Category Archives: CFA level I

3 Months Study Plan for CFA Level I

You can download the 3- months study plan for CFA level I from here – 3 Months Study Plan for CFA level I. (This study plan has been updated for CFA 2017 exam)

Please read the important points at the end of the study plan, and you may change the plan according to your strengths and weaknesses.

Anyone can prepare comprehensively for CFA level I in 3 months, but it will become more and more difficult with a lesser number of days. People usually overestimate how far they can get in a week, but grossly underestimate how far they can get in 3 months.

You can download our sample tests for Financial Reporting and Analysis, Fixed Income, and Quantitative Methods from here.

To know more about CFA level I exam, you can go through this post.

We hope that you can start preparation at the earliest and pass the exam with the flying colors. Wish you all the best !!


Everything about CFA level I exam

CFA level I exam occurs twice a year – June and December. This post is for those candidates who have already registered for the exam and are looking for the things which they can expect in the exam. If this is your first attempt, then you must know few things before sitting for the actual exam.

• There will be two exams of 3 hours each from 9 AM to 12 PM and 2 PM to 5 PM. If you have never given such exams before (2 exams in a day), then you must consider writing 2-3 full mocks (2 exams in a day) before actually writing the CFA level I exam. The reason behind this is that generally candidates perform well in the morning exam but tend to lose focus in the afternoon exam due to fatigue or other similar reasons.

• It is always better to carry your own watch. You may or may not find the wall clock in the exam room. Cell phones are not allowed in the examination hall.

• Make sure that you reach the examination hall around 1 hour before the exam and have been fed properly and carrying all the necessary things like pencils, passport, prescribed financial calculator and CFA examination hall ticket. Water will be provided inside the examination hall. You will need only 1 copy of examination hall ticket. The invigilators will sign on that ticket in both morning and afternoon exam and you need to preserve it for the afternoon exam after finishing the morning exam. They will finally take that ticket at the end of the afternoon exam.

• You can take extra cells for the financial calculator if you fear that the calculator might stop working in between. However, there will be very few problems where you would be requiring the actual use of the financial calculator. Most of the questions would need very small calculations which could be done without the use of a calculator as well. You need not panic if your calculator stops working in between the exam and you don’t have the extra cells or calculator. Panic will cause more harm than the absence of calculator.

• The 2 hours gap between the exams is never 2 hours long. The invigilators generally consume 20-30 minutes in collecting the papers and making sure that all the candidates have filled the required details properly on the answer sheet. You again have to be in the hall again around 15-20 minutes before the exam. So, the total time you can spend on any activity between the exams is around 60-75 minutes. So, if you are planning to revise some formulas or visit some nearby restaurant for lunch, you should be careful about the timings. It is always better to bring some food with you because the nearby restaurants might be full of other CFA candidates. The food/liquid (chocolates/energy drink) that provides a good amount of energy can be a good thing to consume.

• Whenever invigilators ask you to stop, you must stop. You must close your questions booklets and answer sheet and must not touch your pencil till the collection of your paper by an invigilator. There have been too many cases where candidates have suffered because of not stopping. It is always a better practice to fill the ovals in the answer sheet as you move along rather than filling all ovals at the end of the paper. Try to finish paper 10-15 minutes before the actual time so that you can recheck your answer sheet whether you have filled everything properly or not. Since there is no negative marking in the exam, you must attempt all the questions.

• Do not look into the answer sheet of other candidates. If caught then there could be serious repercussions and also there is more than 60% probability that the other candidate would fail the exam.

• There is a good probability that you might meet few friends in between the exam break or before the start of the morning exam. It is always better if you don’t meet them before the end of both exams. You may lose focus on meeting them. Your full concentration should be on the exam only.

Exam Preparation

How much time should I devote to preparation for CFA level I exam? This is the most commonly asked question by the candidates preparing for the exam. The answer depends on your background, your IQ level, your familiarity with the topics and your focus while studying. There is no unique answer for it. But if you are still looking for the exact time required, then it is 332 hours, 37 minutes and 28 seconds. Those 28 seconds are very important and can be decisive in the final result.

From where should I study – CFA curriculum books or third party content providers’ notes? There are advantages and disadvantages in following either of the above. CFA curriculum books will consume a lot of time as they have explained everything in detail and sometimes have even provided additional readings which are not required for the exam. While doing revision from the curriculum books, it will take a good amount of time. In case you are preparing from the curriculum books, you must prepare your own notes so that you can finish the revision soon. On the other hand, the third party content providers have compressed the readings to half or even lesser. You can finish the course soon, but they generally tend to miss few areas (5-10%) which could be asked in the exam although those areas are not that important for the exam point of view. But still, there is always some risk. It is recommended to read Ethics from curriculum books.

How many questions should I practice and from where should I attempt those? This is also one of the favorite questions of the candidates. It also depends on the candidate. Some candidates have passed the exam by practicing only 500 questions while many others have failed even after practicing around 3,000 questions. However, it is recommended that you try to practice at least 1,500 questions i.e. on an average 25 questions per reading. If you are not scoring 80% marks in those questions, you should go for more questions till your accuracy level increases to 80%. The best source for practicing questions is CFA curriculum books. The problems at the end of the chapters are the best in the quality and are very relevant too. You will find around 1,000-1,500 questions from the CFA curriculum books. Even if you are preparing from some third party content provider, you must solve the end of chapter problems from the CFA curriculum books. Apart from solving those problems, you must also go through the blue-box examples given in the curriculum books. When you are done with those problems and still feel the need to practice more, then you should practice problems from the previous years’ mock exams provided by the CFA Institute. Only 1 mock test is available to the CFA candidates, but you can get previous years’ exam from some other sources. You can even buy question bank from some third party content provider to boost your practice. But those questions should be practiced only after you have finished all the questions from the CFA curriculum books.

How should I go about the preparation? Which subjects should be studied first and which should be studied later? The CFA curriculum books are the best answer for this question. They have structured their book number so that you just need to follow the same chronology and you will do well. If we look at the book 1 from the curriculum books, it contains two subjects – Ethical and Professional Standards and Quantitative Methods. Book 2 contains Economics. Book 3 contains Financial Reporting and Analysis. Book 4 contains Corporate Finance and Portfolio Management. Book 5 contains Equity and Fixed Income. Book 6 contains Derivatives and Alternative Investments.

They have put Quantitative Methods in the first book for a reason. You will be studying about discounting and present value concept from that subject which is the backbone for almost all the calculations in other subjects. So, you must do that topic first and then can take any other subject after that. However, it is advisable that you do understand the Financial Reporting and Analysis as well before moving to other subjects related to finance because that would make things easier to comprehend. Rest all subjects can be studied as per your liking.

Ethical and Professional Standards (36 questions – 15.00% weight)

Ethical and Professional Standard or Ethics is second most heavily weighted subject after Financial Reporting and Analysis. It is even more important because of Ethics Adjustment. If you think that you have always been ethical in your life and that would help you in scoring good marks, then you’re thinking wrong. The ethics dictated by CFA Institute can be very different from your personal moral, ethical standards. For example, many guys might think that insider trading is a victimless crime and also makes markets more informational efficient but according to CFA Ethical Standards, it is a violation. Also, you don’t have to be ethical to score good marks in ethics. 🙂 All you need to do is to study this subject from the curriculum books and try to understand in depth about the treatment of seven Standards of Professional Conduct. Most of the questions will be asked from these seven standards. Only 4-5 questions will be asked from GIPS. There will be few one liner questions as well. You need to know this subject inside-out.  So, you must practice enough questions to get an idea of every type of questions that can be asked in the exam. It is also the subject which has the best ratio of questions asked per page of the curriculum.

Quantitative Methods (28 questions – 11.66% weight)

This subject contains 8 readings. The first two readings dealt with the time value of money and discounted cash flow applications. These readings are not only important for the exam point of view but also for the understanding of other areas like equity valuation or fixed income valuation. Then we have chapters on statistics, probability, and probability distribution. Sampling and Hypothesis are two other topics, and it ends with Technical Analysis. For the exam point of view, the first 6 chapters are very important. In the past, there have been very few questions asked from the last two chapters (around 2-4 only). So, you can focus accordingly. The sampling chapter is very important. The important topics are Confidence Intervals, Continuous distribution, Normal distribution, Statistical measures and various kinds of yields. This is the topic for which you will require financial calculator the most. Proper practice with a financial calculator is required to ace this subject. Understanding is more important rather than just finishing the subject. If this subject is understood well, you even do not need to revise it again. That’s the beauty of this subject. You must familiarize yourself with the working of the financial calculator and should be very careful while solving the problems. If you end up making one mistake, there is a good probability that you will find that answer as an option in the options for the question. Clearing the TVM memory is very important before solving any question and you must be additional careful for solving questions related to an annuity.

Economics (24 questions – 10.00% weight)

Economics is a very specialized discipline. Murray Rothbard was correct when he said – “It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.” Most of the mainstream economists get it wrong. That’s the main reason that CFA Institute keeps on changing the syllabus of Economics every now and then. Most of the macroeconomics does not make sense at all. But we should not think too much while preparing for the exam. Just take it as the face value whatever is given in the curriculum books and try to solve the problems using the curriculum content only. The worst thing about it is that it has the worst ratio of questions asked per page of the content. So, one need to study a lot to get the questions correct. The dividend from studying this subject is very low. But still, we can’t leave 10% part of the exam. It has 9 readings. First 4 readings deal with microeconomics, next 3 reading deal with macroeconomics and the last 2 readings are for international trade and currency exchange. Students find first 4 chapters and last 2 chapters manageable as those readings make some sense. But they generally find the chapters related to macroeconomics a little tough. But the good thing is that in the exam, most of the questions would be asked from the first 4 chapters. You should be perfect in first 4 chapters and should be decent in rest 5 chapters to excel in this subject. It will also become boring to finish all the 9 readings in one go. So, you can mix few readings with other subjects to maintain the right amount of concentration and focus.

Financial Reporting and Analysis (48 questions – 20.00% weight)

This subject has the maximum weight in the exam. It is imperative to score well in this subject. It has 14 readings. The first 3 readings give an introduction to the subject. The next 4 readings form the core of the subject discussing income statement, balance sheet, cash flow statements and financial analysis techniques using various ratios. The next 4 readings discuss the important part of financial statements in details like inventories, long-lived assets, income taxes, and non-current liabilities. The last 3 readings evaluate the quality of financial reporting and financial statements. These readings are very interesting. Every reading teaches a new thing, and it is very important to understand everything in detail because these readings will also help you as an analyst in future. For the exam point of view, the readings discussing the income statement, balance sheet, and cash flow statements are the most important readings, and you will find around 20-25 questions from those 3 readings. There will be 6-8 questions from first 3 readings as well. Generally, candidates who do not have prior knowledge of financial statements, find the readings related to income taxes and non-current liabilities little difficult. But the good thing is that these readings are not that important from the exam point of view. You will find only 1-2 questions from income taxes and only 2-4 questions from non-current liabilities. To excel in this subject, our focus should be ob first 7 readings which will comprise around 70% of the questions. The income statement chapter is the most important chapter, and after that the cash flow statements chapter is important. One strategy could be to study first 7 chapters in the first reading. Then study some other subjects and then come back to this subject again and finish the rest 7 readings along with the revision of first 6 readings.

Corporate Finance (17 questions – 7.08%)

Corporate Finance deals with the decision of corporate in raising capital and using that capital. This is very interesting subject, and almost all candidates love reading this subject. It is highly conceptual as well. If you are good with Quantitative Methods and Financial Reporting and Analysis, then this subject will be a cakewalk for you as it is nothing but the application of concepts learned in those subjects. It has 6 readings which can be finished at a much quicker speed. The first two reading deals with capital budgeting and cost of capital and most of the questions will be asked from these two readings only. Capital budgeting involves the concepts learned in Quantitative Methods like NPV, IRR and some other methods of decision making like payback period, etc. Cost of capital is an important chapter which deals with the cost of debt, the cost of equity, the cost of preferred equity etc. This chapter will help us in Equity subject as well. Then we have readings on measures of leverage and dividends and share repurchase which is very interesting and easy readings. The last 2 readings are on working capital management and corporate governance. Very few questions (1 or 2) are asked from corporate governance reading. But the reading related to working capital management is very important and highly conceptual as well. It is advisable to study this reading from the curriculum book to understand the process in detail. If you are good with NPV/IRR calculations and can understand the concepts well, you can ace this reading and can score almost perfect marks.

Portfolio Management (17 questions – 7.08%)

This subject contains 4 readings, and the candidates who are good with mathematics can finish this subject very quickly. The important areas are the interpretation of various lines like CML, CAL, and SML. Candidates should know everything in detail about those lines like the x-axis and y-axis for those lines and the importance of slope of those lines and what do these lines suggest etc. The candidate must also understand how diversification helps in bringing the risk of a portfolio down and how efficient portfolios are formed and selected. The calculations related to the variance of a portfolio and CAPM are also important. The last reading is about IPS (Investment Policy Statement) which will be tested heavily in CFA level III but not that much in CFA level I.

Equity (24 questions – 10.00%)

Equity subject is one of the easiest subjects to ace. It is mostly theoretical subject related to the equity market, and the concepts are very simple to understand. It has only 6 readings, and 10% weight is good for those 6 readings. One should focus more on this subject and try to score closer to 90% marks in it to boost the overall score. All you need to do is to read the topics from the book and practice enough number of questions. There will be so many small details to remember, but you have to do that to score well in this subject. The first reading is about market organization and structure. Second reading is about security market indices, and you must know the difference between different indices and the advantages and disadvantages of using different indices. The third reading is about market efficiency and in all probability; you will find questions related to the forms of market efficiency in the exam. The 4th and 5th readings deal with an overview of equity securities and introduction to company and industry analysis. These readings are very simple and mostly theoretical. The last reading is about the equity valuation which will form the basis for the equity valuation in CFA level II exam. This reading is mostly about discounting and the candidates good with the discounting calculation, find it relatively easy and highly scoring.

Fixed Income (24 questions – 10.00%)

This is one of the most conceptual topics from the CFA level I curriculum. It has 6 readings. The first two readings are theoretical and cover the basics of the different types of fixed income securities and what all players issue those securities and how they are issued and traded in the market. Although it is a very simple area, you need to spend a decent amount of time to understand different types of securities. Try to do all the examples from the curriculum books to have a solid understanding of these topics. Next topic is about the valuation of fixed income securities and covers the analytic behind the valuation of bonds. If you are strong in understanding the concept of the time value of money calculation, this reading will be easier to master. The next reading is about the asset-backed securities. Study it slowly to absorb the process of securitization, SPV, and asset-backed securities. Only basics of these things have been covered in CFA level I curriculum. The next chapter is about risk factors in fixed income securities and talks about duration and convexity approaches. This chapter is the most conceptual chapter of level I curriculum. Spend enough time on this to understand it completely. The last reading is about credit analysis and how rating agencies provide ratings to fixed income securities. It is another theoretical and interesting reading.

Derivatives (12 questions – 5.00%)

Many candidates find this reading relatively difficult as compared to other subjects. This subject is highly conceptual. It has 6 readings. The first reading talks about various derivative instruments and is just an introduction to the topics. The next 4 readings form the core of the subject and cover forwards, futures, options, and swaps. Almost all the questions will be asked from these 4 readings. The last reading is about few options strategies and risk management, and it is interesting reading. The reading related to Options is very important and is highly testable as well. One should practice enough questions to remember all the concepts. If you have any interest in jobs related to trading desks, you must be very good in this area. Following derivative markets along with studying will definitely help in better understanding. For more understanding of the areas, one can always refer the Bible of derivatives- the book by John C. Hull.

Alternative Investments (10 questions – 4.166%)

This is the last subject, and it has the least weight in the exam. But still one must not leave this subject because it has only 1 reading and the reading is relatively small for the 4.166% weight.   The reading is mostly theoretical but interesting as well. One complete reading and one revision will be enough to answer 8-9 correct questions out of total 10 questions.

Passing Score

There are no such clear cut passing percentage marks as they change the MPS (minimum passing score) every year depending upon the toughness level of the exam. Historically, it has always been below 70%. It generally falls between 60-70%. A score of 70% will most likely end up as a passing score.
You do not need to score more than 50% in all the subjects. If your overall total score is above the MPS, then you will pass the exam even if your score in few subjects is zero. However, there is an Ethics adjustment in case your score is on the borderline. If your score is on the borderline, they will look at your score in Ethics, and that score will be given more weight in the final assessment.


The result will be announced after 6-8 weeks from the exam date, and it will be announced on Tuesday. The pass percentage has been around 38% in recent few years. But you should not concentrate on pass percentage. Your focus should be on getting more than 70% marks in the exam. That will certainly cross you over the passing line. The period of 6-8 weeks is a good amount of time, and it is very important for the candidates who have written exam in December to prepare for the June level II exam as that exam preparation would require a good amount of time. You can read this post to know what to do after December CFA level I exam. Wish you all the best for the exam.

You can download our sample tests for Financial Reporting and Analysis, Fixed Income, and Quantitative Methods from here.

Konvexity Newsletter: March Edition

The March edition of Konvexity newsletter is out for both CFA level I and CFA level II.

CFA level I: The newsletter consists of  two comprehensive tests. Each test is of 90 minutes duration and consists of 60 questions. One test is on “Economics” and the other test is on “Equity”.

You can download the CFA level I newsletter from here.

CFA level II: The newsletter consists of two comprehensive tests. Each test is of 90 minutes duration and consists of 5 item sets. Each item set contains a total of 6 questions. One test is on “Financial Reporting and Analysis” and the other test is on “Fixed Income”.

You can download the CFA level II newsletter from here.

Konvexity Newsletter: February Edition

The February edition of Konvexity newsletter is out for both CFA level I and CFA level II.

CFA level I: The newsletter consists of one book review and two comprehensive tests. Each test is of 90 minutes duration and consists of 60 questions. One test is on “Financial Reporting and Analysis” and the other test is on “Portfolio Management and Derivatives”. The FRA test is based on first 6 readings of FRA till ‘Understanding Cash Flow Statements’. Rest readings will be tested in second FRA test.

You can download February CFA level I newsletter from here.

CFA level II: The newsletter consists of one book review and two comprehensive tests. Each test is of 90 minutes duration and consists of 5 item sets. Each item set contains a total of 6 questions. One test is on “Equity” and the other test is on “Alternative Investments and Economics”.

You can download February CFA level II newsletter from here.

How to finish CFA curriculum in 2 months?

80 days are left for June CFA exam. Most of us would have finished around 50% of the curriculum so far. However, there will still be plenty of souls who haven’t got adequate time to devote for the exam preparations. Some guys even wouldn’t have opened their books and they are waiting for some miracle to happen so that they can start their studies. They definitely want to start the studies but they are better in excuse making. That’s why they keep making excuses for themselves.  With each excuse, they are building pressure on themselves and now they are afraid of even starting. This post is dedicated to those guys who haven’t started yet and are in a dilemma whether they would be able to do that or not.

It is very important to finish the first reading of the curriculum at least 20 days before the exam so that we can sufficient time for practicing mock exams. So we have only 60 days left. Many of you must be contemplating whether to defer the exam or give it a try. Just remember that half-hearted effort is most likely to end in failure and utter disappointment.

People are so afraid of failure. So afraid that they quit before they started. But you guys have do understand it’s not about failing. It’s about raising each and every time you did. Nobody I repeat nobody you know from television or books who is successful is fail-free. In fact those are the people that failed a lot. Because they never gave up. Because they always focused on what their goals were. Success doesn’t come overnight. It comes from hard work and dedication every single day. Nights. You don’t prosper from day one to day two. It takes weeks, sometimes decades. Your goal, no matter how high it may be, is reachable for everybody the only question is how much time and energy are you willing to spend. What are your priorities. If priority number one is and has been the thing you want to accomplish you will don’t worry about that.

The answer to your question whether it could be done in 2 months is a big YES. It can be done and many people have done it in past. All you need is right strategy and focused approach. Just remove all the doubts from your mind. Think of the greatest thing ever done by you so far. Compare that to this and you will find all the motivation to give it a try. The hardest thing is to start but once you are set, everything will fall into place. Don’t listen to any person who belittles your ambitions. An enemy is better than a friend who keeps on belittling your ambitions and wants your company in failure.

Don’t ever let somebody tell you that you can’t do something. Not even yourself (your own mind sometimes acts as a limiting factor. Break those limits). People can’t do something themselves. They want to tell you that you can’t do it. If you want something. Go get it. Period.

Strategy for CFA level I: 60 days – 67 reading. Maximum weight areas are FRA (Financial Reporting and Analysis) and Ethics. These two subjects constitute 35% of the exam. FRA has 14 readings. But first 3 and last 3 readings can be done in 2 days and are not that important for the exam point of view. The middle 8 readings are the crux. Each reading can be easily done in a day with proper practice. It will take 5-6 hours to read and solve the practice questions provided at the back of the chapter. Keep noting important formulas in a separate notepad. It will help you a lot during revision and will reduce your revision time by more than 50%. FRA needs 10 days. Either you can start with Quantitative Methods or you can start with FRA. It will depend on your background. If you are from a non-mathematical background, try starting it from FRA as Quant can consume a lot of time. You can break your FRA in two halves. In the first 5 days, read first 7 readings and last 7 readings in other 5 days (may be during the later stage of your preparation so that you do not forget anything about FRA).

After FRA, the basics of quant should be done which involves the present value of money and discounted cash flow (NPV and IRR). With these two readings, you can finish the 6 readings of Corporate Finance as well. These 8 readings could easily be done in 5 days. For Ethics, you can set 1 hour daily and finish it along with all the other subjects. By doing this you will be having enough of a practice of Ethics questions which will help you a lot in the end.

Quantitative Methods and Fixed Income has a weight of 11.66% each in the final exam. Economics and Equity have 10% weight each. After doing half of FRA, Quant basics, and Corporate Finance, you can attack Equity or Fixed Income. Equity is small and mostly theoretical and can be easily finished in 5 days. Fixed Income is little lengthy and it would take 7 days of yours. Do not forget to practice enough questions. After these subjects, move on to rest of the Quantitative Methods and Derivatives. These two subjects can be finished easily in 6 days and 4 days each considering you are devoting 5-6 hours daily. Now try doing Economics. Economics is too lengthy for its 10% weight. Selective reading would be good or try studying it from some prep provider so that you can read the concise version of it. Do not devote more than 8 days to it. Now 40 days are over and you are left with half of FRA, Portfolio Management, and Alternative Investments. You can easily do rest of the FRA in 5 days. Portfolio Management has 4 readings out of which 2 are very small. It won’t take more than 3 days and AI can be done in 1 single day. So, you can easily finish it off in 49 days. Rest 11 days can be devoted to your weak areas, practicing more questions and reading Ethics again.

Last 20 days should be spent on 2 revisions. First revision will take 10 days and the second will take 3-4 days. Try to attempt at least 4-5 mocks before the main exam. Once you’re done with it, the chances of success will improve a lot. It is that simple. 5-6 hours a day for other subjects. 1 hour daily for Ethics. Total of 6-7 hours daily for next 80 days and you are through. Now don’t give another excuse that you have an office to attend. 6-7 hours daily makes 45 hours for a week. If you can study 12 hours on weekends, then you need to study only 4 hours on weekdays which is manageable. You have to do it no matter whatever it takes it to do.

You can download the study plan for CFA level I from here.

Strategy for CFA level II: 60 days – 56 readings. Equity and FRA have the highest weight and they are the easiest of all the subjects with Corporate Finance as one exception. The good thing is that you can start from any topic as almost every subject builds on from the material you studied in level I curriculum.

Equity has 8 reading and first 3 readings are very small and can be finished in one single day. Rest 5 readings can be finished in 6 days assuming 2 days for the most important reading i.e. Free Cash Flow Valuation. FRA has a total of 8 readings. Last 3 reading can be done in 2 days and first 2 readings in 2 0days. The most important readings are Readings 19, 20 and 21. There is 90% chances that you will get at least one item set from each of those 3 readings. Master those three readings in 5 days. Practice enough of item sets questions provided at the end of the curriculum books.

These two subjects constitute 40% of the exam. Keep on revising them. Note all the important formulas and results on a sheet of paper and spend at least 30 minutes daily in revising those. These will take 16 days of yours. After these two subjects, Derivatives, Corporate Finance, Ethics, and Fixed Income have 10% weight each. Derivatives (6 readings) can be finished in 8 days. Corporate Finance (5 readings) can be finished in 5 days. Ethics (10 readings) can be finished in 5 days. (Spend more time on the new reading for level II which were not there in level I) Fixed Income (6 readings) can be finished in 8 days. You still have 18 days left for rest 4 subjects which have a weight of 5% each in the main exam. Quantitative Methods (3) readings can be done in 3 days. Economics (3 readings) is the simplest of all once you have understood derivatives) and can be easily finished in 3 days. Alternative Investments (4 readings) can be done in 3 days. Portfolio Management (3 readings) can be finished in 3 days. So, everything would be over in 54 days. Practice is the main thing after that. Practice lots of questions and spend lots of time on the 6 topics which have 80% of the total weight.

You can go through this article for a detailed strategy to finish CFA level II curriculum in 2 months.

Strategy for CFA level III: 60 days – 43 readings. This is the toughest level of all and if you are from an accounting background, you will find it relatively tougher to crack as there is no weight given to accounting subject in level III. It is also different from the level I and level II and it has one subjective exam as well. The best strategy to crack the exam is to go through the previous years’ mock exams. The questions in the exam will be almost similar to the questions provided in the mock exams. Once you can master those questions, no one can fail you in the subjective test.

30% of the subjective paper will come from the Portfolio Management – Individual and around 20% will come from the Portfolio Management – Institutional. So, you know which areas you need to master. Devote enough time on those 2 topics as you will find 10% more of those in the objective paper. Those two areas can be mastered in 15 days. Read them slowly and practice the questions by writing on a sheet of paper. That will make a lot of good to your confidence. Once you are done with these two areas, rest is easy and fun to read.

The first book and the last book that are related to Ethics and GIPS respectively, generally comes in the objective paper only and constitute 30% of the objective test. GIPS is too lengthy and weight is also less. So, spend the time accordingly. By looking at the previous mocks, you will have a good idea what all things you need to study carefully. One should not spend more than 8 days in these two readings.

Rest all of the readings concerning with portfolio management, equity, derivatives, economics and fixed income are fun to read. You will learn a lot in those readings and if you have mastered the concepts in level II, you can finish all of those readings very quickly. If you are weak in your concepts, try to study them carefully and assimilate all the learning. The subjective exam will be highly conceptual unlike level I and level II. So, proper understanding is very important. All of these readings can easily be done in 35-40 days if you can spend 5-6 hours on a daily basis.

You can go through this article for a detailed strategy to complete curriculum for CFA level III exam in 2 months.

If you haven’t registered for the exam yet, tomorrow is the last day for registration for the June exam. Do register for the exam and give it a go. Start the preparation from today itself. everything would be fine in next 60 days.

If you wanna start then start now “I’ll start tomorrow” is a lie!! And you know that. No excuses anymore, no tomorrow anymore. There’s no tomorrow. There’s only today.

So, start today. Open up your books. You have neglected them for such a long time. But they never said any words to you. They are not angry with you. They are waiting for you like a lover. Go on and fall in love with them.

Also, remember that pain is temporary and pride is forever. All the best. Success will be yours.

Konvexity Newsletter: January Edition

The January edition of Konvexity newsletter is out for both CFA level I and CFA level II.

CFA level I: The newsletter consists of one book review and two comprehensive tests. Each test is of 90 minutes duration and consists of 60 questions. One test is on “Corporate Finance and Alternative Investment” and the other test is on “Fixed Income”. In the coming months, we will be providing comprehensive tests for each of the subjects. We will provide a total of 10 tests and all tests will be provided before the beginning of the month of May so that we have adequate time to judge our progress. There will be 2 tests on FRA, 1 test on Equity, 1 on Economics, 1 on Quantitative Methods, 1 on Ethics, 1 on “Derivatives and Portfolio Management”, and the last one on “Quantitative Methods and Fixed Income”.

You can download January CFA level I newsletter from here.

CFA level II: The newsletter consists of one book review and two comprehensive tests. Each test is of 90 minutes duration and consists of 5 item sets. Each item set contains a total of 6 questions. One test is on “Corporate Finance” and the other test is on “Derivatives”. We will provide a comprehensive test for each subject. There will be a total of 10 comprehensive tests. All the tests will be provided before the beginning month of May so that you can judge your progress. There will be 2 tests on FRA, 2 tests on Equity, 1 test on Fixed Income, 1 test on Ethics, 1 test on “Economics and Portfolio Management”, and the last one on “Quantitative Methods and Alternative Investments”.

You can download January CFA level II newsletter from here.

I failed in December CFA level I exam. Now what to do?

Ist conversation:

A: How is your result for CFA level I exam?

B: Couldn’t clear. My graduation exams finished just two weeks before the CFA exam. I had to prepare for those exams as well.

A: Oh. That’s sad. Sorry to hear that. Yes, it’s always difficult to prepare for the CFA exam along with the other exams.

B: No worries. Anyway there is not much use of the CFA certification. It’s a money minting process by the CFA Institute.

A: Is it?

B: Yup. I wasted my 6 months preparing for this certification. I don’t want to waste 3 more years preparing for that. There are many better alternatives to get a break in the finance industry. I will now prepare for GMAT and hopefully would be able to join some B-school in the next season.

A: Nice. All the best.

2nd conversation:

C: I flunked in the CFA level I exam. 😦 What about you?

D: Same here, man. Couldn’t clear the exam.

C: 😀 How much band did you get?

D: 5. What about you?

C: I got 6. I was better than you. 🙂

D: Cool. So, what’s the plan now? Are you sitting for the exam again?

C: Didn’t think about it. I guess I would take some days rest and then will ponder over it. What about you?

D: I am also in dilemma whether I should go for the next (June) attempt only or should wait for the December attempt. I think I would go for the December attempt. I am planning to try some other certifications in between. I might go for the FRM level I certification in the month of April or might try some other. Need to explore options.

C: That’s nice, man. Do tell me about your plan. I’ll also follow the same. Hey, I’m booking tickets for the movie ‘Matru Ki Bijlee Ka Mandola’ for Friday show. Do you also wanna join?

D: I’m game. See you on Friday.

3rd conversation:

E: Hi dude. Results are out for CFA level I. How is your result?

F: I couldn’t clear. 😥

E: Oh, man. That’s so sad. How much band did you get?

F: 9

E: That was close. Missed by a whisker. Now, what are your futures plan? Again applying for the certification?

F: Yes. I am registering for the next (June) exam only. I analyzed my mistakes and now know what needs to be done. Second registration deadline is 13th February. I will be again needing you credit card for submitting the fee. Hope that’s fine with you.

E: You can use my credit card. Nice to know that you’re going for the next attempt only. That would give you a good time for the level II preparation as well.

F: Thanks for the card. Yes, but the first goal is to cleat the level I exam in June.

E: That’s so nice to hear.

The above are the few of the conversations that occur on or after the CFA exam result date. Most of the guys start blaming circumstances for their failure. Few candidates take consolation for the fact that they performed better than their friends. Some candidates even start doubting the credibility and usefulness of the certification although they were the same candidates who were gung-ho about it before the announcement of the result. Only a few candidates show the courage to go for the very next attempt and that makes all the difference.

These questions always loom in front of the unsuccessful candidates: What should I do now? Should I quit or persevere? When should I go for the next attempt?

Generally, candidates fail to make good decisions. The failure makes them make such decisions. It’s always difficult to make a rational decision while confronting failure. Few candidates depend too much on others’ opinion and don’t think for themselves. Those finally end up living a miserable life, always adjusting themselves with the opinion of others. The person who maintains the same composure in success and failure generally wins the race.

What should I do? Should I quit or persevere? : This question is too subjective. Still, there are some parameters to help the candidates in making a right decision. Just ponder over the below-mentioned points:

  • How many hours did you spend for preparing for the level I exam?
  • What is your score band? Do you think that you can perform well after putting a little more effort?
  • Did you enjoy reading the curriculum and learned many new things?
  • Are you really enthusiastic about working in the finance industry for a long time?

If you answer all the questions honestly, you will know what is the right decision for you. If you have given enough hours (more than 400 hours) for the preparation of the exam and still able to get a band less than 5. Then, it would be really difficult for you to pass the exam. I am not saying that you can’t. You can do what you think. But still, the path would be hard. If you can understand what is demanded from you, then you must go. But if it looks like that it would be too much for you and you might lose your focus in between and you are not that eager to join the finance industry. Then it’s always better to quit and pursue your other dreams. There are many things which you can do.

But in case you really enjoyed the learning and are very interested in joining the industry and think that you can pass the exam with some additional effort, then you should not quit. Do not ever make a decision in anger, frustration or pain so that you have to repent it at the later stage. Very few candidates manage to pass all the exams in one attempt. The average time taken for passing the certification is around 3.5-4 years.

Remember that you are at least better than 25% of the candidates who do not even sit for the exam. You at least showed the courage and sat for the exam. It’s not that bad to fail in such comprehensive exam. But if you do not study your failures and do not learn from those, it would not help you at all. Analyze the reason for your failures and see if you can work on those reasons and then make a decision. Just do not make a decision thinking that you will lag your friends by 1 year or so in getting the charter holder. Do not think for the short-term. Think for the long-term. Failures and successes are the part and parcel of life. These will keep on coming. One should never lose hope in case of failure. Accept your failure. You failed. Now you’re sad. You’re dejected. You have to start it all over again. That’s what you have to do.

When should I go for the next attempt? : You have finally made a decision to sit for the exam. You are wondering whether you should go for the very next June exam or at some later period (December or next year). This can be easily tackled. If you have nothing major thing to do in next 4 months, then you must go for the very next attempt in June. You had finished the course just 2 months ago. You can make a better strategy now and can work on your mistakes in a much better way. If you do not attempt now, then you might again have to start from the scratch as everything would seem new with the passage of time. There is one additional benefit of sitting for the June exam. You would get enough preparation time for the level II exam which is considered as the toughest level among the 3 levels.

What are you waiting for? Make a decision and act on it. I’ll leave you with few quotes that can inspire you to make long-term and correct decisions.

“Leaders make decisions – all the time. Followers make suggestions. Making suggestions is easy because it requires no action or fear of failure. Making decisions is tough. It takes guts because there is always something at stake.” ~ Ruben Gonzalez

“Our lives are defined by opportunities, even the ones we miss.” (Just do not miss the opportunity to sit for the next CFA exam)

“Do not let the hero in your soul perish, in lonely frustration for the life you deserved, but have never been able to reach. Check your road and the nature of your battle. The world you desired can be won, it exists, it is real, it is possible, it’s yours.” ~ Ayn Rand

“It’s a great thing when you realize you still have the ability to surprise yourself. Makes you wonder what else you can do that you’ve forgotten about.” ~ Lester Burnham in the movie American Beauty

“When I grow up I’m gonna fly the fastest planes ever built, make the biggest movies ever and be the richest man in the world.” ~ Howard Hughes in the movie The Aviator


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