The Ten Commandments for CFA Level II
Again, as per the Level I commandments, the Level II commandments are the result of experience - lots and lots of it. Study it carefully and you will have leap-frogged over a chunk of Level II candidates already in terms of preparedness, even before you begin revising. Exam-day tips will also may make the difference between a pass and a fail.
Here are the top 10 things you should know and adhere to as a Level II candidate.
#1 - This is Not the Same as Level I.
Not only it is not, but most candidates that have taken the Level II exam comment about how disproportionately tougher Level II is compared to Level I. I believe this is the main fallacy of candidates who end up not passing - by taking the exam lightly (and by lightly I mean assuming the level of effort you committed to Level I would be enough) and not realising their mistake until it is too late in the preparation process. There is a huge amount of material to cover and you need to be more prepared than before.
#2 - Start Earlier.
#3 - Basics of Level I Will Be Needed.
Many concepts in Level II build on basics that are outlined in Level I, so having a good grounding in Level I helps. Some study materials (e.g. Schweser) include a Level I refresher booklet specifically for this purpose - I recommend hanging on to that. If not, a condensed version of Level I notes (such as Schweser's Secret Sauce or Elan's Eleventh Hour) would work as well.
#4 - Item-Set Rule I - Understand the Item-Set Format.
Less questions is better, right? Not necessarily.
Although you will have twice as much time per question compared to Level I, reading through the vignette will take a lot of time. The vignette will have significant amounts of redundant information carefully inserted in, designed to confuse the candidate and will take up additional time to sift through. But with practice you can learn to size up the whole item-set as a whole and quickly discard irrelevant information. Reading through the questions first before the vignette helps massively.
#5 - Item-Set Rule II - Questions Can, and Will Be Harder.
#6 - Item-Set Rule III - It's Better to be a Know-It-All.
Summing up item-sets - they are a new set of beasts that are best understood earlier in the process than later. Spend some time getting to know the format as you're ploughing through the notes and thank me later.
#7 - Know Your Topic Weightings.
- Ethics - 10%
- Investment Tools (Corp Fin, Econs, FRA, Quant) - 30%-60%
- Asset Classes (Alt Invs, Derivatives, Equity, F.Income) - 35%-75%
- Portfolio Mgmt and Wealth Planning - 5%-15%
This is helpful, but much more meaningful when viewed in the context of potential item-sets:
- Ethics - 2 item-sets
- Investment Tools (Corp Fin, Econs, FRA, Quant) - 6-12 item-sets
- Asset Classes (Alt Invs, Derivatives, Equity, F.Income) - 7-15 item-sets
- Portfolio Mgmt and Wealth Planning - 1-3 item-sets
This means that Investment Tools and Asset Classes will be the ones to beat here. Opinions on the tough ones to beat vary so evaluate them for yourself, but the topics with most weightings within them are FRA and Equity so make sure you put effort into nailing them - together they can account for more than half the exam.
#8 - Don't Be Shy.
#9 - The Commandments From Level I Will Apply.
#10 - Venture Forth and Kick-Ass.
Level II is the traditional phase where candidates despair - on one hand they've passed Level I and don't want to waste that effort, but on the other hand they have 2 more exams to go, and in the middle of reputedly the toughest at that. Despairing is common, but not all that useful.
Know this - the pass rates for Level II are generally higher than Level I, so assuming you've done your best to prepare, you should have a higher chance at passing. So don't despair, and continue being awesome.