For those moving on to CFA Level 2 and 3, there is undoubtedly a little bit of growing pains. Both exams get mixed reviews from students as to which is harder, but they are both unequivocally harder than CFA Level 1.
In today’s post, we discuss.
CFA Level 2 and 3: What’s the Deal?
One of the most glaring differences between CFA Level 1 and CFA Level 2 and 3 are the question formats. For instance, CFA Level 2 uses more of a vignette-style approach to questions.
This often involves a page, or page and a half of a scenario. Buried in that scenario are many details, numbers, and facts the candidate is required to analyze. Hence, CFA Level 2 becomes a much more comprehension-style exam. Not only that, but the questions, at times, build on themselves. Several questions may need to be answered with respect to each vignette, and the answers to prior questions may be needed to answer subsequent ones.
CFA Level 3 on the other hand, can include some “long-answer” questions. Some multiple choice, and some long answer questions make this exam difficult – and the long answer questions are often the difference between a pass, and a fail in our experience. A deep understanding of the material is required. This is especially true to answer questions beyond just the “recognition” required of multiple choice questions.
You do not see this with CFA Level 1. The first exam tends to include questions organized by section. However, they are ultimately unique questions with no relation to each other, other than the fact that they may both come from the same topic.
Can I Pass?
Given the challenges above, at Professional Exam Tutoring we often get asked how easy it is to pass.
The answer: not that easy, but still doable.
What it ultimately boils down to is doing the work, and there’s a lot of it. While that might be much too general, let’s get a little more specific. CFA Level 2 and 3 build on the first level. That said, there is a lot of new content, and you are competing against others that also passed CFA Level 1. Since the exam is graded on a curve, this presents an extra challenge.
When reviewing CFA Level 2 and 3 material, “doing the work” means truly understanding the content you are reading and practicing. At times that can require looking up definitions on Investopedia, or spending some time on Google learning new definitions. It can also mean learning the definitions of the definitions.
The most successful students we see understand questions by thoroughly exploring them. Note: This does not mean repetitively doing the same questions so that you can get to the right answer. Once you’ve answered one type of question, test yourself by finding other questions with the exact same concept. This will ensure you can answer the question several different ways which will be required for the exam.
Passing Rates
Overall, the CFA Level 2 and 3 are much harder exams but both are doable.
Since the CFA Exam has become computer based, the passing rate has become more volatile. A failed CFA Exam was quite likely in 2021. Initially following the transition, the passing rate plunged for CFA Level 1 as low as 22%, but has begun to level off closer to 40%.
CFA Level 2’s pass rate is somewhere between 40% and 50% over the last decade. While for CFA Level 3 it is between 40% and 55%. With a thorough approach, and some patience, you’ll be able to get through them all. Good luck!