CFA level III in 2 months

The month of March is about to end and if you had finished only Behavioral Finance and a little bit of Private Wealth reading, then this post is for you. You might be one of the guys who had finished CFA level I and CFA level II by this time i.e. 2 months before the exam. But somehow you’re not finding the same enthusiasm to cover the CFA level III syllabus.  It happens with many guys for different reasons. The primary reasons are: (1) Candidates think that they would prepare comprehensively for CFA level III exam because it has a subjective exam and they tend to spend too much time on earlier readings. (2) Candidates find first few readings quite boring and that hinders the speed. (3) They feel complacent after CFA level II exam and do not give too much time and effort to CFA level III exam. (4) They find curriculum easier than CFA level II and never have the same urgency to finish the exam that they had during the level II exam. (5) They think that they are not good in the subjective exam and their passing probability is low and think that they may just gain experience in the first attempt and then give it a full effort in the second attempt. And there are many such reasons like getting married, change in jobs after level II and so on. Whatever be your reasons, you have one thing in common which is the time left for the exam. Now you have to finish the curriculum in 2 months and are wondering how to go about this.

Every candidate is different and has different strengths and weaknesses. But I will provide a broader framework which could be helpful for you to finish the curriculum and even revise it twice before the exam date. You are free to modify it according to your strengths and the syllabus already covered by you. I am assuming here that you haven’t touched anything and you have to start from tomorrow with only 60 days left for the exam.

First of all, we need to be aware of the pattern of CFA level III exam. You may also like to go through this post about level III exam. As you are aware that there are 18 study sessions in CFA level III. Now you need to know what all topics are most likely to show up in the morning essay type exam and what all topics you would find in the afternoon item set based exam. You can refer to the table given below. You will find 2 item sets of Ethics and 1 item set of GIPS in afternoon exam and for the rest of the subjects, it can vary.

Study Session Study Session Subject Moring Exam Afternoon Exam
1 Code of Ethics and Standards of Professional Conduct No Yes
2 Ethical and Professional Standards in Practice No Yes
3 Behavioral Finance Yes Very less chance
4 Private Wealth Management Yes Maybe
5 Portfolio Management for Institutional Investors Yes Very less chance
6 Capital Markets Expectations in Portfolio Management May be May be
7 Economic Concepts for Asset Valuation in Portfolio Management More likely Maybe
8 Asset Allocation May be May be
9 Management of Passive and Active Fixed Income Portfolios Maybe More likely
10 Portfolio Management of Global Bonds and Fixed-Income Derivatives Maybe More likely
11 Equity Portfolio Management May be More likely
12 Equity Portfolio Management May be More likely
13 Alternative Investments for Portfolio Management Very less chance More likely
14 Risk Management More likely More likely
15 Risk Management Applications of Derivatives May be May be
16 Trading, Monitoring, and Rebalancing May be May be
17 Performance Evaluation and Attribution Maybe Maybe
18 GIPS No Yes

Essay based morning exam – Both morning and afternoon exams will have a total score of 180. In the morning exam. there will be 9 to 12 questions (each question carrying 2-4 parts and the weight varying from 10 to 40 marks). The morning essay exam will be loaded with 3rd (Behavioral Finance), 4th (Private Wealth) and 5th (Institutional Management) questions. These three readings will have weight around 45%- 50% (80 to 90 marks) of the morning exam. So, you need not worry about the essay based exam. Just ace these three study sessions and you’re pretty good for the morning exam. The other questions may be from other study sessions like 7th, 8th, 8th, 11th, 12th, 14th, 15th, 16th and 17th. But you need not worry too much about those sessions. Just study those sessions as if there would be only multiple choice questions asked from those topics.

Item-set based afternoon exam – It will have 10 item sets just like CFA level II exam and a total of 60 questions. 3 item sets from Ethics and GIPS. So, you need to study those sessions thoroughly. Rest 7 item sets will come from other study sessions. Last year (in 2013) there were 2 item sets from Alternative Investments. But after 2013, they have reduced one reading of AI so you may not find two item sets in this year’s exam.

Strategy for morning exam – Go through all the previous actual CFA papers. You can find last 3 years’ actual morning exams (2011-2013) on CFA website. After going through morning exams, you will get to know what kind of questions would be asked from every reading. Before starting any topic, you should go through the exams to see what is important and what type of questions would be asked so that you can prepare accordingly. The major problem with morning exam is that it is lengthier and most of the candidates fail to attempt the full exam. Your goal should be to not commit that mistake. For that, you need to practice enough number of essay based papers and write only the model answers which have been asked in the questions. The best way is that when you attempt mock exams, give yourself 2 hours instead of 3 hours. This is important because on the main day you can very easily lose 30 minutes. In private wealth and institutional management reading, you need to solve for the interest rates. If you miss one or two values, you need to solve that question again and that can take a good amount of time. So, try to finish your mocks in 2 hours so that you can easily finish your actual exam in 2.5 hours and can further improve your answers in last 3 minutes. They will give you marks on the steps and not on the final answer. So, do show all the steps in the calculation. You can learn more about that only by going through previous actual exam papers.

Strategy for afternoon exam – You will find this paper relatively easier and also less lengthy than the morning exam. But that generally leads to silly mistakes. It can easily happen that you may end up finishing in 1.5 – 2 hours. But you should not make such mistake. Give adequate time to each item set (around 15 minutes) so that you do not miss the fine points asked in the questions and do not commit the silly mistakes. Practice is the key here. This exam in more important than the morning exam because in the morning exam, candidates generally get lower marks than the afternoon exam. If you perform excellently in morning exam and below average on afternoon exam, then you may not pass. But if you perform below average in morning exam and excellent in the afternoon exam, then you are more likely to pass. I couldn’t finish my morning exam. I left 20 marks of questions unattended. But I performed really well in afternoon exam and I was sure after the exam that I would pass easily. Your target should be to get 80% marks in the afternoon exam.

How much time should be given to each study session: First of all, you should try to study everything from the CFA curriculum books. Last year, they asked many questions in the morning exam which were not very well covered by the 3rd party notes. You must be thinking how can you finish the curriculum books in 2 months. But it is possible. 3 books out of 6 books have less than 400 pages and rest 3 books have less than 600 pages. The comprehension will not be that tough as you had already passed CFA level II exam. You can  easily finish 100 pages in 8 hours. So, you will be needing around 200 hours for finishing the first reading. It is very important to prepare your notes as you finish first reading so that you can do second revision and third revision in 50 hours and 20 hours respectively. You must spend around 80 hours for practicing question. You may spend 40 hours for essay based exams and 40 hours for essay based exam. Those many hours will definitely prepare you for the final exam. So, you need around 350 hours. But if are using 3rd party notes, then you can decrease that time by 100 more hours as it will take less time. But you must not cut your practice time for essay based question and item set based questions. So, if you can devote 6 hours on an average daily for next 60 days, then go with the curriculum books. But if you cannot devote that much time, then use 3rd party vendors notes. You may also do a combo as well i.e. you can study from 3rd party notes and do questions from the curriculum book and do blue box examples. That would be ideal as less time is left.

Study Session Study Session Subject Number of hours needed for first reading Time for practicing questions and mock tests
1 Code of Ethics and Standards of Professional Conduct 6 to 9 4
2 Ethical and Professional Standards in Practice 4 to 6 4
3 Behavioral Finance 8 to 12 4
4 Private Wealth Management 16 to 24 8
5 Portfolio Management for Institutional Investors 10 to 15 6
6 Capital Markets Expectations in Portfolio Management 6 to 9 3
7 Economic Concepts for Asset Valuation in Portfolio Management 5 to 8 3
8 Asset Allocation 8 to 12 4
9 Management of Passive and Active Fixed Income Portfolios 7 to 10 3
10 Portfolio Management of Global Bonds and Fixed-Income Derivatives 7 to 10 3
11 Equity Portfolio Management 7 to 10 3
12 Equity Portfolio Management 4 to 6 2
13 Alternative Investments for Portfolio Management 6 to 9 4
14 Risk Management 10 to 15 6
15 Risk Management Applications of Derivatives 15 to 20 8
16 Trading, Monitoring, and Rebalancing 8 to 12 4
17 Performance Evaluation and Attribution 8 to 12 4
18 GIPS 10 to 15 4

The range given in the table is the range of the number of hours needed if you are studying from the notes provided by a 3rd party vendor to the number of hours needed if you are studying from curriculum books. If you are studying from 3rd party vendors, then you should be doing Risk Management in 10 hours and if you are studying it from the curriculum books, then you should be able to finish it in 15 hours.

Test Series: We are coming up with a test series. There will be 20 sectional tests in the test series. 8 tests for essay based questions and 12 for item sets based questions. Each test will be of 90 marks and of 90 minutes duration. These 20 tests will cover the entire course comprehensively. The cost will be $20 for the test series and that will be available on our website from mid of April. We will also be providing 1 full mock test but that test will not be part of the test series. If you want some tests for practice, you may subscribe to our test series.

Final Words: Do not lose your focus. You just need to focus for 2 more months and then you will be over with the certification. Visualize ‘CFA’ after your name. That should give you enough motivation. Trust yourself. Never ever think that you will not be able to pass the exam if you are not so good in subjective papers. This subjective exam is a different one and it is more like that of an objective exam rather than a subjective exam. You need to develop a hunger for passing the exam. If you do not believe in yourself then who else will. Ignore the naysayers who think that it cannot be done in 2 months. Pay no attention to the people who say that it can’t be done. Study diligently for next 2 months and I am sure that you will have the last laugh. Best of luck. I hope to see on the other side in the coming month of August.


5 thoughts on “CFA level III in 2 months

  1. Saurabh April 1, 2014 at 5:53 am Reply

    Very well written.

  2. Nikhil Yadav April 10, 2014 at 12:30 pm Reply

    Many Thanks for the intricate analysis, would certainly help in strategizing better 🙂

  3. […] can go through this article for a detailed strategy to complete curriculum for CFA level III exam in 2 […]

  4. Manuel June 9, 2014 at 5:46 pm Reply

    Well, I did it n one month but mixing curriculum with schweser. Obviously, I studied GIPS, Derivatives, Fixed and Ethics from the curriculum. The rest from Schweser. Now, I’m waiting for the results. I’ll let you know in August how well I did.

  5. Sanajy Saraf December 29, 2017 at 7:55 am Reply

    Great written blog, thanks for sharing this blog with us.

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A blog of the NYU Colloquium on Market Institutions and the Leipzig Colloquium on the Market Order

Fundoo Professor

Thoughts of a teacher & practitioner of value investing and behavioral economics

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