20%, and the return on B will be 40%. So there’s only three possible outcomes here: 20% and 15%, or 0% return on B, and 4% return on A. There’s a 25% probability of that outcome. So no real shortcut using the calculator on that one.

Calculating Depreciation on TI BAII Plus

Let’s take a look at some depreciation measures here to wrap things up. 

For straight-line depreciation, it’s just the original cost minus the salvage value over its depreciable life. So this is not a difficult calculation for straight-line depreciation expense. 

But there is a depreciation function, a depreciation mode on your calculator. It’s the second function above the four key. Clear everything out of there using second; and you clear entry and then enter, and it cycles between the different depreciation methods.

Once you have straight-line depreciation on the screen, then scroll down and enter the life, four years; then the next one, M01. 

This is used to tell the calculator if the asset was purchased part-way through a month or a year; 4.5 would be halfway through. You won’t need anything like that for the Level I exam.

Then we put in our salvage value and our cost and choose the year you want. Let’s say year two and ENTER. So you’re prompted with a year after we’ve scrolled down after we told it the estimated salvage value. 

So now we look at year two, and we find the annual depreciation is 750. The reduced book value is the cost minus the accumulated depreciation.

After two years, since it’s a straight line, we’ve had two years of $750-a-year depreciation. That’s 1,500. It took our book value from 4,000 down to 2,500. And the remaining depreciable value is 1,500. Why is that? Because we said we have a salvage value of 1,000. So it’s subtracting that salvage value off to give you the remaining depreciable value of the asset.

Now straight line is pretty straightforward if you’ll pardon our choice of words. But accelerated methods are going to come in handy here. One of the accelerated methods is Double Declining Balance, and that’s what we’re going to find here. 

So in our example, we’ve got a new piece of equipment that costs $4,000 at the beginning day of the year. It’s likely to last four years with an estimated residual or salvage value of $1,000 at the end of the period. So, Double Declining Balance is cost minus accumulated depreciation. So each year, it uses the net book value and then multiplies it times twice the straight-line percentage or fraction.

How do we do this on the calculator? Go into depreciation mode, clear everything out. We want Double Declining Balance. So it says a declining balance of 200. Double is 200%. So, then cycle between all the depreciation methods until you have this DB equals 200 on the screen and then scroll down. 

Our life is four years, so enter that and scroll down, our estimated useful life. And then M01. You won’t need this one because we’re not going to do it partway through the month. We’ll put our cost in as $4,000. Our salvage value is estimated at $1,000, so enter both of those.

And then we’re going to choose the year we want and say, “What’s second-year depreciation?” So 2, ENTER, scroll down.

And now we can just review the data. Annual depreciation in that second year is 1,000. Reduced book value, at its cost minus accumulated depreciation, is 1,000 at the end of the second year. Remaining depreciable amount, nothing.

Essentially, we’ve taken 2,000 the first year, which was two-fourths times the 4,000. One-fourth because it’s got four years, two-fourth because we’re using Double Declining Balance. And because we’re using Double Declining Balance, we multiply it times the beginning book value, not times the difference between cost and salvage value. So, the remaining depreciation after the two years of Double Declining Balance is zero.

That’s a lot of the functions between the video volume on the basic functions and this one on the advanced functions, or uses of the TI calculator. So, hopefully, this will give you all the tools you need to make this your new best friend for dealing with problems in finance, corporate finance, debt securities, IRR, NPV, and all of that.

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• Why You Need a Calculator for the CFA Exam
• Allowed Calculators for the CFA Exam
• TI BA II Plus vs. HP 12C
• Approved Calculator Accessories
• Calculator Tips and Tricks

Why You Need a Calculator for the CFA Exam

If you have already begun your exam prep, you already know why you need a calculator. However, if you haven’t started yet, here is the answer. You have approximately 90 seconds to answer the questions on the CFA exam. The equations and calculations you are expected to solve are complicated. As a result, it is almost impossible to take the exam without a calculator and expect to pass. Calculators are not provided at the testing center, and you can’t borrow a calculator or share one with someone else at the testing center. Therefore, you must bring your own to the exam.

Allowed Calculators for the CFA Exam

• Texas Instruments (TI) BA II Plus (including BA II Plus Professional)
• Hewlett Packard (HP) 12C (including the HP 12C Platinum, 12C Platinum 25th anniversary edition, 12C 30th-anniversary edition, and HP 12C Prestige)

Get your calculator skills ready for the curriculum with our CFA Program Fundamentals eBook.

TI BA II Plus vs. HP 12C: Which Is Better for the CFA Exam?

The answer to which model is better depends on your preferences and comfort level with the two different types of operating systems. If you’re used to algebraic inputs, and you haven’t had much experience with any other type of operating system, the TI BA II Plus model will probably work best for you. Most exam preparation providers, including Kaplan Schweser, focus on teaching you how to use the TI BA II Plus model.

If you have been using one of the authorized HP 12C models in your work or studies, then it might be the better choice for you. You can find a lot of information about why some candidates and CFA charterholders prefer it by checking out Analyst Forum and Quora.

The Difference Between Approved the Calculator Models

Approved Calculator Accessories for the CFA Exam

• Calculator covers
• Keystroke cards
• Loose extra batteries
• Small screwdriver for replacing your BA II Plus batteries

Can You Bring Two Calculators to the CFA Exam?

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CFA Exam Calculator Tips and Tricks

Because you won’t be able to refer to the calculator manual during the exam (even if you could, you wouldn’t have time), you should learn how to use the calculators beforehand. You can start by downloading the manuals for the TI and HP models from the web. 

If you have decided to use the BA II Plus model, you can learn the basics in this Kaplan Schweser video tutorial and then tackle the more advanced features. There are also tutorials for the HP 12C. This tutorial covers the HP 12C for all finance applications, and this HP 12C tutorial is specific to the CFA exam.

Exam Day Tips

• Start Your CFA Exam Level II Prep Early
  
• How Much to Study for CFA Exam Level II
  
• Review CFA Institute’s Learning Outcome Statements (LOS)
  
• Know CFA Exam Level II Weights and Curriculum
  
• Learn the CFA Exam Level II Question Format
  
• Recommended CFA Exam Level II Prep Breakdown
  
• Learn How to Take the CFA Exam Level II
  
• Apply Level II CFA Concepts to Real Life
• Last-Minute Level II CFA Exam Study Tips
• Can You Pass CFA Level II with Self Study

Start Your CFA Exam Level II Prep Early

How Much to Study for CFA Exam Level II

How Many Study Sessions Do You Need for CFA Level II Exam Prep?

You should engage in 80-100 study sessions across your six to nine months preparing for the Level II CFA Exam. We arrived at this range because most CFA Candidates prefer to prep for a few hours, almost every day of the week. If your preference is to take more frequent days off from your prep, you can engage in fewer study sessions than that. However, keep in mind that if you were to only engage in 60 study sessions, then you will need to average 5.5 hours per study session in order to meet the minimum suggestion of 325 total hours studying. The more often you sit down for a study session, the less demanding each individual study session will be.

Review CFA Institute’s Learning Outcome Statements (LOS)

Know CFA Exam Level II Curriculum and Weights

• Ethical and Professional Standards: 10-15%
• Quantitative Methods: 5-10%
• Economics: 5-10%
• Financial Statement Analysis: 10-15%
• Corporate Issuers: 5-10%
• Equity Investments: 10-15%
• Fixed Income: 10-15%
• Derivatives: 5-10%
• Alternative Investments: 5-10%
• Portfolio Management and Wealth Planning: 10-15%

Learn the CFA Exam Level II Question Format

Recommended CFA Exam Level II Prep Breakdown

Level II CFA Exam Prep: Reading & Lectures [PREPARE]

Debriefing Is a Critical CFA Level II Exam Study Strategy

Different Forms of Level II CFA Exam Question Debriefing

If you’re using something like the SchweserPro™ QBank, then you’ve got thousands of questions to attempt to cover the whole syllabus. It’s a big ask to do that, but an effective use of the questions should ensure you cover the majority of every CFA exam topic.

CFA Exam Level II Prep: Mock Exams [PERFORM]

When taking Level II CFA Mock Exams, your focus should be on the Learning Outcome Statements (LOS) from CFA Institute because they detail exactly what you are expected to do on exam day.

Learn How to Take the CFA Exam Level II

Looking for more help with passing the Level II CFA^® exam? Check out our CFA Exam Level II study packages.

Apply Level II CFA Exam Concepts to Real Life

Your CFA exam score is graded by machines and charterholders. CFA Institute then uses a methodology to determine a minimum passing score that is applied to each exam. In this article, we break down how the whole grading process works and share some tips to increase your likelihood of getting a passing grade.

CFA Exam Score Grading

The multiple-choice sections in all three levels of the CFA exam are graded by a machine, although 10 percent are checked by humans. The essay portion of CFA Level III—known as constructed response—is graded by CFA charterholders. The graders are divided into teams, and each team grades one question, using guideline answers and grading keys provided by CFA Institute. The graders do not know the names of any of the candidates or even their testing centers.

Junior graders, senior graders, and a grader of graders not only grade the exams but also check the work of others to ensure consistency and quality. The middle 50 percent of the distribution of scores are graded again by someone else to ensure that marginal cases get another pass. Then, for those exams with questions where the scores of the first and second rounds of grading are different, there is a third round of grading. This thoroughness from the CFA Institute is why it can take so long to get your results, but is critical to ensuring that the grading rubric is being applied fairly. 

Assess your baseline knowledge of the Level I CFA Program curriculum with a free CFA diagnostic exam

CFA Exam Grading Process: Step-by-step

If you’re wondering why it takes so long to receive your results for these computer-based exams, this comprehensive, step-by-step breakdown of the grading process helps explain the timeline:

1. Testing centers send exam data to Prometric after your test day. Once the results are received, it is consolidated and made available to CFA Institute. Due to the high volume of CFA candidates, this first part of the process can take several days after the exam window has closed.
2. CFA Institute reviews the exam day experience. It’s during the days waiting for the results from Prometric that the CFA Institute reviews candidate comments and statistics on a question-by-question basis. This helps them flag any questions that were confusing or did not do a good job of evaluating candidates’ understanding of the content.
3. CFA Institute validates that they have received all test results for all candidates correctly.
4. CFA Institute begins its official analysis. They validate that each version of the exam performs as expected. Due to the collaborative nature of the grading process—mostly for the Level III essay portion—it takes a few weeks to complete.
5. Standard Setting grading takes place over the next few days. This is when the CFA Institute’s pool of diverse graders (“Standard Setters”) review each question on the exam to determine the likelihood of a ‘Just Qualified Candidate’ will or will not answer that question correctly (in theory). This process essentially weighs the difficulty of questions on the exam to help determine what can be deemed as a fair passing score.
6. CFA Institute recommends their Minimum Passing Score. This is the aggregate of the question-by-question judgments made by graders during the Standard Setting grading process.
7. Automated process generates the score report that candidates receive.
8. Quality assurance double checks those reports for accuracy.
9. Results release is scheduled. The scheduled CFA Exam results release is always scheduled in advance with bandwidth in mind, given the high demand of candidates rightfully wanting to access their scores immediately upon release.
   

What exactly is the CFA Minimum Passing Score?

The Minimum Passing Score (MPS) is the benchmark used to determine whether a candidate has passed or failed the exam. The MPS varies for each level and is determined after each exam administration.

To get the MPS, CFA Institute conducts workshops for each level of the exam. Workshop participants go through the entire exam several times, looking at each question to make independent judgments on the expected performance of a “just-competent” candidate on each question. After they correlate the judgments and review them, they issue a report that provides a score range for the exam.

CFA charterholder members on the Board of Governors of CFA Institute use this report as the foundation for setting the MPS for each level. CFA Institute does not release the MPS, although research indicates that it hovers between 60 and 70 percent.

Because the CFA Institute uses multiple versions of each exam, they need to make sure the MPS is set fairly across different versions.  To do this they use the process of equating, which is a statistical process to maintain comparable scores on different test versions both within and across administrations.  

With this method, the CFA Institute can be confident the MPS was set fairly across two or more different versions of the exam.

The Final Grade

Candidates do not receive a numerical score for their exams. After the MPS is set, it is applied to each graded exam, and candidates get their results. They receive either “Pass” for a score at or above the MPS or a “Did not pass” result for a score below it.

With their grade, candidates also get a summary of how they did by each topic area covered on the exam and the maximum amount of points that candidates can earn in each topic area. The score for each topic area is expressed in three ranges: less than 50 percent, between 50 and 70 percent, and more than 70 percent.

CFA Exam Grading Interpretation Guide >>

How to Get a “Pass” Result after CFA Exam Grading

If you would like to increase your chances of getting the “Pass” grade, here are some steps to follow for each level of the CFA exam:

1. Develop your study plan 6–9 months before the exam.
2. Allot 90–120 hours to reading and coursework, 120–150 hours to answering practice questions, and 60 hours to taking practice and mock exams.
3. Make all Learning Outcome Statements part of your plan.
4. Use study groups and CFA exam prep courses to stick to your plan.
5. Know the exam weights.
6. For each concept you learn, ask yourself how it applies in the real world.
7. In the last weeks, before the exam, instead of panicking or ramping up your study intensity, space your practice sessions further apart, and get plenty of rest.

Every year, hundreds of thousands of candidates attempt to pass the CFA® exam. Because the CFA charter is widely considered to be the gold standard within the investment community, it is no surprise that the intense difficulty of the exams results in the majority of candidates failing at least once. And when it happens to you, it can be a frustrating feeling. But all is not lost. You have experience on your side, and you can retake the exam with confidence. You just need to keep a few things in mind as you prepare for your retake.

Recent Low CFA Level I, II, and III Exam Pass Rates: What it Means for You

Across recent CFA Exam administrations, there was a consistent trend: noticeably low pass rates. The low pass rates have been a trend across all the Level I, Level II, and Level III CFA exams. While there are multiple contributing factors to that trend, including COVID-19, and more, it’s most important to focus on what to do next as you continue to climb toward becoming a CFA Charterholder.

If You Did Not Pass the CFA Exam

The average candidate spends four years in the program, meaning most do not pass at least one exam on their journey to becoming a CFA charterholder. Combine that fact with the historic low pass rate for recent exams, and you can rest assured that many smart, capable candidates are in the same boat as you. 

While it is easy to feel that you wasted 300 hours of study for no reward, a better way to think about it is that you have completed a large amount of the study requirement for your next attempt. Although the CFA Program curriculum does change each calendar year, much of the knowledge you have gained from the previous exam will still be relevant for your next attempt at the exam. Don’t give up on the CFA Program. Instead, view the time you spent this year as an investment in ensuring you pass the next exam. So, what to do now? 

Retaking a level of the CFA exam is not nearly as time-consuming as studying a level from scratch. It should be much easier to balance your work, family, and study commitments this time around. Having said this, it still pays to start your studies early and spread the study time over many months to minimize the impact on your life.

Retaking the CFA Exam

How many times can you retake the CFA?

CFA candidates can take each exam level a maximum of six times, a policy that was instituted in 2021. Also beginning with the 2021 exams, candidates can take an exam up to two times per calendar year, but cannot take the exam in windows that are less than 6 months apart.

When to Retake the CFA Exam

The first step to deciding when to retake the exam is to assess your previous exam preparation experience. How many hours did you spend preparing? Did you consistently stick to a structured study plan? Are there other study materials that could help you pass your next exam? Examine how you will approach exam prep differently going forward, reflect on your own personal/professional goals, and consider the various exam window options offered by CFA Institute to determine when to retake the CFA exam. 

In general, we recommend retaking the exam as soon as possible, especially if you can do so in the same calendar year. Registering for the next possible exam is best for the following reasons: 

• Momentum is on your side. Even if you have been taking a break since your last exam, all of the effort you put into preparing for it is relatively fresh. 
• The longer you wait to retake the exam, the higher the likelihood that you will forget the material that you have already learned.
  

It is particularly important to retake the exam in the same calendar year if at all possible, since CFA Institute changes the CFA Program curriculum on an annual basis. Retaking the exam before these annual updates will give you a higher probability of passing because you will be more familiar with the curriculum being tested.

Regardless of which exam you decide to sign up for, we have some recommendations for approaching the next exam attempt:

• Carefully review your exam results and use them as a diagnostic tool to help guide your studies on the next attempt.
• Organize your study plan to focus on weak areas first. Your study plan should be weighted heavily toward practicing the material using the SchweserPro QBank and end-of-chapter questions in the CFA curriculum. 
• After doing additional practice, if you are still performing poorly, revisit the SchweserNotes and OnDemand class videos to relearn the concepts with which you are struggling. 

Continue this process until one month prior to the exam and then focus on a well-structured final review process. especially if you were unable to do this for the May exam. 

For final review, focus heavily on practicing what you have learned, but with the Schweser Mock Exams rather than the SchweserPro QBank. After completing a mock exam, thoroughly review the answer explanations for the questions you answered incorrectly. Make certain you understand the logic behind the correct answer.

Also, be sure to use the OnDemand Review videos to sharpen your exam strategy and ensure you retain information for the exam. 

Finally, get help through our InstructorLink tool if you are still struggling with the material. We want you to succeed on the CFA exams and are always ready to help.

Takeaways from Recent CFA Exam Pass Rates

According to CFA Institute, the recent low pass rates are somewhat of an anomaly, as they are largely driven by candidates who have been affected by COVID-19 related deferrals and cancellations. Additionally, it looks like we are seeing a higher minimum passing score (MPS) in the era of computer-based testing. Both of these factors have combined to yield the lowest pass rates ever recorded in the history of the CFA Program. 

What does this mean for candidates? You need to be better prepared to go into the CFA exam. We suggest that you aim to be scoring more than 75% on mock exams, rather than the 70% we used to suggest. This extra work will certainly pay off in increasing your chances on exam day. And also, Level I candidates should keep in mind that the more prepared they are for Level I, the easier the Level II and III exams will be. 

No one likes to fail an exam, but given the difficulty of the CFA exams, it is the norm rather than the exception. Very few candidates pass all three CFA exams on their first attempt. CFA Institute estimates it takes the average successful candidate four years to complete the CFA Program. So failing one level, if not two, makes you an average candidate. It is difficult for most candidates entering the program to accept this. Most people entering the program are high fliers who have passed most, if not all, exams that they have taken in the past. As one candidate recently said, “I don’t do failure.” As recent CFA pass rates would suggest, passing all levels of the CFA exam is the exception rather than the rule.

Keep in mind, whether you pass or fail the CFA exam, Kaplan Schweser is here to support you during every step of your journey to becoming a CFA charterholder.

The CFA program requires candidates to pass three separate exams. Each CFA level requires candidates to prepare for a lot of material. To be successful, you need to prepare an effective CFA study plan that includes a detailed prep schedule.

Having a study schedule can help you organize your study planner around the topics on which you will be tested. To master these curriculum topics and utilize the time you have we have outlined our recommendations for the CFA Charter and provided you with tips for creating an effective CFA study plan.

• How To Know When You’re Ready To Take The CFA Exam
• What Is The Best Order To Study For The CFA Exam?
• Tips For Creating an Effective CFA Study Plan
• Start Creating Your CFA Study Plan

CFA Study Plan Schedules

When preparing a CFA study plan schedule, it’s important to account for your background and familiarity with the CFA curriculum.  Candidates with a financial degree and professional work experience may need less than 100 hours to study for a CFA exam.  However, candidates who don’t have a background in the CFA curriculum will likely need to study over 300 hours for a CFA exam. 

No matter what background a CFA exam candidate has, we recommend that candidates spend 6 to 9 months preparing for a CFA exam and create a study plan that spreads those hours out over the months to avoid cramming in too much within the last few. 

Before you choose your CFA exam date, download this free Before You Decide to Sit for the CFA Exam eBook.

How To Know When You’re Ready To Take The CFA Exam

A good measure by which to judge if a candidate is ready to take the CFA exam is by paying attention to mock practice exam results. If candidates are able to consistently score above 75% on each curriculum topic when taking a CFA mock practice exam, then we would suggest that they are ready for the exam regardless of the hours they have spent preparing.

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What Is The Best Order To Study For The CFA Exam?

The best order to study for the CFA exam depends on a number of factors including:

• The CFA level you’re preparing for
• You’re educational and professional background
• The amount of time you have available to study

Our recommendation for an average Level I CFA candidate is to begin preparing for the concepts covered in the Quantitative Methods topic if you don’t have a quantitative background because these concepts are present in multiple topic areas.

Consider preparing for the Fixed Income and Equity Investments topics before studying for Corporate Issuers because through that process you will familiarize yourself with the components of Weighted Average Cost of Capital (WACC), which is very important for Corporate Issuers.

Tips For Creating an Effective CFA Study Plan

1. Stick to your CFA study schedule and don’t fall behind.

Once you create your study schedule, be disciplined and stick to it! To provide the motivation to stay on task, take a CFA Program review course and prepare for it like a university course; read the relevant material ahead of time, get at least a big picture of the topics to be covered, and write down any questions you want to ask. 

Another great way to stick to your study plan is to form a study group that meets on a regular basis. Studying with others who are facing the same challenge you face provides motivation and support. In addition, being able to ask questions or explain a concept to someone else helps develop your own mastery of the topics. Build the class times and study group meeting times into your schedule, and, once again, stick to it!

2. Prepare, Practice, Perform.

A very useful organizing structure for your plan is based on the three key stages of learning: Prepare, Practice, Perform. The path to success is to focus on the Learning Outcome Statements (LOS) provided by CFA Institute. 

These are performance-based objectives that provide detail on exactly what you are expected to be able to DO on exam day. For example, one LOS might be “Calculate and interpret Net Present Value (NPV).” The command words “calculate” and “interpret” are what you should be able to do correctly.

Assess your baseline knowledge of the Level I CFA Program curriculum with a free CFA diagnostic exam

CFA Study Plan: The Prepare Stage

CFA Study Plan: The Practice Stage

The second stage is Practice. This is when you actually apply the knowledge from the prepare stage by working on practice problems. If you are supposed to calculate NPV, the best way to learn how to do that is by doing 10 practice problems that ask you to do just that. Our experience is that most candidates spend too much time preparing and not enough time practicing.

CFA Study Plan: The Perform Stage

3. Review regularly.

The material you learn when you begin will not stay with you until exam day if you don’t go back and revisit it once in a while. Plan to spend a few hours each week going back and reviewing material you think you’ve already mastered. Do some CFA practice questions and, if you make any mistakes, dig into those concepts again until you know them.

Review CFA Concepts with Free Flashcards

4. Cover all of the material.

Don’t play the prediction game by guessing at which Learning Outcome Statements from the CFA Institute won’t be tested and then ignoring that material. Every LOS is fair game for the exam, and you have to be ready for anything to be tested.

5. Study Ethics and Professional Standards last.

We recommend studying Ethics and Professional Standards after you are comfortable with other CFA topics because preparing for these questions mainly relies on using the ROTE learning method, which is the process of memorizing information based on repetition.

6. Reserve the last month for CFA Mock Exams.

During the last month or so before the exam, begin to take practice and CFA mock exams in realistic settings. Take the exam on your own with no notes, and be sure to block off at least 3 hours to simulate one session. The key is to use the exams to identify how prepared you are by assessing your areas of weakness and addressing them. If you get a question wrong, note whether the issue was the application of your knowledge to the question, or a fundamental lack of understanding of the concept. Keep track of your scores and look for an upward trend…by exam day, you should be scoring above 70% consistently.

7. And finally, reward yourself.

Make a plan to do something fun and relaxing on the day after the exam…golf, hiking, time with family, video games, or simply sleeping. You’ve earned it!

Start Creating Your CFA Study Plan

As you get ready for your CFA exam, consider making Kaplan Schweser’s CFA study materials—complete with classes, study tools, and mock exams—the centerpiece of your mission to earn a passing grade.