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.


Quantitative Analysis Sectional Test : FRM Part 1

Please find the sectional test of the subject Quantitative Analysis for FRM part 1 from the links given below. The test consists of 50 questions and should be completed within 2 hours The toughness level is moderate and the target score should be 70% and above.

Quantitative Analysis Sectional Test

Solutions to Quantitative Analysis Sectional Test

The sectional tests of Financial Markets and Products can be downloaded from here.

Everything about CFA level II exam

Congratulations on passing CFA level I exam. You have crossed the first hurdle and now on your way to attaining CFA charter. The second hurdle, CFA level II exam, is relatively tougher hurdle than the CFA level I exam because of two reasons. First reason is that the curriculum of CFA level II is tougher than that of CFA level I and the competition among the more serious candidates being the second reason. Apart from that, this exam occurs only once a year. So, if you do not pass the exam, you have to wait for one more year which tests patience and many guys give up because of such a long wait. So, it becomes even more important to clear this exam in the first attempt. This exam contains two papers of 60 questions each. In CFA level I exam, we had 120 questions per paper but here that has been reduced to half. Do, the importance of every question increases by a factor of two. Few silly mistakes and carelessness in the exam can change the final result. So, one has to be extra cautious while attempting the papers. If this is your first attempt at CFA level II exam, then you must know few things before sitting for the actual exam.

• Few of you would have cleared level I by taking more than one attempt. But you must not think that you won’t be able to pass this exam in one attempt. Because this is a totally different animal and with a proper strategy, you can outsmart the competition and crack the exam with a focused 4-month preparation.

• The exam pattern will be the itemset based format. Each item set will have 6 questions. There will be 10 item sets in one paper of 3 hours and a total of 20 sets in morning and afternoon exam.

• The length of item set would be around 1-2 pages. There will be around 400-800 words to be read. Most of the item sets will have 1-3 exhibits with them. The exhibits will have some data and information which candidates have to use to answer the questions.

• The exam is not a reading comprehension exam. So, you should not worry about your reading comprehension skills. Questions will be direct and not inferential i.e. they will check the subject knowledge and not your comprehension skills.

• The weights of the subjects are not fixed as they were in CFA level I exam. They have provided a range for each subject. The ranges are 5-10%, 5-15%, 10-20%, 15-20% and 15-25%. The 5-10% range is for Economics and Quantitative Methods. You should rest assured that the weight of these subjects will be only 5% in the final exam i.e. only 1 item set based on these subjects. It has been the same for last 5 years. The 15-20% and 15-25% ranges are for Financial Reporting and Analysis and Equity Investments. In past years, they have asked 20% each from both of the topics. So, there is very less probability that they would change the weights. So, we can expect 4 item sets each from both Financial Reporting and Analysis and Equity Investments. (Note: Only 3 items sets were asked from Equity in 2016) Now the thing to be noticed is that these 4 item sets won’t be asked in one single paper. These will be spread over both the papers i.e. 2 item sets in morning and 2 in the afternoon. One can capitalize on that. Suppose there are 4 important areas in Financial Reporting and Analysis and they ask 2 item sets from 2 areas in the morning exam. Then, there are going to ask the rest 2 item sets from the remaining 2 important areas. So, you can revise the important concepts in the time gap between the two exams.

• Now the only remaining range is 5-15% which is for remaining 5 subjects – Corporate Finance, Alternative Investments, Derivatives, Fixed Income and Portfolio Management. Till June 2013 exam, the weights used to be 10% for Corporate Finance, Derivatives and Fixed Income and 5% for Alternative Investments and Portfolio Management. But in June 2013 exam, they changed the structure of weights. They asked 10% from Alternative Investments and 5% from Fixed Income in June 2013 CFA level II exam. These weights can again change in coming future. So, you need to concentrate equally well in these subjects and should not leave thinking that only 1 item set would come from the entire subject.

• The questions will be more calculation intensive than the CFA level I questions. So, you would be using calculator more in the exam. It is always better to get additional batteries for the calculator in the exam in case the calculator stops working. Even though the use of calculator would be more, most of the questions (more than 60%) would be still conceptual and theoretical. Ethics will be completely theoretical. For other subjects, out of 6 questions, you will most likely find 2 questions asking for calculations and rest questions will be conceptual.

• It is advisable that you attempt at least 2-3 full-length mock exams to make yourself comfortable with the pattern of the exam. You have to read a lot in the exam. So, you must have enough practice of doing that otherwise you could find time short for attempting all the questions.

• The one hour time between the exams can be utilized effectively. But it can work opposite as well as you can forget other things in a panic mode. So, revise the topics in between the exams only if you have already followed the same approach in your mock exams and got good results because of it.

Exam Preparation

How much time should I devote to preparation for CFA level II exam? CFA level II curriculum is more conceptual and relatively tougher than CFA level I curriculum. So, one should devote more time than the time devoted to CFA level I exam. However, it might be the case that in level I, you studied finance for the first time and took considerably longer time to understand the concepts. In that case, you would need less time for level II as you already know most of the basic stuff needed for the understanding. You should devote more time to problem-solving than just passive reading. Most of the learning will be by solving new questions. You might miss many important points while reading the content but those things will be cleared as you attempt more and more questions. It is always better to keep more time for the preparation as the exam occurs only once in a year and even in the second attempt, everything would look new again because of the gap between the exams. If you are planning to keep 300 hours for exam preparation, then out of those 300 hours at least 150 hours should be kept for problem-solving.

From where should I study – CFA curriculum books or third party content providers’ notes? The curriculum books are recommended. Level II exam is about valuation and you must need to understand everything in detail which could be best done by using the curriculum books. Not a single content provider is as comprehensive as curriculum books. The additional benefit of using curriculum books is that most of the problems in the curriculum books are in itemset based format which might not be the case with the third party content providers’ notes. However, you must understand that the curriculum books are going to take a good amount of time in revision as well. So, you must make your own notes or you can use third party content providers’ notes for revision. You may also do the subjects with more weight (Ethics, Financial Reporting and Analysis and Equity Investments) from curriculum books and rest of the subjects from third party content providers’ notes.

How many questions should I practice and from where should I attempt those? You should do as many questions as you can. Most of the concepts will get cleared only after solving the problems. Please make sure that the most of the questions are in item set format. You can find many item set format questions in the curriculum books. But still, those won’t be sufficient. So, we recommend that you get item set format questions from third party content providers or you can get those questions from previous mock exams given by the CFA Institute. CFA Institute provides only 1 mock test each year but you can always find previous mock exams on the great thing called the internet. You should attempt at least 300 item sets (1,800 questions) apart from solving individual questions to be perfectly prepared for the exam. You must also attempt at least 2-3 mock exams to make yourself familiar with the pattern and boost your confidence.

Free item set questions

You can practice free item set question from here.

Strategy for attempting item set questions

You can find many strategies to attempt item set questions from here.

How should I go about the preparation? Which subjects should be studied first and which should be studied later? You can either follow the pattern as given by the CFA Institute curriculum books or can make your own customized study plan. If you want to start lightly, you should start from Equity Investments and can follow it with other subjects like Financial Reporting and Analysis and Corporate Finance. Derivatives, Fixed Income, Quantitative Methods and Economics are relatively tougher in the level II curriculum. You can sandwich these topics between the other subjects and make your own customized schedule. But the main focus should be on three subjects – Equity Investments, Financial Reporting and Analysis and Ethics. These subjects have a total weight of 50% in the exam. These are very crucial subjects and luckily easier as well on a relative basis.

Ethical and Professional Standards (2 item sets: 1 in each paper – 10% – 15% weight)

The course of this subject includes everything you covered in your level I curriculum except the reading related to GIPS. There are few additional readings as well. These new readings are more important as compared to old readings from CFA level I. The most important reading is related to research objective standards. You can expect one item set from it. The other item set is expected to come from the seven standards. Given the importance of Ethics (Ethics adjustment) and its small course relative to other subjects, you must focus extensively on this subject and try to solve as many questions as possible. By solving more cases, you can maximize your score and can target a score of 10 out of 12 questions. The best practice questions are from the previous mock exams by CFA Institute. You can even solve Ethics from mock exams of level III for the common syllabus.

Quantitative Methods (1 item set: In one of the papers – 5-10% weight)

Quantitative Methods contains only 3 readings. The first reading is Correlation and Regression. The second reading is related to multiple regression and issues in regression. The last reading is related to time series analysis which most of the candidates find relatively tough. The second reading is the most important one and you are most likely to get the only item set from this reading or they can combine second reading with third reading and can ask 1-2 questions from third reading and rest from second reading. It is very difficult to get one full item set from the third reading. If you understand the second reading related to multiple regression and issues in regression, then you need not worry about the first reading as it is just a subset of the second reading. First reading is about linear regression with one independent variable. The most important area which can be tested in the exam is the issues in regression – heteroskedasticity, serial correlation and multicollinearity. If you know how to look at the ANOVA table and what all the variables in ANOVA table specify and the issues in regression, you are most likely to ace this subject. This subject looks tough but if understood clearly, you can revise this subject in 30 minutes and can score good marks.

Economics (1 item set: In one of the papers – 5-10% weight)

Economics has three readings. The last reading is a very small one regarding regulation and chances of getting the only item set from this reading are extremely small. However, you can get an odd question from this reading on that item set. The first and second readings are the important ones. The first reading deals with currency exchange rate determination and forecasting. It is a quite long reading and will take a good amount of time during first reading. Candidates tend to forget the small details and findings of this reading. So, it is a must that you prepare small notes and note down the important things and keep revising that stuff on a regular interval. The second reading is little bit quantitative in nature. It is about economic growth and investment decision. This is also very important reading. No topic can be considered less important. Candidates generally find it difficult to deal with economics in level II exam and generally ignore it given that its weight is most likely to be 5% only. But one should not ignore the entire subject and concentrate on the findings of the readings. Most probably the item set will be covering 2 readings out of 3 readings. So, you should not leave anything. But also do not spend too much time on understanding it. Just concentrate on the learning from the reading and move on to other subjects.

Financial Reporting and Analysis (4 item sets: 2 in each paper – 15-20% weight)

It has a total of 8 readings. First two readings discuss inventory and long-lived assets. These readings are almost similar to level 1 readings with a little more detailed version. You can easily master these readings with one reading. The next three readings are the most important ones and form the backbone of level II curriculum. These are related to inter-corporate investments, employee compensation, and multinational operations. You are most likely to find 3 item sets out of 4 from these 3 readings. Rest 1 item set can be asked from a combination of other readings. It is very important to absorb everything from these three readings and practice enough questions to gain mastery of these topics. It is highly advisable that you must read these three readings from the CFA curriculum books. The last two readings have been modified this year. These readings deal with financial reporting quality and the integration of financial statements. Some new stuff has been added into these readings this year. So, you must concentrate more on those newly added topics. There is one important thing which you guys must know. Whenever CFA Institute changes syllabus i.e. adds some additional readings or updates some already existing readings, then the probability of getting questions from those readings are higher than the other readings. Keeping this in mind, you can concentrate on the important areas.

Corporate Finance (2 item sets: 1 in each paper – 5-15% weight)

This subject contains 6 readings in total. The first 5 readings deal with capital budgeting, capital structure, dividends and share repurchase and two readings of corporate governance. These readings look exactly similar to the readings of corporate finance being covered in CFA level I. These are detailed versions of those topics. This subject looks easy but still many candidates fail to score good marks in it. The reason behind that is a lack of practice and complacency. One should concentrate on finer concepts while reading this subject. The last reading is about mergers and acquisitions and is one of the most important for the exam point of view. Most of the candidates enjoy reading it. You are most likely to get one item set from this reading and the other item set from rest of 5 readings. Focus on the blue box examples given in the curriculum book. You are most likely to find exact similar questions on the exam.

Equity (4 item sets: 2 in each paper – 20-25% weight)

This is the most important subject in level II curriculum. The chance of passing improves to a greater extent if one scores well in this subject. Scoring in this subject is also relatively easier than the other subjects as most of the readings are related to each other and have the same theme i.e. valuation. It has around 10 readings. Two of the readings have been adding recently – Your strategy needs a strategy & Industry and Company Analysis. Please spend more time on those readings. Apart from newly added readings, the most important reading is free cash flow valuation. Other chapters related to valuation like market-based, dividend, residual income, private company valuation are also important. The valuation from free cash flow involves decent knowledge of accounting statements like balance sheet, income statement and statement of cash flows. It is advisable that one go through this primer on financial statements before starting the topics related to valuation. One can expect 1-2 item sets based on free cash flow valuation and rest item sets from other valuation techniques. Practicing many item sets is the key to ace this subject. Your focus should be to minimize the silly mistakes. If you can minimize the silly mistakes, you could score as high as 90% in this topic. One can get the answer by following more than one path for cash flow valuation. It is always a better strategy to recheck the answer by working through uses of cash flows. It is less likely to find an item set from residual income chapter as the problem would become too lengthy for the exam. However, one can get theoretical conceptual questions from that reading. Private company valuation is also an important topic and you should get yourself familiar with the discounts of marketability and control and how they are actually applied. You are most likely to find 1-2 questions based on that.

Alternative Investments (1 or 2 item sets: 1 in each paper – 5-15% weight)

In CFA level I, we just touched the subject of alternative investments. In CFA level II, the topics have been explained in detail. It is always a fun to read this topic as it is very interesting. There are four readings in it. The first two readings deal with private and public real estate investments and are very important readings. It covers the real estate industry in detail. It is very important to understand every blue box example given in the book as you are most likely to find the similar questions on the exam. The third reading is about private equity valuation. This chapter covers the valuation of private equity and other things related to the PE industry. You should focus again on the blue box examples. Earlier they had asked 1 or 2 item sets from Alternative Investments but this time, you might find only 1 item set from it as the weight of Fixed Income has been increased this time.

Fixed Income (2 or 3 item sets: One in each of the papers – 10-20% weight)

There have been few changes in fixed income this year. The first change is obviously its weight in the exam. Earlier it used to be 5-15% and now it is 10-20%. Earlier they used to ask 1-2 item sets. But this time, you will get at least 2 item sets.  Few new concepts have been added in the third chapter related to key rate duration, one sided duration etc. The third chapter is the most important one and you are more likely to find one item set from it. The first 2 chapters are similar in a way and are quite easy to understand. The fourth chapter is related to credit models where you would find the most lengthy formulas. But you need to worry as they are not going to ask questions from those lengthy formulas. However, you may need to remember formula dealing with the reduced form model with constant volatility and constant loss-given-default. You must try to focus on the concepts behind the models like differences between structural models and reduced form models. Another important thing is the difference between expected loss and the present value of expected loss and what are the two factors (risk premium and time value) separating them. Your main focus in fixed income should be on chapter 1st, 3rd, and 4th.

Derivatives (2 item sets: One in each paper – 5-15% weight)

This subject contains 6 readings. The first 4 readings deal with 4 major derivative markets – forwards, futures, options, and swaps. These 4 readings are extremely important. Although the reading of options markets is the most important one but item set can be asked from any of the readings. You must concentrate on areas like swap valuation, option valuation using the binomial method, Greek letters and their importance for options, valuation of forward rate agreement and currency forwards and futures. The fifth reading deals with interest rate derivative instruments and covers topics like cap and floor. Once you master the topic of options, this reading would be a cakewalk. The last reading is regarding credit default swaps and has been added recently, thus requiring additional emphasis. As with most of the other subjects, the practice is the key for cracking this subject. The notation for forward rate agreement in the CFA curriculum book is little obscure but you can make your own notations which are easy to remember and work with. This is the subject if understood correctly can pay rich dividends. The candidates who are good at derivatives can target a score of 100% in the exam.

Portfolio Management (1 item set: In one of the papers – 5-15% weight)

There are 4 readings in this subject. The first reading deals with portfolio concepts and is almost the recap of level I syllabus. It is important reading but you will most likely find questions from the next two readings which have been added recently. These readings deal with information ratio and active management. These readings are very important and you will certainly enjoy reading them. Almost all the topics in the reading “Fundamental law of Active Management” are important and can be asked in the exam. The last reading covers the investment policy statement and the process of portfolio management. This is mostly theoretical reading and prepares you for the portfolio management topics for CFA level III where the weight of portfolio management is around 50%.

Passing Score

The minimum passing score (MPS) for level II depends on the toughness level of the paper. The CFA Institute tries its best to prepare average difficulty paper but sometimes paper can be relatively difficult and sometimes very easy. However, the MPS varies between 60-70%. If you score above 70% marks, you are safely above the passing score. Sometimes few topics could be very difficult to attempt but you must not lose your focus and try to get all the answer correct from the easier topics like Equity and Financial Reporting and Analysis.


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 42% 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. Please focus on the important areas (Equity, Financial Reporting and Analysis, and Ethics) and work out and execute your strategy. Practice more and more item set questions. Everything will be fine. Wish you all the best for the exam.

Download 4 months study plan for CFA level II from here – 4 months CFA level II study plan.

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.

Financial Markets and Products Sectional Tests : FRM Part 1

We are providing two comprehensive sectional tests for Financial Markets and Products for FRM Part 1. Each test consists of 50 questions and of duration 2 hours. But since most of the questions are theoretical, please try to finish test within 1 hour 45 minutes. Test 1 is relatively easy and the target score should be 80% i.e. 40 correct answers. Test 2 is moderate and the target score should be 70-75% i.e. 35-37 correct answers. All the best. Please download the tests from the links provided below.

Financial Markets and Products Sectional Test_1

Financial Markets and Products Sectional Test_2

Solutions to Financial Markets and Products Sectional Test_1

Solutions to Financial Markets and Products Sectional Test_2

Strategy for CFA level III exam

Congratulations for passing CFA level II exam and welcome to the last hurdle of the coveted CFA exams. The pass percentage of CFA level III exam is around 50%. But don’t get complacent as the competition would be much fierce for this final exam. The exam consists of two 3 hours papers as usual. The morning half will be an essay based exam where you need to write the detailed answers in the workbook provided to you. There will be around 9-12 questions and each question will have 2-3 parts and the marks allocated would be ranging from 9-35 per question. The afternoon exam will consist of 10 item sets having 6 questions each (just like level II). The weight for both morning and afternoon exam is equal i.e. 50% (180 marks each).

The MPS (minimum passing score) for level III exam has been around 65% for past few years. If you score more than 70%, then chances of passing the exam are almost certain. So, we need to target at least 70% mark. 70% marks can be targeted using various combinations- Morning marks/Afternoon marks – 40%/100%, 50%/90%, 60%/80%, 70%/70%, 80%/60%, 90%/50%, 100%/40%. Getting 100% marks is almost impossible in both morning and afternoon exam. Getting a 90% in morning exam is also too difficult as per the historical pattern of candidates’ marks. So, we are left with these options – 50%/90%, 60%/80%, 70%/70%, and 80%/60% which basically implies that the marks in the morning exam can range from 50%-80% and that in the afternoon exam can range from 90%-60%.

Importance of afternoon exam:

The afternoon exam is very important for passing the exam. If you fail to score more than 70% marks in the afternoon exam, then the probability of failure increases. It has been observed looking at the past results that candidates who perform poorly in the morning exam can still pass the exam but the candidates who perform poorly in the afternoon exam generally end up failing. If you know everything in the morning exam, the chances are that you would still end up with 70% marks only but that is not the case with the afternoon exam. If you know everything in the afternoon exam, then you will definitely score more than 90% marks. While preparing for the exam, candidates generally tend to focus too much on the essay type questions and less on the item sets. Almost every candidate is too much focused on tackling essay type questions. Although the essay type questions are also important and should not be ignored but the item sets are more important.

Morning Session: Essay Based Questions

Before starting the preparation it is advisable to go through the previous actual exam papers. CFA Institute uploads the actual morning exam papers for last 3 years along with guidelines answers on its website. You can download those papers from here. Just go through all the question papers and get an idea about the types of questions asked in the exam. As you can see that around 80 marks (45%) have been asked from the readings – Portfolio Management: Individual and Institutional. These readings are the backbones of the morning paper. Everyone knows that but still most of the candidates fail to score more than 70% marks in questions related to these readings. The main reasons behind this are a lack of understanding of question and command words. Every candidate must go through the list of command words and ingrain those in your mind.

Each question will be having the number of minutes with it. The number of minutes is nothing but the number of marks associated with that question. There are total 180 minutes. It is advisable that candidates do not spend more than the allocated amount of minutes to a question. Try to keep a standard deviation of fewer than 2 minutes per full question. Otherwise, you might not be able to attempt all the questions and the unattempted question might be the easiest one out of all.

Another important thing is to answer the question where it needs to be answered. There have always been few cases each year where candidates get less than 50% marks in almost all the morning exam questions because of answering the questions at the wrong location. After reading each question, just flip the pages till you see the next question. Most of the times you will find some space where you need to mark the answer and then state the answer in the blank space provided.

All the questions must be read carefully. Some small words like pre-tax, post-tax, real/nominal make a lot of difference to the answer and can reduce the calculations significantly. For example, the question would be to calculate real interest rate required for the pension plan for the next year. But if we miss the next year part, we might end up wasting a hell lot of time thinking that we need to fulfill the liabilities for the entire pension period.

Another important thing to consider is the calculations. Candidates tend to be in the habit of using the financial calculator and just write the answer without explaining it. Just think if you get your answer little wrong and do not show any calculation, then most likely you will not get any marks for the question. However, if you show the calculation and make an error in one of the entries, you will be given partial credit for your solution. Always write the formula and the readings related to that formula on the paper.

Handwriting plays an important role in the morning exam. Most of the exam checkers are retired pharmacists or have experience in understanding the worst kind of handwriting. But still, you can save yourself a considerable amount of marks if you write neatly and in bullet points and highlighting the keyword or writing the keyword more cleanly. Most of the candidates face the issue in time management in the exam. So, the good handwriting becomes bad and the bad handwriting becomes worse in the exam. Practice is the key to learning about the time management. You need to attempt at least 3-4 mock tests and try to finish the mock tests in 2 hours 45 minutes so that you can finish the actual exam comfortably. Finishing the exam will make a lot of difference. If you happen to miss few marks due to mismanagement of time that can affect your performance in the afternoon exam.

Each question is graded by a different examiner. So, do not think that the bad performance in one section would impact the grading in the other sections. Also, do not try to impress the examiner by your knowledge by writing additional stuff which is not required. If the question asks for 3 reasons, give only 3 reasons which are most relevant. You are going to gain nothing by impressing the examiner in one question and leaving other question ill-attempted or unattempted.

It is very important to study from the curriculum books. If you are planning to study from some other third party content provider, then please at least go through the entire curriculum once to see whether they have missed something or not and try to cover that part from the curriculum book. In CFA level I and CFA level II exam, it is easy to manage that part in the exam as the questions were multiple choice and one can always make intelligent guesses. But it will be totally different in the morning exam where you have to give constructed responses. Even if you manage to guess intelligently and write the answer successfully, it will certainly lead to wastage of precious time to think about the answer. The exam setters have the habit to ask around 10% of the questions from the part which you might have never seen while studying from the third party content.

It always becomes tense during the last phase of preparation when only a few days are left as candidates tend to forget the curriculum. They fear that they would forget the curriculum and might not be able to write the constructed responses. But most of the times these fears are misplaced. One should remain confident. As one can see that around 45% of the questions would be asked from Portfolio Management : Individual/Institutional/Behavioral Finance and most of the stuff asked would be direct from the text. So, there is no need to panic at all. Even if one scores 70% in that 45% and score only 50% in rest 55%, he/she would end up getting around 59% marks in the morning exam and those marks will be more than enough if one can perform well in the afternoon exam. Even if we do not consider the afternoon marks, 59% marks in the morning exam would be above the MPS for the morning exam paper. So, it is very important to keep your cool and tackle the problems like a peaceful warrior.

Afternoon Session: Item Set Questions

Morning exam is not the end of the paper. Even if you perform badly in the morning exam, do not let your confidence shake for the afternoon exam. It happens with many of the candidates that they are not able to complete the morning exam and leave 10-20 marks worth question unattempted. But there is nothing to worry. Just think like that. If you can score 60% in rest of 160-170 marks paper, you would end up getting around 55% marks and you need to get around 75-80% marks in the afternoon exam to clear the hurdle. Scoring those many marks is not that difficult in the afternoon exam if you manage to curtail your silly mistakes and have covered the curriculum really well.

Ethics and GIPS have additional importance in the afternoon exam paper. Most probably you will end up getting 2 item sets on Ethics and 1 item set on GIPS. Scoring well in Ethics can make a huge difference because of Ethics adjustment. It can be the difference between getting a band 10 and getting a pass result. One has to remember many things in GIPS and its weight is only 5%. But still one should not leave it. One or two more right answers can make a huge difference. They can shift you percentage score from 63% to 65%. Make use of flash cards but do cover every topic in GIPS. The questions asked in GIPS item set will most likely be straight forward and can definitely boost your score.

There are only a few numerical questions that can be asked in level III exam and you are most likely to find almost all of that stuff in the exam. So, be better prepared for that. CFA level III curriculum is short on quantitative topics and has many theoretical concepts. There are hardly 25 types of topics which require calculations. Make different notes for those topics and revise them again and again. You can easily improve your score by around 5% by following this strategy in the afternoon exam.

Practice enough item sets for your preparation. Try to improve your score to 80% in mocks. 80% targeting will cover the bad performance in the morning exam. You can study more about how to tackle the item set questions from here.

Sometimes it becomes all too difficult during the last days of preparation before the exam. But you need to push yourself as someone has rightly said – The ones who push the limits sometimes discover that the limits sometimes push back. This is the last hurdle for you. Give 100% to it. There is always a rainbow at the end of every storm. Wish you success and good luck.

Please download the 4 months study plan for CFA level III from here.

Please read the strategy for attempting CFA level III morning exam here.

3 Months Study Plan for FRM Part 1

FRM part I exam consists of 4 topics: Foundations of Risk Management (20%), Quantitative Analysis (20%), Financial Markets and Products (30%), and Valuation and Risk Models (30%). The duration of the exam is 4 hours and 100 questions have to be solved.

To prepare for the exam in 3 months (13 weeks), one should finish the course at least 3 weeks before the exam. One needs to finish the entire course in 10 weeks. Last 3 weeks should be used to revision and practice exams. There are 52 assigned readings and 410 AIM Statements.

You can download the study plan for 10 weeks from here – FRM Part 1 Study Plan. You should attempt one comprehensive test of 2 hours length (containing 50 questions) after finishing one full subject. 2 more hours should be spent on analyzing the test.

After finishing the curriculum, one should do one more revision in 9 days. 1.5 days for Foundation of Risk Management, 2 days for Quantitative Methods, 2.5 days for Financial Markets and Products and 3 days for Valuation and Risk Models. After one revision, a comprehensive test should be attempted and analyzed on the 10th day. Rest 10 days can be used for more revision and 2 more comprehensive tests and few sectional tests.


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