CFA Exam 101

Welcome to The CFA Exam Guide! My name is Bryan Kesler and I wanted to help give you the basic background on what the CFA exam is and what to expect.

What is the CFA exam?

The CFA exam is the Chartered Financial Analyst exam that is authored and administered by the CFA Institute.

As a CFA you are expected to have in-depth knowledge of the investment industry and to uphold the strict code of ethics and standards of conduct.

The typical career path of a CFA is to become a portfolio manager or research analysts at hedge funds and private equity firms.

The exam is split into 3 different levels that cover a wide range of investment topics.


CFA Entrance Requirements

Education Requirements
* You must have a Bachelor’s or an equivalent degree or be in your final year of your bachelor’s degree as of you registration date

* Be prepared to take the exams in English

Work Experience
* Have four years of professional work experience (NOTE: does NOT have to be investment related)
* Can also be a combinations of professional work and college experience as long as it totals at least four years. (NOTE: Part Time positions do not qualify, and the four-year total must be accrued prior to enrollment to take exam.

Identification Requirement

* All candidates are required to have a valid international travel passport in order to register for the exam and for admission to the test center.  Read the ID policy.


General Requirements

Be sure you understand the Professional Conduct Statement and Candidate Responsibility Statement.

What is tested on Level 1


Level 1 focuses on tools and inputs, which includes an introduction to asset valuation, finacial reporting, and analysis and portfolio management techniques.


Level 1 is a 2 session exam (3 hours per session) and is made up of a total of 240 multiple choice questions.

Multiple Choice format includes:
1) Sentence completion with three unique choices

2) Questions with three unique choices



What is tested on Level 2


Level 2 focuses on asset valuation, which includes applications of the tools and inputs in asset valuation. The tools and inputs include economics, financial reporting and analysis, and quantitative methods.

Level 2 is a 6 hour 2 session exam and is made up of 20 different item set questions (10 per session)

There are a total of 120 items (20 vignettes with 6 items each)

There is a total of 360 points available at a total of 3 points per item that are equally weighted.


What is tested on Level 3


Level 3 focuses on portfolio management, which includes descriptions of strategies for applying the tools and inputs and asset valuation models in managing equity, fixed income, and derivative instruments for either individuals or institutions.


Level 3 is 6 hour 2 session exam that is made up of Essay questions and item set questions similar to level 2.

The essay questions or “constructed response questions” are usually made up of between 8 and 12 questions which will each have several subparts. In total you can score a maximum of 180 points on the essay section.

How are the topics weighted


Topic Area

Level I

Level II

Level III

Ethical and Professional Standards

15

10-15

10-15

Quantitative Methods

12

5-10

0

Economics

10

5-10

5-15

Financial Reporting and Analysis

20

15-20

0

Corporate Finance

7

5-15

0

Equity Investments

10

15-25

5-15

Fixed Income

10

10-20

10-20

Derivatives

5

5-15

5-15

Alternative Investments

4

5-10

5-15

Portfolio Management and Wealth Planning

7

5-10

40-55

Total

100

100

100



What are the pass rates for each CFA Level?


The statistics released by the CFA institute show that the average pass rate for the Level 1 is only 40%, Level 2 is only 44%, and Level 3 is only 58%. This shows that it is very important that you be properly prepared for each level by find a CFA prep course that is going to fit your busy schedule so that you don’t end up wasting your time by taking any level more than once.

Year

Level 1

Level 2

Level 3

2014 Pass %

42%

46%

54%

2013 Pass %

38%/43%

43%

49%

2012 Pass %

38%/37%

42%

52%

2011 Pass %

39%/38%

43%

51%

2010 Pass %

42%/36%

39%

46%

2009 Pass %

46%/34%

41%

49%

2008 Pass %

35%

46%

53%

2007 Pass %

39%

40%

50%

2006 Pass %

40%

48%

76%

2005 Pass %

35%

56%

55%

2004 Pass %

35%

32%

64%

2003 Pass %

41%

47%

68%

2002 Pass %

44%

47%

58%

Weighted Mean of Pass %

39.7%

44%

57.7%



What are the Entrance Fees for the CFA exam?


In order to enroll to take the CFA exam there is a one time enrollment fee and then an additional Exam Fee for each level.

IMPORTANT NOTE: There are 3 possible registration dates for each CFA exam and the fees increase with each subsequent deadline. So I highly recommend registering early.


Deadlines:

24 September 2014

11:59 p.m. ET

18 February 2015

11:59 p.m. ET

18 March 2015

11:59 p.m. ET

First-time Enrollment Fee:

US$450‡

US$450‡

US$450‡

Exam Fee:

US$630‡

US$825‡

US$1,210‡

The CFA Institute only accepts payment in U.S. dollars.

Enrollment and registration fees are nontransferable and nonrefundable.


NOTE: You are able to withdraw from Level 1 exam as long as the withdrawal form is completed by the stated deadline.  View the CFA exam Level I withdrawal policy.


CFA Salary Expectations


Obviously your salary as a CFA will depend on your location, experience, company and several other factors. In general terms based on the statistics provided by Payscale.com you can expect the following ranges as a CFA:

Portfolio managers are paid $59,492 - $162,747
Financial analysts are paid $40,801 - $95,414
Investment analysts are paid $44,347 - $117,280
Senior financial analysts are paid $51,680 - $ 103,824
CFOs are paid $74,922 - $239,545

What Is My Next Step?

You need to find a CFA review course that is going to GUARANTEE you will pass the CFA exam on your first try so you can start making more $$$ per year!

List of Top CFA Review Courses and Discounts