As a seasoned expert in preparing candidates for the CFA exams, I have seen firsthand the challenges and triumphs of those taking the Level 2 exam. This crucial step in the CFA journey requires a deep understanding of key topics and a strategic approach to studying. In this article, I will share my insights on the topics you can expect to encounter on the CFA Level 2 exam and how to best prepare for them. The quantitative section is a major focus of the Level 2 exam, with one or two sets of articles typically included. This section covers a range of topics, including elements and valuation of bonds.
While the average pass rate for the past 10 years has been 45%, recent pass rates have been lower. This highlights the importance of thoroughly understanding these topics in order to succeed on the exam. One significant change from Level 1 is that weightings are now given in ranges rather than specific percentages. This means that there is some overlap between Level 1 and Level 2 topics, particularly in the area of bond valuation. As a trusted resource for CFA candidates, Kaplan Schweser receives numerous questions about these topics from those preparing for the Level 2 exam. While there are some readings that were not covered in the Level 1 curriculum, they are generally accessible to most candidates.
However, it is crucial to have a strong grasp on all topics as they may appear in unexpected ways on the exam. The ethics section at Level 2 is largely similar to that of Level 1, with one notable exception: there is no coverage of GIPS (Global Investment Performance Standards). Additionally, there is an additional reading on research objectivity standards. It is important to note that the CFA Institute does not assume that candidates will approach the study sessions in a specific order. However, for those who are on the borderline of passing, their ethics score can make all the difference.
Therefore, it is essential to prioritize this topic in your studies. The weightings for each topic may vary depending on the number of questions asked. Keeping track of these weightings can give you an advantage when taking the exam. For example, if you plan to spend 300 hours studying for the Level 2 exam, it is recommended to dedicate at least 150 hours to studying investments in stocks and financial information and analysis. These topics are often overlooked, but they carry the same weight as other topics (5-10%) and are not as technical. The CFA Institute uses a specific methodology to determine the minimum passing score for each exam.
Based on this data, we can see that the most important topics for the Level 2 exam are investments in stocks, financial information and analysis, fixed income, portfolio management, and ethical and professional standards.
