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CFA Simplified | The Scholars' Avenue

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CFA Simplified
Posted by admin in Placements, Print Issue, Training and Placement | 0 comments In recent times, there has been an obvious shift towards finance as a career from engineering perhaps due to the industrys compensation structures as well as opportunities for quick thinking and interacting with the senior management. So for finance enthusiasts, CFA is the new buzz word.

What is CFA? The Chartered Financial Analyst (CFA) Program is a graduate level self study program offered by the CFA Institute to those interested in investment and financial professions. Its syllabus is guaranteed to make the candidates well informed and is internationally recognised. While the main focus is on portfolio management and financial analysis, it brushes through the other areas of finance as well. Most financial institutions consider the CFA charter to be a symbol of professional excellence.

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In order to participate in the CFA program, a candidate must hold or be in the final year of a university degree, or have 4 years of qualified, professional work experience in an investment decision-making process. The program is spread across 3 levels. The fee structure varies with the CFA program curriculum, i.e., eBook only, print only, or both. The enrolment fee and the exam registration fee increase with each deadline.

Level I The first paper is based on multiple-choice with approximately 240 questions and a time limit of 6 hours, split into two 3-hour sessions. It focuses on tools and concepts that apply to investment valuation and management. The prerequisites for this level include a Bachelors degree or equivalent, obtained no later than the 31st of December of the year in which the first exam will be written. The exam is held during the first weekends in June and December and the results are declared within 60 days. The passing rate for this round is about 35-40%. The fee, usually unkind on students pockets, ranges from $1,070 to $1,470.

Level II The second exam is similar to the first with multiple choice questions to be attempted in 6 hours. It mainly deals with asset analysis. The second level is held in the month of June only and results are usually provided within 90 days. Around 40% of the candidates pass this level.

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Level III The final level comprises of 120 multiple choice questions as well as an essay, with equal importance to both and a total time of 6 hours is provided . The exam explores portfolio management in great depth. The requirements are a passing grade in Level 2 and 3 years of professional work experience. One must demonstrate a working knowledge of the portfolio management process, from calculating investor constraints, objectives, and capitalmarket expectations to making asset-allocation decisions. The exam is conducted in June and results are declared within 90 days. 45% of the candidates clear this level. It typically takes a minimum of 4 years to complete the CFA Program.

CFA vs. MBA

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CFA Simplified | The Scholars' Avenue

While most websites harp on about the syllabus being very similar to a Masters in Financial Management, our alumni still feel that one cannot substitute for the other. A PGDM from an IIM or the ISB would guarantee you a better placement and a more thorough understanding of the subject. An MBA from a B-school abroad is beyond comparison, they say. An MBA is required to spur your career. Time it well. And while you wait for that time enhance your knowledge with CFA, says a 2006-graduate who, having completed all 3 levels, is now going to continue working for a couple of more years before going for a foreign MBA. There are few who opt for substituting an MBA with the CFA degree, citing time-saving to be the advantage. As far as an alumnus who recruits B-school grads, is concerned, nothing beats a class-room education and formal recognition from a good university.

Why CFA? The publicly touted reason is that the CFA charter is one of the most highly respected and valued qualifications recognised internationally. It is a representation of your professional competency. While most students on our campus cite CV-building as the primary reason and a fresh curiosity about Finance as the secondary motive, the alumni we spoke to, have a little more to add. One at Deutsche Bank says that having the most comprehensive and vast self-study syllabus available gives you an overview of a broad gamut of the various fields in finance in a lucid manner. A CFA qualification usually gets you into the buy-side of the finance-based careers as the syllabus with every increasing level shifts more towards Investment Analysis and Portfolio Management. Another recent alumnus adds that as most banks sponsor the exam and aggressively encourage their employees to become CFA charter-holders, there isnt any financial burden on the candidate and complete support from the work-place eases the process of balancing work and study. Other alumni contributed, saying that even though they are pursuing Masters in Management or Finance, they find the syllabus helpful because it covers all topics breadth-wise and not in-depth. Completing the 3 levels of CFA via self study shows perseverance, adds tremendous value to your CV and does aid in your chances of a bonus or hike in salary, says another alumnus who has recently acquired the charter. When speaking to our peers across the IIT campuses, we came across a similar trend. More than 50 people in our own campus and a similar number in IIT-B have attempted the CFA Level-1. The CFA-bug has also spread to Delhi and Madras. Its not really a differentiating criterion anymore. Everyone serious about finance clears the first level before graduating, says a recent IIT-B graduate who says that the qualification helped him get a Masters in Finance despite having an engineering background. Other students say that clearing the first level is more than enough for you to understand if your interests lie in the area or not. They say that not all finance-based companies value the charter enough to sponsor you and cite financial restrictions as the reason for not completing the course.

Bottom line: if you are interested in learning finance, have heavy-enough pockets and have nothing better to do with your time here CFA might just be the answer for you. More information can be obtained at http://www.cfainstitute.org/
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