Tips for passing CFA® Program Level II exam
We often hear from candidates that CFA Program’s Level II is the most difficult level in the three-exam series.
It is true that studying for CFA Level II is a different beast than Level I. While Level I is about breadth and memorizing definitions, Level II is about depth and application. You aren't just learning what a tool is, you’re learning how to use it to value a complex company.
Here is a strategic roadmap to help you navigate CFA Program Level II.
Learn from other candidates
A good place to start is with advice from other candidates. When we asked them to vote online for their most useful pieces of study advice, nearly all of those who did picked either “consistent study hours” or “take practice questions”.
If you’re struggling to schedule your study, you may find it helpful to allocate consistent study hours and then build the rest of your commitments around them. That way you know you have your study plan under control, but can still deal with everything else – after all, life doesn’t stop just because you are studying. You might also find that studying smaller amounts on a regular basis helps you retain more information than trying to cover big chunks of the curriculum in occasional long sessions.
Master the "Big Five" topics
The Level II exam is more evenly weighted than Level I, but five topics typically carry the most weight (10–15% each). Mastering these is non-negotiable, as they can make up 60% of your exam.
That said, don't skip the "small" topics like Derivatives or Alternatives. Even a "small" topic can still show up as two full vignettes (8–12 questions), which can sink your score if you ignored them.
| Topic | Strategic Focus |
|---|---|
| Equity Valuation | The heart of Level II. Focus on DDM, FCF, and Multiples. |
| FSA (Financial Statement Analysis) | Hardest for many. Focus on Intercorporate Investments and Pensions. |
| Fixed Income | Highly technical. Master credit analysis and bond valuation with embedded options. |
| Portfolio Management | Focus on the integration of various asset classes and risk management. |
| Ethics | Same GIPS and Standards as Level I, but the vignettes are much trickier. |
Transition to "Vignette Thinking"
Unlike CFA Program Level I standard “learn and describe” multiple-choice questions, Level II uses Item Sets (Vignettes). You are provided with a 1–2 page case study followed by 4 or 6 questions.
It’s important to read the whole vignette first and then read the questions.
After you read the first question, go back and find the relevant paragraph in the vignette. Usually, the questions follow the chronological order of the text.
Passive reading doesn’t work at this level.
Because the material is more complex and requires you to apply it, "passive reading" won't work.
- Active Learning: For every hour you spend reading, spend at least 30 minutes studying examples and End-of-Reading (EOC) questions.
- It’s all about the math: Create a formula sheet early and make sure you are good friends with your calculator. Level II is math-heavy, and you don’t want to be memorizing the Black-Scholes or Pension equations in the final week.
Extra tools can help
- Prep Providers: Exam prep providers can be a valuable supplement to your studies. Each provider may offer different prep courses and may operate on different schedules.
- The Learning Ecosystem: Don’t ignore the CFA Institute’s own portal. Their practice questions and mock exams are the closest you will get to the actual exam's "vibe."
- Practice Pack: An optional paid add-on to the Learning Ecosystem, providing extra practice questions and mock exams, including one Prometric mock exam to simulate the exam-day experience. All questions are written by the same test writers as those on the actual CFA exam.
Final Review
Reserve the last 4–6 weeks exclusively for review and Mock Exams.
- Mocks are for stamina, not just scores. The Level II exam is mentally draining. You need to practice sitting for 4.5 hours of intense vignettes and learn time management to adjust your pace to the exam format. Strive to complete 6-10 full mock exams.
- Target Score: Aim for 70%+ on mocks. If you’re hitting 60%, don’t panic. Go back and flag weak areas and re-drill them.
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