Tips for taking the CFA exam


Robert R. Johnson continues his advice to candidates

It is essential that candidates become very familiar with their financial calculator

s stated in an earlier installment, the keys to success in the CFA Program are quite simple: time and preparation. Surveys reveal that successful CFA candidates spend, on average, in excess of 250 hours per level preparing for the examinations. Studying for the examinations, however, is a necessary but not sufficient condition for success. Get to the exam in the right frame of mind. In the weeks leading up to the examination, it is advisable to make a dry run of the examination day experience to incorporate the actual examination schedule, and to determine commuting time, parking availability and public transportation schedules. Too often, candidates do not allow enough time on the morning of the examination and arrive at the exam center either late or very close to the starting time. Those candidates are not in a proper frame of mind to maximize their performance on examination day. Go to the right location. You must study and know the exam rules. Most importantly, you will not be admitted to the examination unless you have a current and valid government-issued ID. You will also not be admitted unless you have an admission ticket. The admission ticket will list the location of the examination. Please go to that location. It is common that AIMR will use two or more venues in a city. Know your calculator. It is essential that candidates

become very familiar with their financial calculator (either the two models of the Hewlett Packard 12C or the Texas Instruments BAII Plus) prior to the examination day. You do not want to waste precious time during the examination learning how to perform certain calculations because you have not practiced enough with the calculator. Rest up the day before. Don’t plan to study on the day before or early on the morning of the exam. It is much more important to spend that time relaxing. Remember, the CFA examination is six hours in length. You need to be well rested to give yourself the best opportunity to succeed. Keep your own counsel. I urge candidates not to talk to other candidates about the exam during the lunch break on the day. Inevitably you will focus on what you did not know during the morning session and this could lower your confidence for the afternoon session.

Tips by exam level
The Level I exam is composed entirely of multiple choice questions - 120 questions in each of the two sessions. They are composed of questions from each of the six major topic areas Ethical and Professional Standards, Quantitative Analysis, Economic Analysis, Financial Statement Analysis, Asset Valuation and Portfolio Management. From the perspective of testing psychology, it makes sense to start with your

topic area of strength. If you are an accountant, for example, you may want to start with the Financial Statement Analysis questions. The worst thing that you can do is to start with an area that is not one of your strongest. Starting with your strengths ensures that you will have requisite time to devote to those areas you are likely to earn the most points. I have found that Level I candidates consistently perform somewhat worse on the morning section of the examination than on the afternoon section. Many candidates mistakenly assume that the difficulty of the CFA examination questions will be equivalent to the questions in various test banks offered by third-party prep course providers. By the afternoon session, candidates have an appropriate feel for the difficulty of the questions and adjust their pace accordingly. When answering each question, carefully read the entire question stem and each of the responses. If you cannot determine the correct answer, then guess among the remaining responses. There is no penalty for guessing on the CFA examination. Your score is simply the number of correctly answered questions. In addition, the CFA examination is what testing experts refer to as a compensatory examination that is, weaknesses in some areas can be overcome by strengths in other areas. Please mark your answers on the computer scan sheet



provided. Often candidates will mark their answers in the question book and will wait until the end of the examination to fill out the computer scan sheet. This is not an advisable strategy. You only have three hours for each section of the CFA examination. If time is called before you have had time to transfer your answers, you will not be given additional time. In addition, some candidates have found that they get off track when transferring their answers to the scan sheet.

Levels II and III
With the essay questions that appear in Levels II and III, it is particularly important to pay attention to command words and number instructions. For instance, if the question asks you to “list” three variables in the BlackScholes option pricing model, you do not need to “define” the factors. In addition, do not provide more than the required number of responses. If you are asked to list three factors and you list five factors, only the first three will be graded. One of the common mistakes made by candidates on the essay portion of the examinations is that they will overlook questions or question parts. Essay questions are typically arranged into several parts, say A, B, C, D, and E. Often candidates will answer parts A and B and find that they cannot answer part C. Unfortunately, they often go to the next question, and forget to answer parts D and E. Please attempt to answer all parts of all questions. For time management purposes, pay attention to

minute allocations, which also reflect the points allocated for the questions. You should not spend 30 minutes answering a 12-minute question. You can only receive a maximum of 12 points for a 12-point question even if you replicate the guideline answer. Partially inconsistent or illogical answers will not receive full credit. For example, assume you are asked to choose an appropriate asset allocation and justify your choice. If you select asset allocation A and justify asset allocation B, you will certainly not receive full credit. On questions that require calculations, it is wise to show all of your calculations and state any assumptions you think are necessary. Finally, the most important piece of advice for the essay portion of the examination is to answer the questions asked, not the questions you wish had been asked. CFA examination graders do not award candidates points for “general knowledge.” Points are only earned when the answer is correct and responsive to the question. If you do not know the answer leave that question blank.

Item set questions
On a survey of CFA candidates sitting for the 2002 examinations, 60% of candidates said that the item set questions were more difficult than the essay questions, 30% said that they were as difficult as the essay questions, and only 10% said that they were easier than the essay questions. Because the item set questions account for one-half of the Level II and III examinations, it is important that you are familiar with the format. Sample item set

questions are provided in your study guides. Additional item sets are available to both candidates and non-candidates at the AIMR website at www. sample_item_set.pdf Item set questions are essentially short vignettes or case studies followed by six individual multiple choice questions. But each multiple choice question can only be answered after reading, studying, and analyzing the vignette. Therefore, you should carefully read each vignette before attempting to answer any of the individual items. As with the stand-alone multiple choice questions at Level I, you should read each individual item carefully. You should eliminate any obviously incorrect responses. You should answer all questions, as there is no penalty for guessing on the item set portion of the examination. Many candidates under perform (relative to their abilities) on the CFA examinations because they suffer from test anxiety. Simply put, they place such importance on their performance that they panic on exam day. Candidates would be well advised to put the exam in perspective. That is, the worst thing that can happen to a candidate on exam day is that they fail. Given the way the CFA Program is structured, any candidate who fails can register for the next exam administration and try again. Placing too much importance on your outcome can negatively affect your performance. Recognizing that if you fail you will have another chance can help lessen that anxiety. ■

Because the item set questions account for one-half of the Level II and III examinations, it is important that you are familiar with the format

Robert R. Johnson, PhD, CFA, is executive vice-president in the CFA Program division at the AIMR.

Sign up to vote on this title
UsefulNot useful