How to Pass the CFA^® Exam

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 material, but you also need to be able to apply what you learned to scenarios on the exam. This level of understanding and practical application takes time to develop. Therefore, you 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 Level III CFA 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

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?

• 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

Last-Minute Level II 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: Take Mock Exams to Learn Which Topics to Focus on

Figure out which curriculum topics you need to focus on during the last few weeks of your Level II prep by taking a CFA mock exam.  Make sure the amount you time you use to focus on specific curriculum topics also has heavier topic weights. 

For example, if you have been struggling with learning how different methods are used to account for intercorporate investment formulas but also are having a hard time memorizing classifications of regulations and regulators, get focused on what your learning barriers are in Financial Statement Analysis because that topic carries more weight than Economics in Level II. 

2. 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.

3: Practice Vignette Questions

Start practicing Level II questions vs diving deep into more reading material. These practice questions can help you learn new concepts and practice your answering techniques. Practicing CFA questions can you give you the confidence that indeed you are ready or they can help you identify weaknesses.  Either way, they are beneficial for CFA candidates in the early and late stages of CFA prep.

4: Solidify Your Calculator Methods

Your calculator is an important tool when taking a CFA exam so make sure you are ready to use your calculator’s features as described in the learning outcome statements. 

Watch this video to learn how you can use the BAII Plus calculator for capital budgeting, uneven cash flows, NPV, IRR, payback period and discounted, and more.

5: Study Using the 50/10 Rule

Use a timer to study for 50 minutes of every hour with zero breaks or distractions. If you get distracted and stop working in those 50 minutes, start the timer over again. Once you hit 50 minutes, take a 10-minute break…then back to work! If you can train yourself this way, you will study hard 80% of the time, which is more effective than half-studying with periodic distractions.

6: Don’t Be Afraid to Ask For Help

It’s understandable to feel overwhelmed and anxious about preparing for the Level II CFA exam. This exam is undoubtedly more difficult than Level I. 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 II with Self Study?

Ready To Start Preparing for the CFA Exam?

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

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.

Recent passing rates for all levels of the CFA exam were as follows:

Recent CFA Level I Exam Pass Rates

These recent pass rates have been noticeably low. 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

Results from recent Level II exams have varied. While the only significantly lower-than-average pass rate was from the August 2021 exam (29%), it seemed that dip may be a part of a similarly alarming trend as Level I’s consistently declining pass rates. However, the February 2022 exam pass rate of 44%, signals that Level II candidates are back on track as results begin to normalize.

Recent CFA Level III Exam Pass Rates

The November 2021 Level III exam pass rate was 43%, which continues the low pass rate trend. However, November's results are a slight improvement from the August 2021 Level III pass rate of 39% which, was a historically low pass rate.

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.

Beginning in 2022, pass rates for CFA Level I will be given out four times a year to correspond with the exam windows (CFA Institute has opened additional seatings for all levels of the 2021 exam). Also beginning in 2022, pass rates for Levels II and III will be given out for each window.

Why are Recent CFA Exam Pass Rates So Low?

You probably noticed the stark contrast between the 2021 scores and the 2020 scores. In fact, there have been all sorts of speculation about the reasons for the low scoring. However, this is still a limited data set among years of data sets. Therefore, it’s best to wait to see if the next round of scores is more on par with early 2021 and late 2020 scores or if they remain low before looking for the cause. 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.

To postpone a scheduled CFA exam, you must meet specific criteria and appeal directly to CFA Institute - unless CFA Institute postpones the exam for reasons such as natural disasters, a pandemic, or a major format change.

When CFA Institute postpones or cancels the exam, they provide notice to candidates and help them transfer to the new date or register again. In this article, we address what happens when a candidate wants to take the exam at a later date.

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. They call this a deferral, and they decide whether to offer deferrals case-by-case. To be considered, you must notify CFA Institute by email that you or a member of your immediate family have a life-threatening or very serious illness, you are pregnant, there is a death in your immediate family, or you have mandatory military service on the day of the exam. CFA Institute has a self-assessment tool you can use to determine whether you should request a deferral.

After reviewing your case, CFA Institute will determine whether you can postpone your scheduled exam to the next sitting. On Reddit and analystforum.com, there are personal stories about deferrals that go into detail about the results of the process. 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.

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

CFA Institute Deferral Policy Qualifications

• You  or your immediate family member (parent, grandparent, sibling, spouse/domestic partner, or child) are suffering from a life-threatening illness, that has been diagnosed since you registered for your current exam.
• 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.

CFA Deferral Policy Processing Time

Withdrawing From the CFA Exam

You may withdraw from the CFA exam up to five days before the exam date. Withdrawing means that you do not have to take the exam, but it stops there. If you want to take it at the next sitting, you will have to register again.

CFA Institute has two policies for withdrawals. If you withdraw from the exam within the first three days after registering, you will be issued a full refund of your registration and exam fees. If you withdraw after that, you will lose your fees, but you can register again as soon as your withdrawal is processed. You will have to pay the fees again.

If you do not withdraw by the deadline, and you then don’t sit for the exam, you will not be allowed to register for the next sitting until after CFA Institute releases all the results from the current exam. So, if you need to withdraw, go through the proper channels to ensure a place at the next sitting.

Once you withdraw, it’s final. This means that if you withdraw your registration for one sitting, you cannot re-register for the same sitting.

If you don’t want to withdraw from the exam, but you can’t take it at your assigned testing center, you can request a change.

Testing Center Change

After you receive the location of your testing center, you can change it online by using your account without forfeiting any fees. If you request a change before admission tickets are released, the change is automatic unless the testing center is full. If you request a change to a testing center that has space available after admission tickets are released, you will be notified by mail of the change.

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.

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.

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

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.  

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).

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 »

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. 

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.

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.

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.

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. 

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.

Latest CFA Exam Dates »

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.

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

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

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.

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.

• CFA Exam Window Dates
• How CFA Exam Results Are Released
• How To Find Your CFA Exam Results
• Do CFA Exam Results Expire
• What Time Do CFA Exam Results Come Out
• How The CFA Exam Is Graded
• How To Interpret CFA Exam Results
• Can You Share CFA Exam Results
• CFA Exam Pass Rates

When are CFA Exam Windows?

CFA Exam Level I Window Example

CFA Exam Level II Window Example

CFA Exam Level Ill Window Example

How CFA Exam Results are Released

The CFA Institute will notify you via email if you passed or failed.  If you are interested in seeing the detailed breakdown of your performance in each section, you can log in to your account with the CFA Institute and find that information.

How to Find Your CFA Exam Results

CFA exam results will be emailed directly to you and will be immediately available to view for approximately one year after the test date in your CFA Institute account profile. If you need to find your CFA exam results after this date, you will need to generate and download a verification letter from your CFA Institute account profile.

Do CFA Exam Results Expire?

No, CFA exam results do not expire and will be available to you for as long as you have your CFA Institute profile active.  The CFA designation is not a licensing program and hence it does not have an expiration date.

What Time Do CFA Exam Results Come Out?

The CFA Institute does not usually set an exact time for emailing out results to test-takers, but you can expect to receive your results sometime after 8 AM CDT.  Below are some local times in other regions of the world that take the CFA exam:

• São Paulo: 10 AM
• London: 2 PM
• Berlin: 3 PM
• Cape Town: 3 PM
• New Dehli: 6:30 PM
• Singapore: 9 PM
• Shanghai: 9 PM
• Tokyo: 10 PM
• Sydney: 12 AM

How is the CFA Exam Graded?

Can You Share CFA Exam Results?

There are no rules against sharing your CFA exam results with others. Letting your community know how you performed may even be beneficial by gaining encouragement and helpful insights whether you are preparing to retake the exam or move on to the next level. Reviewing your lower scored areas with fellow candidates or an instructor can also contribute to better understanding the CFA curriculum throughout the study process. 

CFA Exam Pass Rates

The CFA Institute has been keeping a record of pass rates for each level of the CFA exam since 1963.  In 2021, the pass rate for each level did not exceed 45%.  The CFA exam pass rates change after every exam window and vary based on the exam level. To find the most current pass rates for each CFA level visit our CFA exam pass rate guide for more information.  

Ready To Get Started?

As you strive for a positive outcome from CFA exam grading, consider making a Kaplan Schweser CFA study materials—complete with classes, practice exams, and mock exams—the centerpiece of your mission to earn a passing grade on all levels of the CFA exam.

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, the preparation phase of 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.

How Much to Study for CFA Level I Exam

Across the five-to-six months that you should spend studying for the Level I CFA Exam, you should plan to devote at least 300 total hours (the average study time) to your Level I prep. If that number seems daunting to you, then consider spreading your studies across nine months instead of five. That way, you would only need to devote roughly 1 hour and 10 minutes per day (on average) to your Level I prep (versus closer to 1 hour and 40 minutes per day). Prep for longer stretches of time on certain days to earn yourself an occasional day off from studying.

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.

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.

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. 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.

Begin your journey to becoming a successful CFA^® candidate! Download Your Free Copy of CFA Program Fundamentals eBook, 2nd Edition

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.

A frequent topic of discussion among CFA® charter candidates is what’s different between CFA Level I and II? The near-universal consensus is that CFA Level II is a significant step up from CFA Level I in a number of ways.

CFA Level I vs Level II

The following 10 points outline some of the major differences a candidate will encounter between Level I and Level II of the CFA exam.

Differences Between CFA Level II and Level III »

10) CFA Level II Uses Vignettes

At Level I, questions are normally defined using only a brief self-contained question stem, such as: “The period of time within which a hedge fund must fulfill a redemption request is called…” At Level II, vignettes are introduced. A vignette can be thought of as a mini-case, where a business scenario is described in several paragraphs using a mix of text, tables, financial statements, and so on. A Level II candidate must develop the ability to quickly scan through a vignette and pick out the pieces of data needed to answer a particular question.

9) CFA Level II Organizes Uses Item-Set Question Format

The CFA Level I exam consists of 180 questions, and each of these questions is unrelated to the others. By contrast, Level II questions are organized as “item sets,” each based on a shared common vignette and containing 4–6 multiple-choice questions. Generally, these questions will all dig into a single topic. This deep dive into individual topics makes it potentially more dangerous to skip a particular reading because each item sets represents 5% of the points on the exam.

8) CFA Level II Allows Less Time to Finish than the Level I Exam

The CFA Level I computer-based exam exam takes 4 hours and 30 minutes, split into two equal sessions of 2 hours and 15 minutes.  The Level II CFA computer-based exam will be 4 hours and 24 minutes, split into two equal sessions of 2 hours and 12 minutes, with an optional break in-between. This means you will need to be even more time conscious when taking the Level II CFA exam. 

7) CFA Level I Exam Topics are Usually Learned During Undergrad

Candidates who tackle the CFA exams have at least an undergraduate degree under their belt, often in business or a related subject. As a result, many Level I candidates begin their studies with a solid understanding of major Level I concepts. However, at Level II, candidates generally find this advantage runs out, and their previous studies provide relatively little direct advantage on exam day.

Begin your journey to becoming a successful CFA® candidate! Download Your Free Copy of CFA Program Fundamentals eBook, 2nd Edition

6) CFA Level II Exam Test Takers Often Have Less Free Time to Study than Level I Candidates

Many candidates begin studying for the Level I exam when they have a lull in their education, family, or career commitments. Often, candidates find that a year later, when the Level II exam rolls around, they have a new personal situation and a fresh set of distractions related to school, work, or children. These new distractions may require a candidate to double down on their commitment to their CFA Program studies. Candidates can expect to spend on average 25 or more hours studying for the Level II exam compared to the Level I exam.

Can I Take the CFA Level I and CFA Level II Exams Together?

No, you can not take the CFA Level I and Level II Exam together.  As you pursue your CFA designation you have to pass the Level I exam to become eligible to take the Level II exam.

You are only allowed to take the exam two times per calendar year and you can only take one exam every six months. You cannot exceed a total of six attempts per exam level.

5) CFA Exam Topic Weights: Level I Weighs Ethic Scores Heavier than Level II

For the Level I CFA exam, CFA Institute specifies different topic weights than for Level II. All topic weights are expressed in ranges.

4) CFA Level I Exam Emphasizes Memorization

In the CFA Level I curriculum, there is a significant focus on rote recall of formulas and definitions. At Level II, memorization is de-emphasized, while greater conceptual understanding is required. Level II CFA candidates are expected to demonstrate their ability to apply tools and relationships to analyze financial data and to value assets. Furthermore, at Level II, a candidate’s ability to link one theory or concept to another will be tested.

3) CFA Level II Exam Material is More Complex

While the Level I CFA exam is broad, most of the Level I material is a straightforward introduction to the concepts covered. The Level II CFA curriculum, by comparison, is not only equally broad but also contains numerous concepts that can be difficult to grasp. For example, swap valuation, CDS valuation, binomial options valuation, and Black–Scholes–Merton can all be mind-boggling topics.

2) CFA Level II Exam Increases Question Difficulty

Not only are Level II CFA concepts generally more complex, but the questions on the Level II exam also require more concentration. Compared to Level I, a candidate will need a higher level of preparation and skill to select the correct answer to a Level II question. Every topic is tested to a more sophisticated standard. A Level II CFA aspirant might believe that because they studied the CFA Institute Code of Ethics and Standards at Level I, they don’t need to revisit the material again at Level II. This would be a mistake. In Level II Ethics, the same content is tested but at a much more difficult level.

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1) There are Far More CFA Level I Candidates than Level II Candidates

Perhaps the biggest difference between Level I and Level II is “almost anybody” can sign up for the Level I CFA exam, while only candidates who have conquered the Level I exam can enroll to sit for the Level II exam. As a result, 100% of candidates sitting in the Level II section on exam day are serious about the exam process and have demonstrated an ability to correctly answer questions about CFA exam topics. In short, the competition at Level II is far higher because all the candidates have earned their right to be there.

Next Steps or CFA Level I or Level II Candidates

Now that you understand the extra level of effort the Level II exam requires, put your trust in the expertise Kaplan Schweser offers by browsing our CFA study materials.

Learn the basic functions of your Texas Instruments (TI) BAII Plus calculator that you will need for the CFA exam. In this video, 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×

WATCH VIDEO

Learn how to do advanced calculator functions using the BAII Plus calculator for the CFA^® exam from Kaplan Schweser’s Dr. Doug Van Eaton, CFA. This video covers how to calculate the following:

• Capital Budgeting
• Uneven Cash Flows
• Net Present Value (NPV)
• Internal Rate of Return (IRR)
• Payback Period & Discounted
• Breakeven Quantity of Sales
• Mean, Variance, and Standard Deviation
• Covariance, Correlation, and Regression
• Depreciation

WATCH VIDEO

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Video Transcription

In this volume in the Schweser Video Library, we want to talk about some of the more advanced features and functions on the Texas Instruments Calculator. 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 method.

Capital Budgeting

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 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 were $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. Hitting 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 for I, what discount rate do 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, 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 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 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.

Uneven Cash Flows

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 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, that also has 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 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.

Mean, Variance, and Standard Deviation

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 that the Population Standard Deviation, given that probability models is 1.56%, and then we can square that to get 2.44 for our Population Variance.

Covariance, Correlation, and Regression

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 that 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 come 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.

Depreciation

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 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 straight forward, if you’ll pardon our choice of words. But accelerated methods is 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 declining balance 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 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, 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 doing problems in finance, corporate finance, debt securities, IRR, NPV, and all of that.

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Looking for additional CFA exam instruction? Choose from Kaplan Schweser’s CFA exam study packages available for all levels.

The CFA^® Level I Exam is now computer-based, along with Level II and Level III, and all exams are administered by Prometric. So, what is the Level I CFA exam computer based training like? And what should you expect from a computer-based training (CBT) exam? This article answers these questions.

Scheduling Your CBT CFA^® Exam

Because there is an exam window rather than one set date, you’ll have to schedule your exam with Prometric. You can schedule or reschedule your exam appointment online or by phone through CFA Institute:

• USA: 1.800.310.6402 with a local number of 443.751.4833
• EMEA: +31320239580
• APAC: 60327817750

Make sure you enroll in the CFA® Program before you try to make an appointment. Testing times and locations are based on availability. After you schedule your appointment, Prometric will confirm it in an email.

Before Exam Day: Review the Computer-Based Testing Tutorial

You can familiarize yourself with how a CBT exam works and the exam tool features before exam day. Prometric has created a CFA exam tutorial with helpful information that you can preview any time before you take the exam. It will also be offered as a refresher on exam day. It explains things like:

• What the mouse pointer will look like
• How to navigate through the test screens
• How to track your progress through exam questions
• What “Time Remaining” means and how it works
• How to answer the multiple questions
• How to use highlighting, flagging, and strikethroughs

At the end of the tutorial, there is a brief sample test (with two questions). However, if you want to practice taking the CFA exam in the computer-based testing format, you can try the simulation mode that is part of the Kaplan Schweser mock exam.

Kaplan Schweser’s Questions of the Day are a great way to jumpstart your daily study. Sign up now, and get a Level I practice question directly in your inbox each day.

When to Arrive at the Computer-Based Testing Center

Be sure to show up about 30 minutes early for your exam time. It is a good idea to map out where the testing center is and figure out how long it will take you to get there. If you arrive late, you might not be allowed to take the test. If this happens, then you will not get any kind of exam fee refund, nor will you be able to transfer the fee to a different appointment.

At all testing centers, you will be required to show your passport. CFA Institute requires that every CFA^® Program candidate have a valid international travel passport to register and sit for the exam. You are only allowed to bring certain items into the testing center room with you; any other personal belongings are best kept in your locked car. So, it’s possible that you might have to go through a metal detector wand test or turn your pockets completely inside out to ensure they have been emptied of all personal belongings.

Cell phones, handheld computers, and other communication devices or electronics are prohibited from being taken into a testing room or being used during bathroom breaks. If you do have some items that you don’t want to leave in your car, you are likely to be given a locker. Once your belongings are stored away, you will then be escorted into the testing room with only your picture ID, locker key, approved calculator, and any other permitted items.

Taking the CBT Level I CFA Exam

The testing center will have a computer ready for you. Before you start taking the exam, you will go through the Prometric tutorial again. Then the exam will begin. You should be aware that there may be cameras present in the testing room. You are expected to be quiet; any suspicious signs of cheating will disqualify you from the exam. Any CFA Institute Code of Conduct violation could lead to disciplinary action.

Once you complete the exam, you can gather any belongings from your test area and the locker and leave. CFA Institute will contact you with your exam results. At this time, CFA Institute is stating that you’ll receive those results no later than 7.5 weeks after you take the exam.

Have Other Questions About CBT and Level I of the CFA Exam?

Check out Prometric’s Exam Day page to learn more about what you should expect going into the exam. You can also ensure you are prepared for the Level I computer-based exam with CFA Level I preparation packages. We have study options to suit all learning styles! Get started today.

Are you going to take Level I of the CFA exam? If so, you might have heard all kinds of opinions about how hard it is and what you can do to pass the CFA Level I exam. This article is a practical, step-by-step guide to passing Level I of the CFA exam based on tips and guidance from Kaplan instructors and successful CFA charterholders.

Step 1: Familiarize Yourself with the CFA^® Exam Level I Curriculum

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:

• Ethics 15-20%
• Quantitative methods 8–12%
• Economics 8–12%
• Financial reporting and analysis 13–17%
• Corporate issuers 8–12%
• Equity investments 10–12%
• Fixed income 10–12%
• Derivatives 5–8%
• Alternative investments 5–8%
• Portfolio management 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.

Step 2: Learn the CFA Exam Level I Question Format

The format of the Level I exam is multiple-choice. There are 180 equally-weighted questions with a focus on investment, and each question has three answer choices. The exam is divided into a morning session and afternoon session, and each has 90 questions. Both sessions cover all of the topics according to their weights, so be prepared to answer questions about each topic in both sessions. There’s no gaming the system.

Knowing this format will help you start thinking along those lines as you study. It’s also important to remember Level I is testing your knowledge and understanding of these topics, so you need to have the concepts of each topic area down.

Step 3: Know the Level I Pass Rate, and Use It to Your Advantage

Level I of the CFA exam is definitely challenging. The pass rate is in the low-to-mid 40s. You can find the most recent pass rates in this article. Don’t be discouraged by those numbers. Instead, use them to energize your preparation. If you haven’t already, you should start studying right away. Although CFA Institute recommends 300 hours, that’s really their minimum needed to pass. So, see if you can put in more. Over the years, successful candidates have told us that they studied for about 360 hours, so that’s a good goal for you.

Dedicate as much of your free time as you can to studying, and don’t let up until you walk in the door of the testing center. In short, start early, and study often. Consider an exam prep package because surveys show that the pass rate for Level I is higher for those who do. For even more details, check out our article on how to make the most of your study hours.

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

Step 4: Prepare, Practice, and Review

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. The 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.

Level I CFA exam preparation classes can really help here, and that’s why anyone serious about passing the exam should enroll in one. These courses will go over the concepts and help you navigate the LOS. You will answer practice questions throughout these classes; however, you should also 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.

CFA charterholders report that review workshops were part of their preparation strategy and helped them pass. These review workshops pull everything together, which is critical to doing well on the exam. They show you slightly different perspectives for the same topic, which can help you remember solutions to questions when you’re taking the exam.

Step 5: Learn How to Take the Exam—and from Your Mistakes

There’s a difference between learning the material and learning how to take the exam. That’s why you should take at least one mock exam. Mock exams offer realistic simulated exam conditions that can really help you in your last weeks of studying. The Kaplan Schweser mock exam offers a simulation mode that mimics the computer-based exam from Prometrics, the testing provider. 

Our mock exams include a multimedia tutorial that will take you through each question and help you understand where the answer comes from, the calculations required, and what terms they are testing you on. This will help 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. “I learned from mistakes,” they say.

Step 6: Watch This Tutorial

For an in-depth look at what you need to do to increase your chance of passing the CFA Level I exam, view this video by clicking the image to get started.

How to Pass Level I of the 2021 CFA Exam

How to Pass Level I of the 2022 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 succeed on the CFA exam.

The CFA^® exam calculator policy is clear and direct. Only two models are authorized. No other models are allowed in the exam room. This article explains why you need a calculator for the exam and the two models you can bring.

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.

Are you taking the CFA exam? Learn about the basics. Download your free copy of the CFA^® Program Fundamentals eBook, 2nd Edition.

Which Calculators You Can Use

The CFA exam calculator policy allows only two calculator models for the 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)

Both of these models are widely available. You can order them on Amazon, the Texas Instruments and HP websites, and Walmart online. Both are often sold at office supply stores, as well.

The CFA exam calculator policy also allows calculator covers, keystroke cards, and loose batteries. You should definitely bring extra batteries. You can also have a small screwdriver for replacing your BA II Plus batteries. You can even bring a backup calculator if you want, as long as it’s one of the approved models. However, for any and all calculators you bring, you need to leave the manuals at home.

Before the exam starts, the proctors will inspect your calculator. You’ll need to keep it on your desk where it can be clearly seen because the proctors can inspect it at any time throughout the exam. If the proctors don’t detect that you’ve brought or are using an unauthorized calculator, it doesn’t mean that you’re in compliance with the policy. The proctors can also take it from you at any time. So, don’t take any chances. Bring one of the approved models with you.

The Difference Between the Calculator Models

The TI BA II Plus and TI BA II Plus Professional calculator models offer an algebraic operating system. Anyone who has been using calculators for math will understand that mode. It enables you to enter numbers and combined operations into the calculator in a straightforward sequence.

The HP 12C, 12C Platinum, 12C Platinum 25th Edition, 12C 30th Anniversary Edition, and 12C Prestige models are based on Reverse Polish Notation (RPN). Those who have been working in a bank are usually provided with an HP 12C model. With RPN, users follow their operands. For example, to add 511 and 6137, you would input “511 6137 +” and not “511 + 6137.”

Learning to Use the CFA Exam Calculators

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.

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.

Preparing to Take the CFA Exam? Or Considering It?

Now that you know what calculator models are authorized, learn what other items you should (and should not) bring with you to the CFA exam. If you’re ready to start preparing for the exam, check out our CFA exam packages.

Successfully passing all three levels of the CFA^® exam is a major accomplishment. When you consider that successful candidates typically have to juggle a full-time job while studying, it’s not surprising that fewer than one out of every five candidates successfully completes all three exams and joins the ranks of the other 150,000+ CFA^® charterholders around the world.

In this article, I’ll walk you through the major steps I took in order to pass the CFA exam while working full time as a credit analyst.

What’s Your Goal?

Why are you taking the CFA exam? This may seem like a simple question, but it’s critical to be honest with yourself when answering the question.

Do you happen to be in a job where everyone else is taking the exam, and you’re expected to do the same? Or, do you have a natural passion and curiosity about the markets and are reading (or are likely to start reading) books about the stock market in your spare time?

There is no question that you can pass the CFA exam if you don’t have a natural passion for the financial industry. It’s just much harder and more grueling.

However, if you have that passion, and you have a clear goal that earning the CFA charter can help you meet, it’s just better. The process of working toward that goal will help you find extra stamina when you’re struggling to stay awake while reading about pension accounting or deferred taxes.

Understand Your Tradeoffs

Rather than only thinking about the CFA exam in terms of how many hours you need to study, think about it in terms of what you’re willing to give up in order to pass the exam.

Most of us have busy lives filled with work and other social commitments. Almost no one has a big gaping hole in their weekly routine that is just asking to be used for studying. This means that you need to consider what you need to stop doing so you can spend the time necessary for preparing for the CFA exam.

Depending on your age and commitments, this could mean something as simple as not watching your favorite weekly TV programs. Or, it could require more thought if you have a family and want to spend time with them and study. Whatever you decide to give up, make sure it really is worth it for you.

If you understand what tradeoffs you have to make, and you’re 100 percent comfortable with them, you’re taking an important step in mentally committing yourself for the challenge ahead.

Whether you’re sitting for Level I, Level II, or Level III of the CFA^® exam, CFA Institute recommends that you allot, at minimum, 300 hours for study for each level. However, if you try to cram all 300 hours into the last few months before the exam, it’s likely you will have wasted them, and your chances of passing are slim. In this article, we provide seven tips for how to use your 300 hours of study wisely to significantly increase your chances of passing.

Tip 1: Develop Your Study Plan 6 to 9 Months Before the CFA^® Exam.

Many successful CFA charterholders credit developing their study plan early for their success on the CFA exams. We recommend that you create your plan at least six months before the exam. The reason for this timing is that preparing for the exam encompasses more than simply studying the material—you have to practice applying what you learned to scenarios. This takes time to develop. However, if you can start nine months before the exam, that’s even better.

Benjamin Finley, CFA, is one of hundreds of CFA charterholders we talked to when we were developing our eBook about what it takes to be successful. He has some good advice for your plan. “The final test day is not the only deadline you need to worry about. By assigning several deadlines along the entire span of your studying period by different tasks, such as reading, note taking, flashcards, and testing, as well as topics, such as equity, fixed income, and portfolio management, you will allow yourself less chance of falling behind.” Adds Brady Raanes, CFA, CFP, another charterholder we interviewed, “Begin studying early and be willing to study longer than you anticipated.”

Want more advice like this from CFA Charterholders? Download this free eBook: Before You Decide to Sit for the CFA Exam.

Tip 2: Allot 90 to 120 Hours to Prepare, 120 to 150 Hours to Practice, and 60 Hours to Perform.

For an effective study plan, we recommend following the Prepare > Practice > Perform^® method of studying, starting with the prepare stage.

Prepare

In the prepare stage, you should dedicate anywhere from 90 to 120 hours, or 30 to 40% of your study time, to reading and listening to lectures. This stage is meant for absorbing information and examples of vocabulary, theory, concepts, and principles, and it will get you ready for the next vital stage. Before you learn how to do a calculation, you need to know what it is and what tools are required. You should also spread a little of your prepare activities throughout the 300 hours. The material you learn in your first weeks of study will stay with you better if you revisit it occasionally.

Practice

Next, you should spend 120 to 150 hours, or 40 to 50% of your time, in the practice stage, working through actual problems. Basically, you take concepts you learned in the prepare stage and do practice problems related to them. It’s important that you spend more of your time practicing than preparing because how you apply what you’ve learned is what matters most. You’ll want to allot some review time for the practice stage, too. You should do the same practice questions several times to build confidence and ensure you really understand the concepts.

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

Perform

In the perform stage, you allot 60 hours, or 20%, to simulating exam conditions to assess your level of readiness. This stage also enables you to identify your strengths and weaknesses so you can go back and practice where you think you need it. Generally, spend the last month of studying in this stage and plan to do more than one mock exam. For example, the Schweser Mock Exam, not only mimics the actual exam, but it also offers  a mode that simulates the computer-based testing for all levels of the exam.

Tip 3: Use CFA Exam Prep Courses and Study Groups to Stick to Your Plan.

To provide the motivation to stay on task, take a CFA exam review course and treat it like a university class. Read the relevant material beforehand, get rudimentary ideas of the topics to be covered, and compile any questions you want to ask.

Another great way to stick to your plan is to join an online study group that meets regularly. You can find them on Facebook and Analyst Forum. Connecting with others who are facing the same challenges as you provides support and encouragement. In addition, being able to ask questions or explain a concept to someone else helps develop your own mastery of the topics.

Tip 4: Make All Learning Outcome Statements Part of Your Plan.

The Learning Outcome Statements (LOS) and core concepts from CFA Institute are part of the Candidate Body of Knowledge. Along with CFA Institute study sessions, each LOS helps you determine what you can gain from each reading and what you should concentrate on when studying. They also help you focus on the right topics for the exam. A word of warning: you might be tempted to guess which LOS won’t be tested. Don’t do this! Every LOS is fair game for the exam, and thinking you have a crystal ball could negatively affect your performance.

Tip 5: Know the Exam Weights.

Having a solid understanding of the CFA Program curriculum and how each topic is weighted for the exam will give you a boost on exam day. The curriculum is updated every exam cycle, and all three levels of the exam focus on the same 10 topic areas. However, 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. By paying attention and staying up-to-date on exam weights, you have additional guidelines for focusing your study.

Tip 6: For Each Concept You Learn, Ask Yourself How It Applies in the Real World.

To pass the CFA exam, you must take what you’ve learned and apply it to realistic situations. If you only memorize material, you will struggle to pass the exam. The purpose of the exam is to test your problem-solving skills and apply knowledge to situations you may encounter on the job. And this is why we recommend that you spend more time practicing than preparing.

Successful CFA charterholders agree. Sina Rezaei, CFA, says, “The information learned throughout the process must be executed in a real-life environment. Because of that, it is important to not only focus on the material, but to continue gaining professional experience so the two components—the CFA material and real-life cases—complement each other.”

Tip 7: As CFA Exam Day Approaches, Be Kind to Yourself.

In the last weeks before the exam, resist the tendency to panic or ramp up your study intensity due to anxiety that you might not pass. Cramming instead of reviewing and trying to do too many practice questions or exams will not improve your chances and can have adverse effects. Be kind to yourself instead.

One way to do this is to space your practice sessions further apart—this has the added benefit of helping your chances on the exam. Studies from psychological science show that when students add an extra day between study sessions, performance on a test improves significantly. Also, try to get into a good sleep routine a few weeks before the exam. Experts recommend avoiding electronics, alcohol, and late-night eating right before bed—they can all keep you from falling or staying asleep. A routine can help you sleep better the night before the exam too, when you’ll be understandably nervous.

Finally, use the day before the exam to reread some of the denser areas of the curriculum, including ethics. In the final few days of preparation, do not take mock exams, which can mentally drain you. The goal is not to exhaust your mind and body at the last minute. Resolve to go into the exam center as refreshed and rested as possible. A positive attitude also helps; tell yourself, “I can do this!”

Ready to Get Started on Your 300 hours?

As you map out your study plan for Level I, Level II, or Level III of the CFA exam, consider making a Kaplan Schweser exam prep package—complete with classes, practice exams, and mock exams—part of your 300 hours. Discover all the ways Kaplan Schweser can help with CFA exam prep.