The CFA Level 2 exam is built on candidates’ knowledge from Level 1. The Level 2 CFA exam has a higher pass rate, but it doesn’t mean that Level 2 is easier than Level 1. So in this post, I’ll give you an analysis of CFA Level 2 vs Level 1 as well as the Level 2 curriculum, exam grading, and CFA pass rate trends.
The topics in the CFA Level 2 exam should be familiar to Level 1 candidates. For example, both levels test on equity investments, alternative investments, derivatives, and portfolio management, but the weighting of different topic areas change from one level to another. Other areas such as ethics, economics, financial reporting, and quantitative methods also appear on the Level 2 exam.
I have a detailed explanation of the Level 2 syllabus that includes all of the topics you need to know.
Just as with the CFA Level 1 exam, the CFA Level 2 fees depend on when you register. Specifically,the early registration fee is $940 (around 9 months before exam date) and the standard registration fee $1,250 (~2 months before exam date).
For all info related to fee and expenses, check out our CFA cost page.
I’ve heard from a few readers who find Level 1 easy enough, but I’ve never heard such a comment on Level 2. How hard is CFA Level 2 exam, then?
Level 1 focuses on testing your knowledge and understanding of the CFA concepts. The coverage is very broad with 180 multiple-choice questions.
At Level 2, the focus shifts to analysis and application. The Level 2 curriculum has a greater focus on asset valuation rather than the foundation tools taught at Level I.
Some candidates, especially those who breezed through L1, take L2 too lightly. They expect the same amount of study effort is enough for Level 2 and don’t realize until it is too late that they aren’t prepared for the exam.
Some readers have told me that the CFA Level 2 curriculum seems easier to handle than Level 1. I guess this makes sense because Level 2 has fewer new topics, and in some areas, such as ethics, the concepts are mostly the same as in Level 1.
What’s different is the level of detail you will encounter in L2, and this could come as a nasty surprise if people don’t allocate enough time for the practice questions.
Level 2 questions only consist of multiple-choice questions. But unlike Level 1, some of these questions are related to each other.
The CFA exam is presented in the form of “item sets.” The Level 2 exam has 22 item sets; each consists of a vignette (case statement) and accompanying multiple-choice questions. Altogether, Level 2 candidates will have to answer 88 questions. Candidates work on 11 sets in the morning session and 11 in the afternoon session.
The format of multiple choice questions is similar to that in Level 2, but given there are only 88 questions to work on vs 180 questions in Level 1. You can expect the Level 2 questions to be more complex, too.
If you need additional information, we have an entire post dedicated to the CFA item sets.
The CFA Level 2 pass rate has more or less stabilized in the last 10 years. 10-year average is 43%, which is low compared to other professional exams but is a marked improvement from Level 1 pass rate at 39%.
This is because the “casual exam takers” are eliminated in Level 1. Those who can move on to Level 2 are serious about the CFA exam and should have a better knowledge on finance and investment. Having said that, the curriculum is built on your knowledge in Level 1 and therefore, the questions are supposed to be more difficult.
CFA Institute suggests at least 300 hours of studying time for Level 2.
The results of the Level 2 exam is typically released together with Level 1, that is, around 60 days after the exam date. The fastest and most convenient way is to check the score online. However, you will need your candidate ID to check you scores.
Results are kept online for a year. After this date, candidates may request an official letter confirming their result, but their topic area performance summary will no longer be available.
If you took Level 1 before graduation, please note that you have to complete your bachelor’s degree before taking Level 2. This requirement does not apply to those who are qualified to take the CFA exam because of their work experience.
Unlike the Level 1 exam which is offered four times a year, you can only take Level 2 in three times. Therefore, you may want to check the schedule and important dates.
I suggest that you take a good look at the study materials 5-6 months before the exam date. Start with skimming through the entire book, identify your weaker areas, and plan accordingly. It’s great if you know the stuff and can start later; but if you find it tough, you still have enough time to plan and study properly.
This step is especially for those who pass the November Level 1 exam. You’ll only have a few months of prep time after the results are releases.
The weighting is different in Level 2 compared to Level 1. For example, FRA continues to be heavily tested but equities become more important in Level 2.
It’s a crossroad for many: some of you may start to have “exam-fatigue” after a big effort in Level 1, but there are still two more exams to go. Should you hang on, or just give up?
The CFA exam is a marathon. If you haven’t already, identify and stick to a study habit that can be sustainable for at least 18 months, and realistically, for 4 years.
Most candidates have enough time to finish Level 2. Therefore, try to complete each item set as much as you can. Unlike Level 1, you’d need to reread the entire vignette to answer those item sets.