Tips for taking the CFA exam
CFA CANDIDATE PAGE
s stated in an earlier
A installment, the keys
to success in the
CFA Program are quite sim-
ple: time and preparation.
Surveys reveal that successful
CFA candidates spend, on
average, in excess of 250
hours per level preparing for
the examinations. Studying
Robert R. Johnson
for the examinations, howev-
continues his advice er, is a necessary but not suf-
ficient condition for success.
to candidates
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
It is essential that unless you have an admission
ticket. The admission ticket
candidates become will list the location of the
examination. Please go to
very familiar with that location. It is common
that AIMR will use two or
their financial more venues in a city.
Know your calculator. It
calculator is essential that candidates
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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
PROFESSIONAL INVESTOR • May 2004
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 Black-
Scholes 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
May 2003 • PROFESSIONAL INVESTOR
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
Robert R. Johnson, PhD, CFA, is executive vice-president in the CFA Program division at the AIMR.
questions are provided in your
study guides. Additional item
sets are available to both
candidates and non-candidates
at the AIMR website at www.
aimr.org/pdf/cfaprogram/
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 Because the item
any of the individual items.
As with the stand-alone set questions
multiple choice questions at
Level I, you should read each account for
individual item carefully. You
should eliminate any one-half of the
obviously incorrect responses.
You should answer all Level II and III
questions, as there is no
penalty for guessing on the examinations,
item set portion of the
examination. it is important
Many candidates under
perform (relative to their that you are
abilities) on the CFA
examinations because they familiar with the
suffer from test anxiety.
Simply put, they place such format
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. ■
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