It’s now exactly three weeks until the CFA Level I exam, so I thought I’d post about my progress. I’ve now managed to read through most of the material, which consists of 6 very thick books of about 500 pages each. I skipped a few chapters that I didn’t think were important, and I skipped over the entire sixth book (Derivatives/ Alternative Investments.) This topic is only a very small portion of the exam (less than 10 questions out of 240) and I have to manage my time carefully, so I didn’t think there was a good ROI on reading this book.
As far as practice exams go, the CFA Institute gives you two resources:
1) One full-length, 240-question, six-hour mock exam written by the Institute itself, which is supposed to accurately represent the content of the real exam. This is provided as a PDF that you print out and answer with pencil-and-paper (like the real exam).
2) Two 2-hour, 60-question sample exams, which appear to be written by a third-party test prep provider, and are taken through a web browser. Annoyingly, these exams cost an extra $40 each.
This weekend I took the full-length mock exam. The result was a somewhat disappointing 58% correct. Although the CFA Institute doesn’t provide the actual percentage you need to pass the exam, the internet says that the passing score is about 70-75% correct. To be on the safe side, I am aiming to get 75% correct, which would be 180 out of the 240 questions. Based on my 58% correct result from the mock exam, I only answered 140 questions correct, so I need to improve by 40 more questions. I’m glad I took the exam this weekend since I have another three weeks to study and improve. I feel much better prepared after reviewing the answers from the mock exam.
After reviewing the answers, I came to this conclusion: many of the questions I had missed required memorizing very specific formulas or very specific facts. For example, they expect you to memorize how to calculate over 20 different financial ratios, or know the finer points of accounting differences between US GAAP and IFRS. I think this level of detail is what makes the exam so difficult – there’s just an enormous amount of material that needs to be memorized. In real life, I would just dump the calculations into Excel; but of course the exam would be easy in that case.
On the plus side, a good portion of the questions are qualitative and can be answered correctly if you have a solid grasp of finance fundamentals; I did reasonably well on these types of questions.
At this point I would estimate that I’ve studied for about 150 hours, and I’ve spent $1,255. I’m glad I took the practice exam this weekend; I’ve spent the past week reviewing it and I’ve now memorized another 50 formulas :-) I may wind up spending another $49 and purchasing a full-length mock exam from Schweiser. There’s certainly no guarantee at this point that I will pass, but I’m going to put in the work over the next few weeks and do my best.
Author: Matt Kirisits.