3 CFA Exam Preparation Mistakes — and How to Avoid Them

by Andrew Jones

For access to over 3,000 sample CFA exam study questions and 90+ hours of instructional videos, check out our Fitch Learning CFA Exam Prep app – now available for a free 7 day trial with unlimited access.

About the author: Andrew delivers both CFA® exam preparation courses and non exam finance training for Fitch Learning. Having passed all three levels of the exam as well as gaining a wealth of experience as an industry practitioner he understands the pressures of studying for this prestigious qualification.

Many Chartered Financial Analyst (CFA) exam candidates carry serious misconceptions about both the test and the most effective ways to approach CFA exam preparation. Unfortunately, these common mistakes often trip up otherwise dedicated and qualified candidates, making the difference between a pass and a fail on the exam.

So what are these misperceptions, exactly? And how can you avoid them to make sure all your hard work pays off?

1) Don’t underestimate the test.

This one is key. All too often, candidates imagine that the exam is easier than it actually is — so they don’t put in the necessary study time. The CFA Institute guidelines call for 300 hours of preparation time, and that’s not an arbitrary suggestion. You will need to put in every one of those hours.

2) Leave yourself enough time.

Which brings us to the next mistake. Even when candidates aren’t consciously underestimating the exam, they often don’t leave themselves enough time to put in the study hours they know they need. Those 300 hours represent a major time investment — a significant sacrifice — and making them happen takes careful planning well in advance for most people, not to mention continuous motivation.

3) Don’t neglect what you already know.

“I’ve already learned this material — I can skip to the next topic.” Sounds reasonable, but it can spell failure. Many candidates decide they don’t need to study topics they’ve already learned, but CFA exam preparation isn’t the same as studying for a college degree. The CFA exam tests topics in specific detail, and the volume of information covered means it’s important to study what you already know.

Study Techniques

Now that we know which mistakes to avoid, how can candidates sidestep these pitfalls and achieve the best possible results on the exam?

First, start early. That means at least five months before the exam. Make sure you can dedicate 10-15 hours per week until you take the test. Otherwise, passing is simply unrealistic.

When you prepare, it’s important to blend study techniques. Don’t simply read over the material, but take a blended approach so you can think through the topics from multiple angles and keep the material fresh. Read a chapter, then watch an instructional video, then work on practice questions. Those practice questions are particularly crucial.

By applying your knowledge, investing in CFA exam preparation time regularly, and continuously shoring up your knowledge, you can give yourself the foundation you need to succeed. It’s not easy — but the reward for all the time and effort you put in is worth it.

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CFA Exam – The best time to start preparing

CFAAbdullah-Al-Rezwan is a recent graduate of IBA, University of Dhaka. He has just joined as Management Trainee of The City Bank Limited. He is a Finance enthusiast, but almost readily falls in love with anything that makes him feel a bit more knowledgeable.

As a recent graduate of IBA (Institute of Business Administration, Dhaka), I do not dare propagate futile advice to people who are far more knowledgeable and experienced than I am. So let me first define the target market for this write-up: University students or recent graduates who are planning to sit for professional exams like the CFA and the FRM exam. The reason I can dare preaching to you is that I happened to pass both CFA level 1 exam and FRM Part 1 exam while in my senior year in IBA.

Preparing for CFA exam at any point of your life will need a hell lot of dedication, perseverance and energy. I keep getting this question from many of my juniors whether it is possible to maintain both University academic requirements and CFA exam preparation. With less than a month of work experience and almost non-existent work pressure, I can still vouch for the fact that the easiest way to pass any professional exam is to sit for the exam while you are still a student. Now before you start jumping around, you should remember you can only sit for CFA level 1 exam in your senior year in University. But there is one way you can pass all three levels of CFA exam while being a student. If you join an MBA program just after graduating and pass all three levels at first attempt, you can basically pass CFA exam even before joining a workforce. (I am personally not a big fan of starting MBA right after graduation for many good reasons, so I will not follow that path)

I know it might sound a bit odd that University students hold an edge over professionals in ‘professional’ exams! But that is one absolute truth. Even if you work in Goldman Sachs, you are going to need to go through the CFA exam materials at least once as there’s hardly any school out there which covers all the things that CFA exam encompasses. You can be a fixed income analyst in J.P. Morgan, and you have a very good chance of being bright enough to not needing to go through the Fixed Income section of CFA exam. But what about 9 other topic areas in CFA exam, especially Ethics? It is almost impossible to gain first-hand understanding from work on all the topics of all three levels of CFA exam. Besides, the level of energy and dedication you need to study after returning from work at 8/9/10 pm is enormous and it inevitably results in a not-so-peaceful life. Of course, a student will probably need more study-hours than a professional to pass a particular level in CFA exam but that’s okay. Students get at least twice as much time as professionals do to prepare for the exam. In fact, there’s a general rule that you should invest 300 hours for each level of CFA. Because I had more time and literally zero intention of wasting 100,000 BDT, I think I have gone through 420 study-hours for level 1.

If you are still not convinced, let me throw another surprising benefit that students may enjoy while preparing for professional exams. Because we usually have ample time left for getting more ‘Likes’ and stalking others in Facebook, academics always take a back seat during university life. Many of us ended up suffering from a chronic disease called ‘Procrastination’! As my level 1 exam was approaching, for the first time in my life, I really had to lead a pretty disciplined life because I began to realize that an hour lost in ‘unproductive’ things might result in a grand wastage of 100,000 BDT.  Therefore, I finally stopped procrastinating in my academic requirements in IBA. The outcome was nothing short of ecstasy. I passed CFA level 1 exam in June, FRM part 1 exam in November and obtained a CGPA of 3.9 in my senior year.

So if you have made up your mind, do NOT wait; sit for the level 1 of CFA exam while you are still at the University.

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CFA exam preparation – dealing with stress

Stress while dealing with CFA Exams - The Asif Khan BlogWith February coming close to an end the CFA candidates across all levels have only another 3 months for CFA exam preparation. This is usually the time when people start getting stressed. Depending on personality types this can both be positive or negative. I thought that it might be helpful if I gave a bit of general guidance during for this time.

1. Accept that stress is normal during CFA exam preparation: Whether you are a level 1, 2 or 3 candidate stress will definitely be there during preparation. It also would not matter whether you have just started the syllabus or finished it twice already. The CFA curriculum (mainly in level 2 and level 3) is so vast that it is bound to overwhelm people. While studying one topic you will surely feel that you forgot everything you read in the last chapter.

The reality is that this stress is quite normal and you need to accept it. Almost 90% or more candidates are going through the same thing to some extent or the other. Once you accept it, it becomes easier to handle.

 2. Modify your strategy appropriately: The next step is to analyze where you stand with regards to preparation. If you are following your targets then just keep doing that. If you are lagging behind make sure you put in some extra effort to catch up.

3. Do not give up: My last advice would be to not give up under any circumstances. You have already paid for the exam. So at least try your best even if you cannot pass. You will at least get some knowledge which you can use sometime or the other in your life.

Furthermore, the CFA exam can be quite puzzling at times. You might think that you are unable to remember or comprehend that material but usually it all comes together during the final two weeks before the exam when you are revising the material.

During my level 2 preparation I probably read Derivatives 3-4 times and still did not understand it. My AM session was horrible in the real exam and I was quite sure I would fail.

I ended up getting above 70 in nine topics and between 50 to 70 in one!!!

Photocredits: Freedigitalphotos/artur84

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CFA Exam Preparation: My Foolproof Method to Pass the Exam

Passing the CFA exam on first attempt is tough. I was fortunate enough to make it. I actually used a certain method for CFA exam preparation, which I want to share in this blog post.

The truth is that there is no magic formula. It is all about hard work and determination.  In particular proper planning and execution of the plan is probably the most important factor in passing the CFA exam.

PHASE 1 (2-3 months)

1. Subscribe to this blog: Even though this blog did not really exist when I gave the exam, I will share all the tricks and tips I used to pass CFA. You wouldn’t want to miss those. don’t wait and write your email address on the top right space for subscription. Press the “subscribe” button and confirm it from your email inbox.

2. Register at AnalystforumAnalystforum is the best networking platform for CFA students. I used this forum extensively for some much-needed motivation. That is not the end as people share great notes, help each other out on difficult topics, share questions and what not. Overall a great community to be part of.

3. Finish textbook once: Finish the textbooks once (either CFAI or Schweser). CFAI books are recommended, but I (and others) did pass all three levels with Schweser as my primary reference book.

4. EOC from CFAI Books: Finish ALL the end of chapter questions from CFAI text-book. Don’t bother with questions from Schweser or other 3rd party guidebooks. All questions that you were not able to solve in the first attempt or looks complicated (or you got correct on fluke) should be marked for future reference.

5. Formula Sheet: Make a comprehensive formula sheet and take a glance at it from time to time.

6. Mock Exam: Give your first sample mock and if required keep the formula sheet with you on the first attempt. Try to stick with CFAI mocks and avoid 3rd party mock exams. Tabulate all the scores by segment in an excel sheet. Check the answers and see where you went wrong. Highlight all questions you were incorrect in or got correct by fluke for future reference.

Now you have created a strong base. The next step would be to internalize all the concepts.

Exams are coming up soon. Do not miss this writeup on how to best utilize the last 30 days before the exam.

PHASE 2 (1-2 months)

1. The Mock-Revise loop: THIS IS THE MOST IMPORTANT SEGMENT FOR MASTERING THE CFA. What you need to do is take a look at your scores and find your weakest areas. See where you went wrong by looking at answers.Then give another mock exam and repeat the cycle. Track your scores and see whether you are improving in your weak areas. I would recommend that you give at least 3 full mock exams.

2. Examples from CFAI textbook: The CFAI textbooks have excellent examples in all the chapters. Go through all of them and highlight the ones that look tricky or important.

3. Fill in the blanks if you used 3rd party guidebooks: One problem that 3rd party reference books users face is that these books sometimes skip important concepts to condense concepts. MAKE SURE you read the important chapters (like deferred tax) from the original book. Also Analystforum members sometimes make a list of topics that Schweser may have missed.

4. Memorize formulas from the formula sheet:  Carry the formula sheet around wherever you go.

PHASE 3 (Last 30 days)

1. Go back to highlighted questions: Attempt all the questions you have highlighted or marked before and keep doing them until you can get all of them correct

2. Revise entire syllabus by LOS: Go through all the learning objective statements and make sure that you have mastered (not memorization. Memorization does not work) the concepts. Again use the elimination method here as well.

3. Give one last mock exam (Optional): You might want to give a final mock 1-2 weeks before the exam to see your scores. However don’t attempt one too close to the exam as bad scores might affect your confidence.

4. Relax: Don’t forget to take breaks and enjoy time off during the process. I read many novels during my CFA prep time. The key to success for me was proper planning and execution without trying to cram at the 12th hour.

I have also written another piece on ‘how to utilize the last 30 days before the CFA exam‘ which should have extra resources. Be sure to check that out.

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CFA exam : the last 30 days

Preparation for any exam is somewhat of an art and people use different techniques. Nevertheless, there are some methods which work better than others. In this post I want to mention the method I applied for having a rock solid preparation in the CFA Exam.

General Tips for last 1 month
Mock Exams
• I usually used the final month to give 3-4 mock exams in the first 15-20 days or so. After every exam, I put in my scores in an excel sheet to see topic wise scores.
• While giving the exam I usually marked the questions which I found difficult and the questions which I just answered on guess work.
• Next, I identified my mistakes by looking at the correct answers for not only the mistakes but those I got correct through guesswork. When I was unable to understand the answer, I went back to the text book.
• When I scored poorly on a topic I revised that topic and then went for the next mock exam. I repeated the same thing for the next exams but also observed whether my scores are improving or not overall and my weaker segments. Usually I put a lot of emphasis on my ethics score.

Revision
• In the last 10-15 days I usually went for a revision of the whole syllabus. Usually I went LOS by LOS. The objective was to see whether I could understand the concept crystal clearly for all the LOS. Once a LOS was mastered I crossed it out.
• I constantly revised the formulas. I usually made my own formula sheet and used to carry it wherever I went.

Things not to be missed 
• Make sure you have done ALL the end of chapter (EOC) questions from the original book. I would suggest that people do not waste time on questions from Schweser as real exam is very different from Schweser questions. If you have completed everything else and still have time then do Schweser exams.
• Some of the EOCs are quite complicated. I usually marked them to review them over and over again until I mastered them.
• Go through all the blue box examples from original book.

Planning for the 30 days
• I used to make a 30 day plan specifying what I will revise or read in the last 30 days. Sometimes I fell behind my plan due to family obligations or work pressure but by studying more on other days I used to cover it up.
• Normally I suggest that people try to beat their own plan and stay ahead.

Notes
• Some people make their own notes. I usually only made notes for the most critical chapters. However, notes are supposed to be made 3-4 months before exam. Trying to make notes at the last moment is not advisable as it will eat away time.
• If however you already have own notes then instead of reading the book you can just read your notes (depends on the depth of the notes).

Day before the exam
• This day is very important. Confidence level is as important as the preparation itself. To cool the nerves remember that you have studied hard and given your best shot. After this it does not matter whether you pass or fail.
• Try to go to sleep early. I had insomnia problems on this day on almost all three levels and as a result on the exam day I felt weak. If you see any such problems take a sleeping pill on the night before the exam.
• Check your admit card, pencils, eraser, pen, passport, calculator. Check your calculator settings and go through the important functions in your calculator. If you can borrow an extra calculator then borrow one for emergency purpose. Also carry batteries and screwdriver.
• Go through the formula sheet quickly. See if you correctly remember the notations and symbols used in the formula.

Exam day  
• Wake up early in the morning and take a shower. Go to the venue as early as possible. Do not try to study just before the exam. You can off course take a look at the formulas.
• When the exam starts, go to your favorite topic and start answering. THERE IS ONE GOLDEN RULE I FOLLOWED. IF I COULD NOT ANSWER A QUESTION ON THE FIRST ATTEMPT I SKIPPED IT. I GOT BACK TO THEM LATER ON. Please do not waste time on any questions. All questions carry the same marks. However some of them can make you lose a lot of valuable time. TIME MANAGEMENT IS ESSENTIAL IN ALL 3 levels.
• Read all the questions carefully and understand what is being asked. The worst thing that can happen is failing due to silly mistakes.
• If the AM session feels exceedingly hard do not lose hope. In that case PM will be easier. I remember coming out of the Level 2 AM session with the feeling that I will surely fail. However the PM was much easier and I actually scored >70% in 9 segments and between 50-70 in 1 segment.
• While filling out answer boxes please make sure you are answering the correct question. A mistake in answering sequence could change your grade absolutely.
• Even if you have finished the exam with 1 hour extra please recheck all the answers.
• Fill out answers for each and every question as there is no negative marking.

CFA Exam Level 1
• In level 1 you just need to go through the entire syllabus. The actual exam is usually quite easy and has more focus on theoretical questions. The quantitative questions are also quite simple.
• Normally, you would not even have to think for many of the questions. Also, some of the quantitative questions can be answered without even calculating anything.
• Focus on the ethics segment which is very crucial.
• Overall you can expect to finish both AM and PM within 2.5 hrs. But like I mentioned earlier, please use the whole time and recheck.

CFA Exam Level 2
• Level 2 has the largest syllabus, highest number of formulas and much tougher study material compared to level 1.
• Even though the focus is on asset valuation and FSA, I found derivatives to be quite complicated. In fact, I probably had to read the derivatives chapter 3-4 times to get the basic essence of it. In spite of that, I found the actual derivative questions to be exceedingly difficult.
• Unlike level 1, the portion of quantitative questions is larger. Also the questions are not that straight forward. CFAI throws some curveballs from time to time. After reading a particular vignette the questions might look absolutely alien to you. Use your common sense in answering in those times.
• Put strong emphasis on formulas. Also notice whether questions states annual, quarterly or monthly compounding etc. These can be tricky while doing Swaps, Forward Rate Arrangements etc.

CFA Exam Level 3
• Level 3 syllabus is slightly smaller than level 2. It is not as difficult as level 2 to understand but the trick is to apply the knowledge in the actual exam.
• To pass level 3 the candidate must know the concepts like the back of his/her hand. Even the simplest topic can be made very difficult by structuring the question in an obscure manner.
• The key to succeeding in level 3 largely depends on managing time for the AM (written) section. I would recommend that candidates practice as many AM sessions as possible. CFAI website has a lot of such practice exams.
• Just because AM was difficult do not expect PM to be much easier. Some questions had a lot of curve-balls which many candidates did not even realize existed. However it is easier to score more in the PM compared to the AM section.

Final Words
Give your best shot and study as hard as possible. However, success or failure also has a bit of luck in it. Know that you can pretty much pass if you get 70% on average. So even if you get 50% of the questions right, eliminate one wrong answer on 25% of the questions and blindly guess the rest 25% you can score about 70.75% statistically. Also the pass marks for level 3 is definitely set at a lower level. The CFA Charter is a wonderful accomplishment and visualizing about the certificate helps keep motivation up.

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