Can CFA level II curriculum be finished in 4 months?

Can CFA level II curriculum be finished in 4 months? This is the frequently asked question nowadays, especially from the guys who have received the congratulations mail from CFA Institute a few days back, stating that they have passed the December CFA level I exam.

Whenever someone asks me this question, I always ask them to watch the movie Gattaca. Gattaca is all about supreme will and determination to succeed. The movie is about a genetically inferior man who pursues his dream of space travel facing extreme difficulties in his path. The most inspiration scene of the movie comes when the genetically inferior man (Vincent) defeats his genetically superior brother (Anton) in a swimming competition. When Anton asks Vincent about how did he manage to beat him? Vincent replies: I never saved anything for the swim back. This scene gives a message: Never save an effort to reach what you want, never lose hope and NEVER give up no matter how hard your goal is. If you’re ready to give everything for the exam preparation then forget about 4 months, you can crack the exam in 1 month as well.

Would it be tough to prepare for the CFA level II curriculum in 4 months? Yes, it would be. But I think that most of you had sat for the December exam only so that you could attempt the CFA level II exam in June. Then, why are you deviating from your goal and asking such questions? Remember that most of you were praying for the result that if you pass the exam, this time, you’ll go for the next attempt only. You’ve got the chance. Never waste your chances. Some guys even don’t get that chance. You must sit for the exam.

I agree that there will be many guys who wouldn’t have thought on those lines or might have cleared level 1 exam long ago and couldn’t start the reading for CFA level II so far and are genuinely interested in knowing about the toughness level and time required for the CFA level II exam. There are generally two categories of candidates: (1) the candidates who are just focusing on the exam preparation and have nothing else to do (2) the candidates who have to attend offices/colleges along with the CFA exam preparation. For the first type of candidates, the task is comparatively easier as they can daily spend at least 5-6 hours on the preparation. 5-6 hours daily means around 500 hours in 3 months and those many hours are more than enough for finishing the curriculum. They can revise and practice in the last month. However, they should not get complacent knowing that they have an edge over the working professionals. Most of the times, results tell a different story. The percentage of working professionals clearing the exam exceeds those of the candidates who have nothing else to do. The reason could be that the working candidates focus more on the exam thinking that they are behind in the race and work harder.

I have already discussed the strategy to crack CFA level II exam earlier. I missed few points in the previous article like how to go about the course. Which topics should be done initially and which should be done at the later stage and how much time one should allocate for each topic? How should both categories for candidates manage their time? Which topics are more important and from where should one study those topics? I’ll discuss all these things in this post.

LOS distribution table:

Subject

Exam Weightage

Readings

LOS

Weightage/LOS

Ethics

10.00%

10

23

0.435

Quantitative Methods

5.00%

3

38

0.132

Economics

5.00%

3

37

0.135

Financial Reporting and Analysis

20.00%

9

43

0.465

Corporate Finance

10.00%

4

47

0.213

Portfolio Management

5.00%

3

24

0.208

Equity

20.00%

7

79

0.253

Fixed Income

10.00%

4

41

0.244

Derivatives

10.00%

8

56

0.132

Alternative Investments

5.00%

5

52

0.179

Total

100%

56

440

0.227

The above table doesn’t make much sense as LOS for few subjects (AI) are very small as compared to LOS of others (fixed income, FRA). But still, you can see that FRA and Ethics have a quite higher weight per LOS than other subjects. Adding to it the fact that Ethics is 70-75% same as those of level I and most of the questions in level II are generally asked from the rest 20-25% topics, Ethics becomes one of the most scoring areas. Same is the case with FRA. FRA is quite small when we look at its weight in the exam. These two subjects should be on everybody’s tip and these are very high scoring as well. Just think if you can score 90%+ in these subjects, you’ll have 27%-30% in your pocket and you would  need only around 40-45% from rest 70% to clear the exam which makes it around 60% in all other subjects.

Which books should one follow: There are many vendors in the market who provide the notes for the CFA curriculum. But still, the best study material is CFA Institute book only. I agree that they are comprehensive and would take a little more time than other vendors (maybe 1.5 times), but still, those books are worth every extra time spent on reading those. However, there is an exception in Derivatives which has a little tough notation in curriculum books and easier in the other third party content providers. So, for derivatives, one can follow any book. But it is important that everyone study FRA, Ethics, and Fixed Income from the curriculum books. Other third party content providers lack in clarity in those topics and generally miss one or two small topics as well.

Page-wise Distribution of Topics:

Subject

Pages

Exam Weightage

Pages/Weightage

Ideal time(hrs)

Ethics

260

10.00%

26.00

20

Quantitative Methods

218

5.00%

43.60

30

Economics

204

5.00%

48.00

30

Financial Reporting and Analysis

400

20.00%

20.00

65

Corporate Finance

272

10.00%

27.20

30

Portfolio Management

160

5.00%

32.00

25

Equity

471

20.00%

23.50

70

Fixed Income

348

10.00%

34.80

50

Derivatives

354

10.00%

35.40

50

Alternative Investments

210

5.00%

42.00

30

Total

2897

100.00%

28.97

400

The ideal time required for covering the course is around 400 hours. It can vary from person to person depending on the background and grasping power. Make it ± 100 hours. So, the time required will vary from 300 hours to 500 hours and we need to manage that much time in next 3 months leaving last month for revision and mock solving. There are around 13 weeks to the last month. So, we need to manage 400 hours of studies in 13 weeks. We need around 30 hours of studies per week.

I have allocated fewer hours for Ethics as around 70% of the pages are from the level I curriculum. So, you won’t need much time for that. More hours are allocated to Fixed Income and Derivatives considering their difficult level. Only 30 hours are allocated to Corporate Finance as it is one of the easiest topics of level II.

How to manage the time: The candidates, who are just preparing for the exam, can easily cover 30 hours by devoting 5-6 hours daily. However, for working professional, it would be little difficult to manage that time. They just can’t leave it for the weekends. They have to make use of their weekdays as well. Either they can study for 2 hours on weekdays and 10 hours on each weekend. But that leave too much for the weekends and it is difficult to maintain focus for 10 hours in a single day. The ideal strategy would be to study for 3 hours on weekdays and 7-8 hours on weekends. 3 hours can easily be managed if one is an early riser. It is best if one can get up early and study 2 hours in the morning and do the problems for an hour or so after returning from the workplace or college. One other way can be to join some good preparatory classes who can help you cover the entire course in 200 hours. However, there is a catch to it. You might end up wasting your precious time on the weekends.

What should be the chronology for topics: In the level I exam, it was advisable to cover the time value and NPV-IRR concepts earlier as they make the foundation for the rest of the topics. Similarly, for level II, it’s advisable to do Quantitative Methods before Equity and Portfolio Management. The concept of regression will help in understanding those topics in a better way. Rest topics are separate with each other. The ideal way would be to start with the important and easier topics like Corporate Finance or FRA. One can even start with Derivatives as the topics are almost similar to that of level I. Ethics can easily be left at the end otherwise, you would tend to forget many things what you would have learned earlier. Rest all topics can be managed in between. It is ideal to sandwich the tough topic between the easier ones. Corporate Finance, Equity, FRA, Economic, and Ethics are relatively easier topics when compared with the rest of the topics.

You can download 4 months study planner for CFA level II from here. Wish you all the best and Godspeed.

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9 thoughts on “Can CFA level II curriculum be finished in 4 months?

  1. P January 26, 2013 at 1:49 pm Reply

    That was really helpful 🙂 (y)

  2. Vaibhav January 26, 2013 at 2:03 pm Reply

    Nice

  3. ASHISH July 3, 2013 at 11:09 am Reply

    EXCELLENT

  4. […] animal and with proper strategy, you can outsmart the competition and crack the exam with a focused 4 month […]

  5. Rikesh December 9, 2013 at 7:47 am Reply

    Amazing advice!! 🙂
    Thank you so much!

    So, except Derivatives – everything should be studied from the Curriculum?

  6. Kiko February 1, 2014 at 11:20 pm Reply

    wow.

  7. CFA Tutor August 6, 2014 at 7:46 am Reply

    4 month could be prepared for the CFA level 2 exam but it would be challenging. CFA level 2 exam is considered as a hurdle on the CFA program. All the Level 2 candidate have already cleared level 1 so the competition is stronger.

  8. Qq January 27, 2015 at 5:06 pm Reply

    Thank you for the tips and motivation!

  9. Neil January 29, 2015 at 7:18 pm Reply

    There is much wealth in this single post of yours. Brilliantly articulated. I had an executive director give us a similar analogy that his father gave him – Look forward, don’t look back, if you do, all you will see are the bodies of your parents.. a bit morbid but he has now finished his PhD and moving on to a second one.

    Thank you for summarising this so well. I will be reposting your blog through wordpress so that it gets more exposure. You’ve put it really well for me.

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