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Level III CFA Exam Structure

Exam Structure and Duration

NEW IN FEBRUARY 2023: The following exam format changes will take immediate effect beginning with the February Level III exam.

• Constructed response (essay) questions mixed into both exam sessions: Previously, the first session was all essay sets and the second session was all item sets. Each session will now have either 6 item sets and 5 essay sets or 5 item sets and 6 essay sets. The mixed distribution of item types across the two exam sessions will create a more-balanced delivery of questions throughout the exam. Overall the Level III exam will still contain 11 essay sets and 11 item sets for 12 points each.

• Highlighting functionality available within the vignette: Candidates now have the ability to highlight pertinent text within the vignette for each question. Previously, this functionality was limited to the question itself and not the supporting vignette.

• Math editor function removed: Previously, candidates had the option to use a built-in math editor to describe calculation steps or show values for essay questions. This functionality has caused some confusion in the past and has now been removed. An essay text box will accept typed words and numbers. A correct numerical value typed in the essay box by itself receives full credit – formulas and explanations are not required. If you choose to do so, you may describe steps used in the calculation by typing out variables in an equation using normal keyboard strokes.

Structure: The Level III exam consists of item sets comprised of vignettes with accompanying multiple-choice items and constructed response (essay) questions.

All questions must be answered based on the information in the vignette. Hence, the items are not free-standing, as in the CFA Level I exam. You will need to refer to the vignette before answering each item.

The CFA® Program curriculum topic areas for Level III will be randomly placed on the exam. All topics may be covered in either the first or second sessions, and possibly both sessions. Each vignette will begin with a statement of the topic and total point value. For example:

TOPIC: ECONOMICS
TOTAL POINT VALUE OF THIS QUESTION SET IS 12 POINTS

Since Portfolio Management and Wealth Planning represents 35%-40% of the exam, further detail on the topic is provided:

  • The title will include the following sub-topic distinctions:
    • Portfolio Management – Behavioral Finance
    • Portfolio Management – Private Wealth
    • Portfolio Management – Institutional
    • Portfolio Management – Asset Allocation
    • Portfolio Management – Trading
    • Portfolio Management – Performance Evaluation
    • Portfolio Management – Investment Manager Selection

  • For results reporting, topics are grouped into two sub-topic groupings:
    • PM - Behavioral Finance; Private Wealth; and Institutional (15%-25%)
    • PM - Asset Allocation; Trading; Performance Evaluation; and Investment Manager Selection (10%-20%)

Duration: The Level III exam will be 4 hours and 24 minutes, split into two equal sessions of 2 hours and 12 minutes, with an optional break in-between. 

During the normal course of the exam, candidates may find they need assistance from proctors. Proctors will come to workstations as quickly as possible to assist. If able, we encourage candidates to continue working on their exam until a proctor has assisted. Our exam writers have designed the exam to account for minor disruptions or pauses in order for candidates to still have adequate time to respond to all questions.

Learn how hardware/software at the test centers may impact your exam-day experience.

CFA Level III Exam Question Format

Constructed Response (Essay) Format

The vignette-supported essay sets have items with three different methods of entering a response: essay, numerical entry, multiple choice. 

  • Essay questions
  • In the question stem, command words will be used and will be bolded.
  • A text box is available for the response.
  • If more than one answer is requested, (for example, “Explain, with two reasons…”), the following note is included: 
    “Provide each response in a separate paragraph”. 
    Bullet points are acceptable, as well. An important message to note – when asked to provide more than one response, the responses will be evaluated up to the number requested, and in the order presented by the candidate. Anything more than the number requested will not be evaluated.
  • A calculation could be presented as an essay or a numerical entry.
  • An essay text box will accept typed words and numbers. Note that a correct numerical value typed in the essay box by itself receives full credit – formulas and explanations are not required. If a candidate chooses to do so, they may describe steps used in the calculation or show values using either a math editor function or typing out variables in an equation.
  • A numerical entry response box will only accept numbers, commas and a decimal point. There is no room to show work. A question may contain a note with specific guidance on how to format the answer, such as: 
    Provide your answer as a percentage, rounded to one decimal place. 
    10.8 %
  • A multiple-choice question format may occasionally be used in the essay portion of the exam and it is possible that there may be more or less than 3 answer choices.
  • Essay set vignettes will begin with a statement of the topic and total point value, for example:

    • TOPIC: ECONOMICS

    TOTAL POINT VALUE OF THIS QUESTION SET IS 12 POINTS

Each essay set will have variable number of items, and each one is worth a variable-number points. Points per item are not disclosed.

Important Information on Essay Question Structure

There may be multiple questions within one essay item. It is important to understand how many answers a candidate is expected to provide. Three examples are presented:

Example 1

Determine which bond best meets the advisor’s objective.

(Bond X, Bond Y, Bond Z)

Justify your response.

For this question, a candidate is expected to type two answers in the response box: the name of the bond that best meets the objective, and a reason why it meets the objective.

Example 2

Determine, based on the client’s IPS, the most appropriate index to use as a benchmark.

(Index 1, Index 2, Index 3)

Explain why the other two indices are less appropriate.

Note: Each explanation should be in a separate paragraph.

For this question, a candidate is expected to type three answers in the response box: the name of the index that is appropriate, and a reason why the two not selected are less appropriate.

Example 3

Discuss one weakness in the risk management process for each of the following:

  1. Company A
  2. Company B

Note: Each discussion should be in a separate paragraph.

For this question, a candidate is expected to type two answers in the response box: a discussion of the weakness for Company A and a separate discussion of the weakness for Company B.

Item Set Format

Each item set on the Level III exam consists of a vignette followed by 4 multiple-choice questions. The 44 multiple choice items are each worth 3 points.

  • Item set vignettes will begin with a statement of the topic and total point value, for example:

    • TOPIC: QUANTITATIVE METHODS

    TOTAL POINT VALUE OF THIS QUESTION SET IS 12 POINTS

CFA Level III Exam Tips

  • Exam questions referring to Financial Statement Analysis are based on International Financial Reporting Standards (IFRS) unless otherwise specified. When a question is based on US GAAP, it will be stated in the question.
  • Be comfortable with your calculator. Make sure you know how to use the calculator features needed to address the learning outcome statements (LOS).
  • Answer all questions. There is no penalty for incorrect answers.
  • Take a mock exam in the Learning EcoSystem to practice answering exam questions.
  • Familiarize yourself with the software features of the exam in this software tutorial.
  • Learn how hardware/software at the test centers may impact your exam-day experience.
  • Dress comfortably. There is no dress code, but dress in layers for comfort.
  • Review the CFA exam calendar for key dates and to meet pre-exam deadlines.

Example Level III Exam Questions

Below is a link to examples of Level III item set questions.