What is the CFA Exam? - Levels I, II & III

Instructor: Carrie Soucy
To earn the Chartered Financial Analyst (CFA) credential, one must pass a series of CFA exams. Read on to learn about the content and structure of these three exams and get tips to help you prepare for each test.

About the Three CFA Exams

The CFA series of exams, administered by the CFA Institute, measures a candidate's mastery of investment management skills. To earn the CFA credential, one must pass all three exams in sequential order. All exams are offered once a year in June; the CFA also offers Level I exams on a second date in December. The exams are each six hours long and cumulatively focus on 10 content areas, with complexity increasing throughout the series. The content areas and the percentage they represent on each exam are:

Content Areas CFA Level I CFA Level II CFA Level III
Alternative Investments 4% 5%-10% 5%-15%
Corporate Finance 7% 5%-15% 0%
Derivatives 5% 5%-15% 5%-15%
Economics 10% 5%-10% 5%-15%
Equity Investments 10% 15%-25% 5-15%
Ethics/Professional Standards 15% 10%-15% 10-15%
Financial Analysis/Reporting 20% 15%-20% 0%
Fixed Income 10% 10%-20% 10%-20%
Quantitative Methods 12% 5%-10% 0%
Wealth Planning/Portfolio Management 7% 5%-10% 40%-55%

CFA Exam Level I Overview

Level I, the first of the three CFA exams, measures basic understanding of the content areas above, along with investment analytical skills. Based upon reported pass rates for all three exams, Level I is the most difficult to pass, with only 43% of test takers passing in 2016 (compared to 46% and 54% for Levels 2 and 3, respectively).

The CFA Level I test has 240 questions, which are all in multiple-choice format; some of which require you to choose the correct way to complete a sentence, while others ask you to choose the best of three answers to a query. Exam day consists of a morning and an afternoon session, each lasting three hours.

Prep Tip: Given the format of the CFA Level I exam questions, you may benefit from reviewing this quick lesson on strategy for multiple choice questions.

CFA Exam Level II Overview

The CFA Level II exam focuses on asset valuation and properly applying investment tools. This exam is also broken into a morning and afternoon session, each featuring 10 item set questions that require test takers to read a case study that is approximately 1.5 pages long and then answer 6 multiple-choice questions based on the information contained in that passage.

Prep Tip: Along with mastering best practices for multiple-choice questions, before taking the Level II exam, it is a good idea to brush up on reading comprehension. For tips, review this lesson on getting the gist of an essay and improving reading comprehension.

CFA Exam Level III Overview

The final of the CFA exams, Level III requires test takers to demonstrate mastery of all content areas and be able to apply their skills to the planning and management of portfolios. This exam's morning session has 8 to 12 essay questions, each with multiple parts. Some questions require you to freely construct a response, while others provide instruction to address specific parts of the essay prompt. In the afternoon session, CFA Level III test takers must answer 10 item set questions.

Prep Tip: Given that half of this exam requires you to write essays, reviewing proper essay writing techniques is an important part of Level III exam prep. This online Essay Writing: Help and Tutorial course will help you master all skills required to compose effective essays, including prewriting, structuring and revising.

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