Taking the CFA Level I Exam, June 2012
I’ve been interested in beginning the CFA (Chartered Financial Analyst) program for some time, and last month I finally signed up for the June 2nd test day. The cost of registering for the exam was $1215, which included a required set of six books published by the CFA Institute. Additionally, I bought a financial calculator for $50 and will have to pay $40 apiece for two sample exams. I figure that’s enough of an expense already, so I’m opting out of purchasing any additional test-prep materials and instead studying on my own.
It’s interesting to be back in the position of studying for a standardized test. For the Level I exam, the CFA Institute recommends a total of 300 (!) hours of study time over the course of six months. That’s considerably more than a typical GMAT course of study, which runs around 100 hours. Once I received the CFA books, it made sense why they recommend so much prep time: there is a lot of material. There’s a total of six books and they’re 500-700 pages each.
I began studying in early February, so I’m actually aiming to pass the exam with an overall prep time of only four months. However, I figure I have a couple advantages. First of all, I already have an MBA, so I’ve learned some of the CFA material already at the graduate level. Secondly, a big part of the exam (20 to 50 percent) is related to financial statement analysis, and I have a decent understanding of this topic already. So I hope that I’ll be able get through the material on time.
That being said, there’s no doubt this is a very difficult exam, and there’s obviously no guarantee I will pass. Unlike the GMAT, the CFA exam is not scored – rather, it’s Pass/ No Pass. The pass rate as of June 2011 was only 38%.
Study Strategy For The CFA Level I
My general study strategy for Level I is as follows. For each chapter in the books, I begin by reading the “Learning Outcome Statement” in the beginning, which tells you what the testmakers expect you to know after reading the chapter. I then read the chapter one time and take very detailed notes. I try to make my notes detailed enough so I can re-learn the material by reviewing my notes instead of re-reading the books. I figure that I’m forced to follow this strategy because there’s simply too much material to keep re-reading the books. If I had to review the books themselves, I would never get through all the material.
The potential flaw in this strategy is that I am ‘flying in the dark’ – I don’t really know what is likely to appear on the exam and what is not. I have to use my judgment as to what to take notes on, and what to skip – it’s sort of like doing Reading Comprehension passages on the GMAT. However, each chapter in the CFA books does have the “Learning Outcome Statement” which provides guidance on what the testmakers consider important. The CFA Institute also published a general breakdown of the topic weighting on the exam.
Otherwise, I am trying to maximize the value of the official practice questions. Most of the chapters in the books have 20-40 review questions at the end, and I’m trying to treat these questions like the real exam. I’m only doing these problem sets when I feel like I understand the material and can fully focus on them. When I’m reviewing my results, I am keeping an error log and noting both the questions I missed, and the questions on which I guessed correctly. I’m also timing myself to get a general sense of how long the questions take.
Apart from the end-of-chapter problem sets, the CFA Institute provides two 2-hour “Sample Exams”, which unfortunately cost another $40 apiece. I am waiting on these until I get through all the material. There’s also a single full-length “Mock Exam” which is six hours long, just like the actual exam. I will probably take that in early May, a month before test day.
Realistic Study Planning
One thing I’ve found to be very helpful in my studying is to plan around my own lack of discipline. I have a full-time job, and I’ve discovered that I rarely have the energy or discipline to study after work. Instead, the best time for me to study (on weekdays) is in the morning, before I start work. On weekends, I try to put in a solid 2 hours in the morning, and then more time when I am free later in the day. Overall, this adds up to about 10 hours per week. Realistically, I think this about all I can handle while working my full-time job and tutoring the GMAT.
As of this writing, I’m midway through the second CFA book, Economics. I find this book to be completely uninteresting and Economics is supposedly just 10% of the exam, so I’m just trying to plow through it as fast as I can. I’m actually looking forward to the Financial Reporting and Valuation books that are coming up.
Author: Matthew Kirisits.