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 – CFA Level 2 Preparation



Fahd Niaz continues with his series on CFA preparation. If you want to see his earlier post please see his guide on CFA L1 preparation





Don’t be surprised if this is your reaction when you start preparing for Level II of the CFA exam. You may get the feeling that the CFA Institute has lured you in with a relatively straightforward Level I and then dropped the hammer on Level II. There is some truth to the popular notion that Level II is the toughest of all three. Personally, I found the course of Level II to be the most demanding, however the paper of Level III was much more brutal (but we’ll get to that later). Candidates will be living in a fool’s paradise if they intend on following a similar studying tactic as Level I (or even choose to throw in an extra 20-30% effort). This can the turning point of the program and it separates the men from the boys.

An IMPORTANT DISCLAIMER before we go ahead – these study methods are based on what I followed and may not be suited for every individual. The aim is to provide an outside advice on how to approach the exams, but the final word rests with you.

To start off, I’ll reiterate my advice that candidates should try not to jump the gun in the first review. Ignorance can indeed be a bliss and sometimes it’s better not knowing what lies ahead. The item set format introduced in Level II takes some time to get used to. While the paper will still be multiple-choice, the number of questions will be half, implying that you’ll need twice the amount of time to attempt one question. I opted to study from the curriculum and in hindsight it turned out to be the right choice. While you can always use Schweser for the CFA exam, I would highly recommend that wherever possible, try leaning more towards the curriculum as Schweser may not go into the same depth as required.

Be prepared to tackle another obstacle relating to the order in which the item sets appear. Gone are the days when you knew which questions (read bazooka) would be fired at you first. The topic weights are in fact ranges, and there is no prescribed order in which the topics will be tested. So if you were planning on ignoring some lower weight areas (like you did with Derivatives or Alternative Investments in Level I), I’d suggest scrapping that idea immediately.

The buzzword for the Level II course is ‘Valuation’. You will be learning to apply many valuation techniques across different asset classes. Equity & Financial Reporting can potentially make up 55% of your total marks. Needless to say that these, along with Ethics, deserve greatest attention. The Code & Standards reappear here, so if you’ve aced them at Level I, that should boost your confidence. Few readings in Financial Reporting & Derivatives may seem repetitive, but they are in much more detail. Fixed Income can be tricky, particularly structured products and their various categories and characteristics. Portfolio Management will start to offer you a glimpse for what awaits you at Level III.

I would suggest writing out the calculations rather than performing them in your head. This will not only train your fingers on the calculator but also save you precious time on the paper as formulas can be complex (particularly Derivatives & Equity). So be ready for some serious number crunching. For remembering the formulas, flash cards always come in handy.

Befriend the practice exams as simple reading is not going to cut it. The volume of content is huge and the only way to retain so much is to constantly exercise your brain muscles to do exactly what you want it to do on exam day. If you’re attempting practice exams in April or so, the score should not worry you as there’s still a window for improvement. The point of attempting ten item-sets over three hours gets you in the groove of having to recall the entire course in one sitting.

There’s a plus point here as well – the more you practice, you can start to visualize a pattern while reading the vignette. You can end up anticipating which type of question will be asked, before reading the question.

Candidates can have a common (and genuine concern) over whether to read the item set first or the questions? Unfortunately, no one can help you there. It’s best to try both ways and see what works for you.

My approach in the last two weeks stays the same – start wrapping up and reduce the study hours as each day progresses. Don’t worry, your brain will not magically forget how to attempt the questions! One final piece of advice – under NO circumstances should you try to GAME the exam. This means that you should not waste your time pondering over which topics/questions can be tested based on some fancy regression model that you may have run or through an in-depth analysis of mock and sample exam patterns. Please refrain from calculating the chances of whether a newly included reading will be tested this year or not.

On exam day, you already know what to expect. I went into the paper blind and came out even more dumbfounded. Majority of the candidates can feel that way, so don’t beat yourself up if you’re in that list.

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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.

• 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.

• 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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