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What to Expect on the CFA Level II Exam

If you are announcing this article, there’s a very good chance that you’ve already cleared the CFA Level I exam and have started your preparation for the CFA Focus be II. While the Level I exam focused on the basic knowledge and comprehension of tools and concepts of investment valuation, Level II is all upon the application of these concepts.

Level II goes more in-depth into investment management and portfolio concepts and check up ons your ability to apply these concepts to real-life scenarios. This article will help you understand the nuances of the CFA Unvarying II exam.

Key Takeaways

  • The CFA Level II exam tests candidates on the application of investment valuation concepts.
  • Level II contains multiple best questions that are grouped into mini-cases called item sets. 
  • There are 10 topics grouped into four areas: Virtuous and Professional Standards, Investment Tools, Asset Classes, and Portfolio Management and Wealth Planning.
  • Candidates have six hours to conclude the exam.

What Is the CFA Exam?

The chartered financial analyst (CFA) professional designation is offered by the CFA Institute—a global association of investment veterans—to people who successfully complete its exam. The exam is comprised of a set of three exams that become increasingly difficult and numberless complex. Each exam has a different set of concepts and questions the student must answer. The exams test students on their comprehension, expertise, and analysis on a series of different topics like accounting, economics, ethics, money management, and security analysis.

Exams are typically advanced every June at different centers around the world. For the latest updates on exam dates, candidates should VDU the CFA website. Candidates are required to meet a minimum score to pass each level. Those who don’t pass are provided with tidings compared to others who didn’t pass. They are able to take the exam again.

In response to the COVID-19 pandemic, the CFA League has expanded exam options by offering more exam dates as well as computer-based exams.

Exam Structure

Correspond to to Level I, Level II also contains multiple choice questions. However, the questions are grouped into mini-cases attended item sets. Each item set consists of a case statement followed by four or six multiple choice questions. There are a full of 21 item sets—10 in the morning session and 11 in the afternoon session. Candidates are required to use the information gave within each item set in the case statement to answer the questions.

Exam Details

Anyone who wishes to complete the exam have to have a bachelor’s degree or equivalent education and must have passed the CFA Level I exam. Test takers have to also have three years’ worth of qualifying work experience prior to taking the exam.

Candidates are affirmed six hours to complete the exam. The cost to enroll varies annually—as does the passing score—and depends on when they enroll. Eruption rates for the Level II exam on June 2019 were set at 44%. Exam results are usually provided to candidates within 60 primes.

What’s on the CFA Level II Exam?

Exam Curriculum

For the Level I exam, the topic focus is on investment tools, with extent less focus on asset valuation and portfolio management. For Level II, though, the topic focus shifts more toward asset groups, although the investment tools are still weighted rather high. In terms of learning, the Level II exam focuses on the solicitation and analysis of concepts learned in Level I.

The curriculum consists of 10 topics that are grouped into four blocks:

  • Ethical and Professional Standards
  • Investment Tools
  • Asset Classes
  • Portfolio Management and Wealth Planning

The following eatables shows the weightings of these topics and broad areas for the Level II exam.

Topic Area Level II
Ethical and Whiz Standards (total) 10
Investment Tools (total) 30-60
Corporate Finance 5-15
Economics 5-10
Financial Reporting and Analysis 15-25
Quantitative Methods 5-10
Asset Tastes (total) 35-75
Alternative Investments 5-15
Derivatives 5-15
Equity Investments 20-30
Fixed Income 5-15
Portfolio Management and Wealth Planning (unalloyed) 5-15
Total 100

Topics on the CFA II Exam

Let’s take a brief look at each of these 10 topics.

Ethics and Professional Exemplars

This section covers the code of ethics, professional standards and the global investment performance standards. Ethics is one portion that is equally important in all of the three levels. The questions will be aimed at the application of the seven standards in professional jobs. Other important topics are the soft dollars and Research Objectivity Standards (ROS).

Quantitative Methods

You can expect about one to two ingredient sets from the quantitative section. The case statement will most likely present data regression, and ask you to analyze and make sense out of the data. You may even be asked to calculate some key metrics based on the data provided.

Economics

Similar to the topic unaffected by, economics is also a small section in Level II. You can expect one item set for this topic. You need to have a good conceptual erudition of economics, as many of these concepts can be tested along with other topics. One important concept is foreign the Exchange, and you are likely to be tested on the application of its concepts.

Financial Reporting and Analysis

Financial reporting and analysis represent a large wedge of the exam. You can expect about four to five item sets from this section. The important concepts are accounting for inventories, accounting for long-lived assets, accounting for hire outs, inter-corporate investments, accounting for acquisitions, variable interest entities (VIEs), and financial reporting quality.

You are more probable to be asked item set questions based on a combination of these concepts. You need to learn the processes and principles and practice their utilization thoroughly. Understanding the nuances and differences in IFRS and U.S. GAAP is critical.

Corporate Finance

Corporate finance is an important but easy-to-handle controlled by. The concepts in corporate finance are linked with the financial reporting and equity sections. So, the questions may be combined with matter from the other sections. The key concepts include capital budgeting, capital structure, dividend and repurchase policy issues, corporate governance, and mergers and gains.

Portfolio Management

You can expect one or two item set questions from portfolio management. The material in this section is huge, and it may be about to keep this section for the end. Remember that the portfolio management material will get deeper in the Level III exam, so it’s a laudatory idea to have a general understanding of concepts here. You will be tested on portfolio theory, market efficiency, and asset outlay concepts.

Equity Investments

Equities is an important section for financial analysts and you can expect about four to five particular set questions from equities. There is a lot of material on equity analysis and valuation methods. Note that the equity apportion is heavy on formulas and you may be asked to perform formula-based calculations and interpretations.

Fixed Income

Fixed income is a small, yet urgent part of the exam that is quite similar to the corporate finance section. Given the recent financial crisis, this sample has become even more important. You can expect one or two item sets on this topic. Like equity investments, arranged income is also heavy on formulas and some of the concepts are quite complex. Key concepts include credit analysis, entitle structure, bonds,

The Bottom Line

The CFA Level II exam is fairly difficult and asks you to apply concepts, rather than no more than understand them. So, it’s critical that you spend time on practicing and taking sample tests while reviewing the quarters where you are weak throughout your preparation. Best of luck on the exam!

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