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CFA® Exam Level I vs Level II: Top 10 Differences

By: Kent Westlund, CFA
October 6, 2021
Woman researching the differences between level I and level II of the CFA exams

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 Level II is a significant step up from 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.

You can also read about the 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 Level I CFA 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.

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.

CFA Exam Topics
CFA Level I Exam Topic Weight
CFA Level II Exam Topic Weight
 Ethical & Professional Standards 15-20% 10-15%
 Quantitative Methods 8-12% 5-10%
 Economics 8-12% 5-10%
 Financial Statement Analysis 13-17% 10-15%
 Corporate Issuers 8-12% 5-10%
Equity Investments10-12%10-15%
Fixed Income10-12%10-15%
Derivatives5-8%5-10%
Alternative Investments5-8%5-10%
Portfolio Management & Wealth Planning5-8%10-15%

 

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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.

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 signing up for a CFA exam preparation package.

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