Employment of cfa institute Members



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CFA Program

  • Dr. Greg Filbeck, CFA, FRM, CAIA
  • Samuel P. Black III Professor of Finance and Risk Management
  • Penn State Behrend

Employment of CFA Institute Members

CFA Exam Preparation

  • Average Hours Spent Studying for the exam – 307
    • Level 1: 283 hours
    • Level 2: 313 hours
    • Level 3: 324 hours
  • Based on Assigned Readings
  • Oriented to Learning Outcome Statements

CFA Candidate Growth

  • 1963 284
  • 1973 2,000
  • 1983 6,000
  • 1993 19,000
  • 1998 60,000
  • 2003 104,000
  • 2013/4 211,000

The CFA Program is a Rigorous Undertaking

Pass Rates

  • 2014 pass rates
    • Level 1: 42% (December 2013 – 43%)
    • Level 2: 46%
    • Level 3: 54%
  • 148,927 candidates (plus over 62,000 in December 2013)
  • 179 countries exam sites worldwide
  • 25% no-show rate

CFA® Candidate Preparation – What Defines Success?

  • Non-CFA Institute Study Notes (89%)
  • Non-CFA Institute Review Course (87%)
  • Topic-based practice tests (86%)
  • CFA Program end-of-reading problems (85%)
  • CFA Institute Free Mock Exam (85%)
  • Non-CFA Institute practice exams (83%)
  • CFA Program Curriculum (81%)

Hardest Topics

  • Fixed Income (75%)
  • Derivatives (73%)
  • Portfolio Management (70%)
  • Alternative Investments (66%)
  • Economics (65%)
  • Financial Reporting (65%)
  • Registering for the CFA Program June 2015 Examination
  • 24 September 2013 First Deadline
  • 18 February 2014 Second Deadline
  • 18 March 2014 Final Deadline
  • Approximate Costs for New Level I Candidates
  • Enrollment fee to enter CFA Program US $450
  • Registration fee for Level I examination US $825 Shipping cost (study material) Total Costs by 2nd deadline US $1,275
  • Total Costs by 2nd deadline US $1,275
  • Total Costs by the final deadline US $1,660

Exam Tips for All Levels

    • Don’t get caught in the Question Trap
    • The CFA® exam is different than most examinations you have taken in your life…

CFA Program Candidate Body of Knowledge™

CFA Level 1 Exam

  • Focus: Tools and concepts that apply to investment valuation and portfolio management; basic concepts regarding asset classes, securities, and markets; Ethics
  • Exam:
    • 120 Multiple Choice Questions Morning
    • 120 Multiple Choice Questions Afternoon
    • 3 hours per session
    • 90 seconds per question

Exam Tips for Level 1

    • Examination Weights
    • 15% Ethics (SS 1)
    • 12% Quantitative Methods (SS 2 – 3 )
    • 10% Economics (SS 4 – 6)
    • 20% Financial Reporting and Analysis (SS 7 – 10)
    • 7% Corporate Finance (SS 11)
    • 7% Portfolio Management (SS 12)
    • 10% Equity (SS 13 – 14)
    • 10% Fixed Income (SS 15 – 16)
    • 5% Derivatives (SS 17)
    • 4% Alternative Investments (SS 18)

Level 1 Question Format

  • According to the CFA Institute, each item on the Level 1 Examination consists of a stem (question, statement, and/or table) and three distracters, A, B, and C. There are three basic formats used:
    • Stems using sentence completion with three unique distracters;
    • Stems phrased as questions with three unique distracters.
  • Source: CFA Institute

Other Level 1 Facts

  • The Level I CFA exam does not use except, true, or false in item stems and avoids the use of not in item stems whenever possible.
  • When appropriate, stems will include one of the following qualifiers: most likely, least likely, best described, most appropriate, most accurate, least appropriate, or least accurate.
  • Each stem supports only one item on the examination.
  • Source: CFA Institute

Level 1 Exam

  • The Level 1 CFA® Examination does not use any of the following distracters: (1) all of the above, (2) none of the above, (3) Type K questions, (4) not enough information/can’t do.
  • Distracters consisting of words or sentences are typically ordered from shortest to longest; distracters that are quantitative are ordered from the smallest number to largest number.
  • The distracters agree grammatically with the stem; language common to all distracters is placed in the stem.
  • Source: CFA Institute

Questions

  • Each item is linked to one or more Learning Outcome Statements (LOS).
  • Language, terminology, and symbols used in the items are consistent with the LOS and the candidate readings.
  • In the ethics section of the Level 1 CFA® Examination, candidates are not required to know the number associated with a particular Standard.
  • Empirical findings are not tested.
  • Source: CFA Institute

CFA Level 2 Exam

  • Focus: Application of tools and concepts of investment valuation; Industry and company analysis; Analysis of investment vehicles and instruments; Ethics
  • Exam:
    • Morning: 60 Multiple Choice Questions in Item Sets of 6 questions per set
    • Afternoon: 60 Multiple Choice Questions in Item Sets of 6 questions per set
    • 3 hours per session
    • 180 seconds per item set question

Exam Tips for Level 2

    • Examination Weights
    • 10-15% Ethics and Professional Standards (SS 1 – 2)
    • 5-10% Quantitative Methods (SS 3)
    • 5-10% Economics (SS 4)
    • 15-20% Financial Reporting and Analysis (SS 5 – 7)
    • 5-15% Corporate Finance (SS 8 – 9)
    • 15-25% Equity (SS 10 – 12)
    • 5-10% Alternative Investments (SS 13)
    • 10-20% Fixed Income (SS 14 – 15)
    • 5-15% Derivatives (SS 16 – 17)
    • 5-10% Portfolio Management (SS 18)

Item Sets

  • The length of a vignette ranges from about 1 page to 2.5 pages.
  • The longer vignettes are those that include several tables of information, such as for a financial statement analysis, statistics, or fixed-income item set.
  • The average length of the vignettes on the exam is about 1.5 pages.
  • Source: CFA Institute

Item Set Details

  • About 35% of items involve a calculation, and none may be calculation intensive.
  • Some item sets have no calculations, and some have as many as 3-4 items that require calculations.
  • However, the breadth of application is large, and analytical (non-numerical) questions still require considerable quantitative skill and judgment.
  • Source: CFA Institute

CFA Level 3 Exam

  • Focus: Management of institutional and
  • individual portfolios; Management of specific asset class portfolios; Ethics
  • Exam:
    • Morning: Written Problems and Essays
    • Afternoon: 60 Multiple Choice Questions in Item Sets of 6 Questions per set
    • 3 hours per session
    • 180 seconds per item set question

Exam Tips for Level 3

    • Examination Weights
    • 10-15% Ethics
    • 5-15% Economics
    • 5-15% Equity
    • 10-20% Fixed Income
    • 5-15% Derivatives
    • 5-15% Alternative Investments
    • 40-55% Portfolio Management and Wealth Planning

Problems at Level 3

  • Not responsive to command word list (list, define, etc.)
  • Answered a question they wish they had been asked instead of the question that was asked.
  • No work shown on a calculation question and the answer is incorrect.
  • Hedged on questions that asked for a recommendation and justification (e.g., recommended A, but justified B).
  • Source: CFA Institute

Problems at Level 3

  • Neglected to answer part of the question (especially if a several part question). Note that you can still answer part E, even if you do not know the answer to part D.
  • Content area experts spent too much time on their area of expertise, leaving too little time for weak areas.
  • Providing more items or responses than requested. If a question asks for three factors, only the first three that you list will be graded.

Final Thoughts

  • Expect the unexpected on exam day
  •    Study whenever and wherever you can.
  •    Try to study a bit each day, even if it is only for an hour.
  • Remember why you’re doing this (to expand your knowledge and advance your career)
  • Stay Focused—develop a study program and stick to it...

Final Thoughts

  • Identify those topics you’re weakest in and study them hard. Objective: to get as many points as you can in these areas.
  • Work on your weakest area first—that way you can’t procrastinate on this area.
  • Identify those topics you’re strongest in and study them hard, too. Objective: to generate excess returns that can be used to offset some of the points you may lose in other parts of the exam.

Final Thoughts

  • Don’t forget to study your strong areas. You don’t want to lose those points.
  • Don’t Get Frustrated when you come across something in your study program that you just don’t understand.
  • Focus on the big picture; don’t get bogged down in minutia. If you understand the larger issues, the smaller ones usually take care of themselves.       

Final Thoughts

  • Know thyself. Know how you learn and choose an approach that fits your learning style.
  • Assume that you will not be able to study the two weeks prior to the exam.

CFA® Charter Requirements

  • Pass Level 1, 2, and 3 Exams in Sequence
  • Four Years of Acceptable Work Experience
  • Professional References (Level 3)
  • Join CFA Institute
  • Annual Professional Conduct Statement
  • Source: CFA Institute

Exam Design Based on Practice

  • Job analysis survey every 5 years asks, “What knowledge and skills are needed by an investment professional?”
  • Survey results are used to define the Candidate Body of Knowledge, the CFA® Curriculum, the Learning Outcome Statements (LOS) and to write the CFA® Exams.
  • Source: CFA Institute

Congratulations!

  • You’re embarking on an incredible journey!
  • The pursuit of the CFA® designation is a challenging goal.
  • You will discover that the process is…
  • A triathlon, not a walk in the park
  • Difficult by design
  • A life-changing experience



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