CFA Level 2 Exam Weights, Study Plan, Tips, Pass Rates, Fees

CFA Level 2 Exam Weights, Study Plan, Tips, Pass Rates, Fees – If you’re looking at CFA level 2 exam prep tips, it can be assumed that you have already completed your CFA Level 1 course. First of all, congratulations and good luck for CFA Level 2! Now, let’s look at CFA Level 2 and attempt to pass it out with similar intensity or even more. CFA Level 2 exam is considered to be the toughest of the three levels of CFA examination.

This is a comprehensive guide which will help you know the foundation of what you can expect from CFA Level 2 exam. We will cover syllabus, study plan / tips, pass rates and results to get you started. Read slowly, understand everything as you go along and let this article be your first step of preparation.

Without any ado, let’s begin.


Also, checkout Complete Guide to CFA Exam

About CFA Level 2 Exam

Exam CFA Level 2 Exam
Fees Standard registration fee
US$930 (ends 15 February, 2017)
Core Areas Ethics, Quantitative Methods, Economics, Financial Reporting and Analysis, Corporate Finance, Equity Investments, Fixed Income, Derivatives, Alternative Investments, Portfolio Management and Wealth Planning
CFA® Exam Dates CFA® Level 2 is conducted once a year (1st Week of June)
The Deal CFA Level 2 is a full day six-hour examination. Candidates must pass CFA Level 1 before advancing to CFA Level 2 level, but are permitted to repeat an examination if they fail to pass.
Format Item Set / Mini Case Studies
Number of Questions 120 Questions.
20 Item Sets with 6 Multiple Choice Questions  Each
Morning Session – 10 Item Sets
Afternoon Session – 10 Item Sets
Pass Rate 46% in June 2016
Recommended Study Hours A minimum of 300 hours of preparation for CFA Level 2 is recommended.
What next? After you pass CFA Level 2, you can appear for the final CFA Level 3. Once you clear CFA Level 3, you are entitled for the CFA Charter (provided you have the requisitie professional work experience)
Eligibility for CFA Charter You must have one of the following:
Bachelor’s (or equivalent) degree
Be in the final year of bachelor’s degree program
Have four years professional work experience
Have a combination of professional work and university experience that totals at least four years
Official Website

CFA Level 2 Exam Weights / Syllabus

The syllabus of CFA Level 2 is quite comprehensive. In this section, we will look at each subject, their CFA Level 2 exam weights and how you should approach each subject as you start your preparation.


source: CFA Institute

If you observe carefully, you would see that in CFA Level 2, the weightage is given to each subject in almost similar propensity (not exactly). In Level 1 and Level 3, the intensity differs according to subjects (even few subjects you can skip), but in CFA Level 2, you need to study all the subjects.

Ethics and Professional Standards – 10 – 15% weight

Ethics for me was one of the most challenging topics. Since i did not score well in CFA Level 1 in ethics section, i was determined to spend more time on this section. My take would be to check how your score was in CFA Level 1. If you have scored more than 70%, then you already have an excellent foundation. However, if you score lower then please do spend a good amount of time on this section. Please do not forget that Ethics section comes again in CFA level 3.

Quantitative Methods – 5-10%

Do not neglect Quantitative Methods. You may get 1 to 2 vignettes from this section. For me, quantitative methods was again one of the strongest sections and I preferred to complete these set of questions before attempting other difficult sections. Quantitative methods is both formula as well as concept oriented. If you are from an engineering/maths background, then you should not face much issues here. Others, please do take time to practice this section.

Economics – 10%

Expect 2 vignettes from this economics section. Topics included here are Exchange rate determination and forecast, economic growth and regulation, Macro vs Micro economics. Unfortunately, this section was one of my weaker sections. I read this section twice and practiced as many questions as i could

Financial Reporting and Analysis – 15-20%

I loved this Financial Statement Analysis section. By far for me it was easiest and most interesting one. I must say that this section is hardest as well, particularly if you are from a non-accounting background. CFA Level 2 financial reporting goes deep into individual concepts so please do take time to practice as many questions as possible. For me, it was the end of the chapter questions from CFA Institute Books that did the trick.

Corporate Finance – 5-15%

Here you can expect 1-2 vignettes. Topics include  Capital Budgeting, Capital Structure, Dividends and Share Repurchase, Corporate Governance, Mergers and Acquisitions and Corporate Performance. I found this section closely aligned to the Financial Reporting and Analysis. My take is that this is a low hanging fruit. You should master this concept to score well in CFA Level 2 exam.

Equity Investments – 15-25%

This along with Financial Reporting and Analysis are one of the foundation level sections of CFA level 2. Topics include Industry Analysis and Company Analysis, Dividend Discount Valuation Model, Free Cash Flow to Firm, Free Cash Flow to Equity, Market based Equity Multiple and Enterprise Valuation Multiples and Residual Income Valuation Method. You must master this one! Trust me, this one is easy too! 

Fixed Income – 10-20%

You can expect 2-3 vignettes from the Fixed Income section. This one is the favorite of those who are good at Quantitative Analysis. Topics include term structure, future forward, yields, swaps, arbitrage free valuation framework, valuation of bonds, embedded options, credit analysis models, credit default swaps etc. Many candidates find this part to be difficult. So, please start with the basic foundation of the topic and practice the questions as much as possible.

Derivatives 5-15%

Expect 1-2 vignettes from Derivatives Section. Topics here include pricing of forwards commitments, contingent claims, options trading strategies etc.  This one again is the favorite topic of Quant oriented guys. There are various formulas here, however, you need to get through the basic foundations first. Also, make sure to practice these questions using your CFA Calculator.

Alternative Investments – 5-10%

Expect 1-2 vignettes during your CFA level 2 exam. Here the important topics include Real Estate Investments, Private Equity Valuations, Commodities and Commodities derivatives. This topic is more of conceptual in nature with some numerical. Do not avoid this section as it may become a deal breaker.

Portfolio Management and Wealth Planning 5-10%

Expect 1-2 vignettes from Portfolio and Wealth management. This one can be very easy or difficult at the same time. Do read the topics very carefully. It includes portfolio management process, investment policy statements, multifactor models, VAR, Economic analysis, Active management and trading. Do spend time in learning the Investment Policy Statements as this is the very foundation of the most important topic found in CFA level 3.

CFA Level 2 Pass Rates

It’s important to study well. However, knowing the pass rates beforehand will help you intensify your preparation. In this section, we will look at huge data. From 1963 to 2016, we will investigate all the data and find out how easy CFA Level 2 really is.

CFA Level 2 Passing Rates between 1964-1981

The passing rates for CFA Level 2 was very high in the initial years. Between 1964-1981, the average passing rate for CFA Level 2 was at 78%.

CFA Level 2 Results 1964 - 1981

source: CFA Institute

CFA Level 2 Passing Rates between 1982-2000

Between 1982-2000, the average passing rate for CFA Level 2 dropped from 78% from the earlier period to 64%.

However, do not the rise in the total number of CFA Level 2 candidates. The number of candidates appearing for CFA Level 2 increased dramatically during this level 2 results 1982 2000

source: CFA Institute

CFA Level 2 Passing Rates between 2001-2016

  • Between 2000-2016, the average passing rate for CFA Level 2 dropped further from earlier periods to 44%.
  • In June, 2016 the passing rate for CFA level 2 was at 46%.
  • Also, you may note that the total number of candidates appearing for CFA Level 2 steadily increased during this 15 year period.

cfa level 2 results 2001-2016

source: CFA Institute

As you can see the intensity of CFA Level 2, you need to study really hard. Buckle up and start preparing.

CFA Level 2 Exam Format Key Highlights

Before we go ahead and talk about study tips, have a look at the format of the exam so that you can prepare yourself accordingly.

Unlike CFA Level 1 exam, in CFA Level 2, you need to understand each concept in depth so that you can answer vigenettes (mini-cases) easily.

Exam CFA Level 2
Number of questions (total) 120
Type of question Vignettes (Mini-cases)
Time alloted 360 minutes
Full marks 360 points
Every correct answer 3 points
Every incorrect answer No penalty
Sessions 2 (Morning & Afternoon)
Set of questions in each session 10
In each questions, numbers of vignettes 6

source: CFA Institute

  • In the morning session, there would be 10 item set questions, each set containing 6 vignettes.
  • In the afternoon session as well, you need to answer 10 item set questions containing the same 6 vignettes.
  • There will be total 360 points for the whole exam. You would be given 3 points for each correct answer and there is no penalty for any incorrect answer. The time period is of 360 minutes (6 hours) for the whole exam.
  • The major change in the pattern is that there are 10 item set (each around 400-800 words) with six multiple choice questions in each session (Morning & Afternoon Session). These six questions may be dependent or independent on each other.
  • Each item set question covers only one study session (FSA, Ethics, Portfolio) which makes it a bit easier to solve the vignette.

CFA Level 2 Study Plan / Prep Tips

If you have just passed CFA Level 1 and are thinking that you will definitely crack CFA Level 2 exam in one go, then you may have judged the difficulty level of CFA Level 2 exam by the number of questions. While the number of questions in CFA Level 2 exam are certainly lesser, but the difficulty level of the exam is much more than CFA Level 1.

Here are the few things you need to keep in mind if you want to crack CFA Level 2 exam in one go

CFA Level 2 exam is the hardest of all level

  • No, it’s not what we’re saying. Rather it’s being said by the professionals who have already passed CFA. They said that by any means CFA Level 2 exam is the toughest compared to its other two counter-parts.
  • There are few reasons for that. First of all, CFA Level 1 is way too easy for people who are good in finance and have a background in economics and maths.
  • Secondly, when the students are transitioning from Level 1 to Level 2, they’re unable to understand the difficulty level of CFA Level 2 exam until they face the questions in examination hall.
  • Of course, these are generalized statements and don’t include everybody, but still there is truth in these statements. So don’t take CFA Level 2 exam lightly.
  • Also note that now with CFA Level 2, the competition is between serious candidates who have passed Level 1 examination.

You need to double your preparation time:

  • If you have studied 2-3 hours a day for CFA Level 1 exam, you need to double that amount every day if you want to pass CFA Level 2 exam.
  • And you need much more depth in comprehending the concepts than you did in CFA Level 1 exam. Often the vignettes are too direct and you need to answer only one thing without having any chance to elaborate.
  • Plan ahead and have ample time to study the whole curriculum at least 3 times and then you need to practice samples questions so that you don’t feel a certain burst of shock while attempting the vignettes in the examination hall.

Know the weights of the subject (according to item sets):

  • You need to be a know-it-all wizard, yes, we don’t have any doubt about that.
  • But still you need to prioritize and give more weight to the subjects that will act mightier in the item set questions. So you need to know what to expect from which subjects.
  • Four topics – Ethics, Financial Reporting & Analysis, Equity Investment and Fixed Income represent approx. 50%-80% of the weightage.

cfa-level-2-exam-tips-focus-areaBasics of CFA Level 1 would be required

  • CFA is a dynamic course and every level is intertwined with each other.
  • So if you want to make your mark in CFA Level 2 exam, then you need to thorough with the foundation concepts of CFA Level 1.
  • You may also need to go back and understand few concepts in CFA Level 1 exam.

Give special attention on distribution of time:

  • Vignette type questions take more time to answer than any multiple choice type questions.
  • Thus, you need to practice a lot more before you ever get to answer everything in the examination hall perfectly. In the final section, we will talk about sample questions so that you can get an idea about what to expect in the question paper.
  • But practicing sample questions are must, otherwise, it would be difficult for you to clear CFA Level 2 exam in one go. 

Should you read the Vignette first or read the questions first?

  • Many candidates prefer to read the questions first so that they understand the kind of questions expected from the vignette (numerical, conceptual, factual) and then they read the case study. I have personally never tried this approach.
  • My approach was straight forward, i used to read the vignette real quick and then the question. For answering the questions, anyways, you will have to refer back to vignettes time and again.

Try to Score more than 70% in each section

  • CFA does not provide individual section passing scores.
  • However, it is safe to assume that if you get more than 70% in each section, you will not fail.
  • As a strategy, i used to pick sections where I was strongest sections. My best section was the Financial Reporting and Analysis.
  • Picking the strongest helps you build confidence during the exam and also help you save valuable time that can be used for attempting the weaker sections.

CFA Level 2 Exam Fees

It’s important to know how much you need to pay for CFA Level 2 exam. Let’s have a look at that first. As you have passed out from CFA Level 1 exam, you have already paid the enrollment fees. Here are the details of June 2017 exam, if you want to sit for CFA Level 2 exam.


source: CFA Institute

When you pay the exam registration fees, you would be receiving the following things –

  • The eBook which contains everything that you need to study for the exam (the complete curriculum to be precise).
  • You will receive a study planner which will help you track your exam preparation and will guide you to be ahead of time.
  • You will also get topic based practice tests.
  • You will also get mock exams.
  • And finally, you would receive a mobile app which will help you access everything else mentioned above.

If you want to purchase a print version of the complete curriculum, you can do so by simply paying non-refundable US $150 plus shipping.

Over to you!

CFA Level 2 exam is hard. And it’s considered the toughest exam in finance by comparing all the courses in finance domain. From the above examples, stats, tips and sample questions, now, you have an idea why CFA Level 2 exam needs all your effort, time and hardwork.

And if you’re working professional, you need to prioritize your schedule in such a way that you get to study every day at least for few hours. It would often be hard and you won’t feel like doing it. But for a year, if you can pursue this schedule, you will certainly see it in your results. Hope this guide has helped you shape your idea of how to start preparing for CFA Level 2 exam. Get started right away. The clock is ticking.

Good Luck :-)

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