Financial CFA-Level-III Exam (Chartered Financial Analyst(R) Level III (CFA Level III)) Detailed InformationExam Structure and Timing
The Level III exam consists of item set and constructed response (essay) questions:
Morning session: Constructed response (essay) questions (usually between 8 and 12 questions, each with several subparts) with a maximum of 180 points. (The point value for each question is provided in the exam book.)
Afternoon session: 10 item set questions
How the Exam Questions Are Structured
When you prepare for the Level III exam, remember to review the Level II item set question details.
Constructed Response (Essay) Questions
Each essay question has two or more parts (A, B, etc.) and one or both of the following types of designated answer pages:
One type of answer page is an unlined page, clearly labeled for that question part. You are free to write your response as needed on that page.
The other type of answer page has a structured set of boxes. The boxes are clearly labeled for that question part and provide a visual structure to guide you in writing your responses.
Your Essay Exam Book
Read and follow the instructions on the front cover and throughout the exam book.
Page one of the exam book lists all of the questions on the exam as well as the topic and the minutes allocated for each question.
The heading where a question begins states the number of parts in that question and the total number of minutes allocated. For example: “Question 2 has two parts (A, B) for a total of 18 minutes”
Instructions in bold print immediately following the question direct you to the designated answer page for each question part. For example: "Answer 2A on page 17”
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Examples of Exam Questions and Guideline Answers
Below are examples of Level III item set questions and an actual 2014 Level III essay exam with guideline answers. You can expect to see similar questions in terms of structure and level of difficulty, but don't expect to see the same questions repeated on your exam. Additionally, the format of the answer pages for each question may change from year to year.
Remember that the exam is based on the current curriculum.
Examples of Level III item set questions (PDF)
2014 Level III essay questions (PDF) (contains actual previous exam questions)
2014 Level III essay guideline answers (PDF)
Current candidates: Log in for additional Level III essay exams and guidelines answers, plus feedback from graders.
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Exam Topics and Study Session Outlines (including LOS)
2017 Level III Study Sessions index | 2017 Level III Study Sessions combined
Ethical and Professional Standards
Study Session 1 | Readings 1-2
Study Session 2
Behavioral Finance, Individual Investors, and Institutional Investors
Study Session 3
Study Session 4
Study Session 5
Study Session 6
Capital Market Expectations
Study Session 7
Study Session 8
Study Session 9
Fixed Income and Equity Portfolio Management
Study Session 10
Study Session 11
Study Session 12
Alternative Investments, Risk Management, and the Application of Derivatives
Study Session 13
Study Session 14
Study Session 15
Portfolio: Execution, Evaluation and Attribution, and Global Investment Performance Standards
Study Session 16
Study Session 17
Study Session 18
Certification Program Recognition
Many certification programs around the world recognize our educational programs and grant:
Waivers/exemptions from courses, exams, or work experience requirements
Waivers/exemptions from programs that recognize our continuing education (CE) program as satisfying their own CE requirements
Certification Programs Granting Waivers
American Society of Appraisers (ASA)
Association of Chartered Certified Accountants (ACCA)
Certified Credit Research Analyst (CCRA)
Certified Financial Planner (CFP)
Certified Public Accountants (CPA)
Chartered Director (CDir)
Chartered Financial Consultant (ChFC)
Chartered Institute for Securities & Investment (CISI)
Chartered Institute of Management Accountants (CIMA)
Chartered Insurance Institute (CII)
Chartered Life Underwriter (CLU)
Institute and Faculty of Actuaries (IFoA)
Investment Management Certificate (IMC)
Professional Risk Manager (PRM)
Society of Actuaries (SOA)
The Institute of Chartered Accountants in England and Wales (ICAEW)
Wealth Management Essentials (WME)
CFA Institute compiles and maintains this list of waiver opportunities with respect to other certification programs as a service to its members. CFA Institute has no responsibility for the quality of the programs listed, the curriculum, or the fairness of their examination process. Appearance on this list should not be construed as an endorsement of any product, service or organization by CFA Institute.
Chartered Financial Analyst Level 3
This is the last of three exams offered by the CFA Institute (formerly the Association for Investment Management and Research (AIMR)). This exam (in addition to other requirements) must be passed for an individual to become a CFA chartholder. The CFA Program is a globally recognized standard for measuring the competence and integrity of financial analysts. Level III explores portfolio management in great depth. You must demonstrate a working knowledge of the portfolio management process, from calculating investor constraints, objectives, and capital-market expectations to making asset-allocation decisions.
Time Limit: 6 hours
Number of Questions: 10-15
Passing Score: Varies Anually
Passing Rates: As of June 2012, 52%
Format: Essay Questions
Prerequisites: Passing grade on CFA Level II exam, and a U.S. Bachelor's degree or equivalent.
Corequisites: In order to receive your designation as a CFA charterholder upon successful completion of the level 3, you are required to have at least four years of experience in a related field.
Exam Date(s): June
Exam Results: Usually provided within 90 days
Financial CFA-Level-IIICFA-Level-III exam :: Article by ArticleForgeWhat To expect On The CFA degree III examination
The CFA degree III examination is the final in the series of three tests carried out by the CFA Institute. Coupled with at least forty eight months of relevant work journey, successful completion of the last level yields a constitution membership. while the primary two degrees revolved around simple financial advantage, investment valuation comprehension and the utility of each, the CFA stage III examination focuses on portfolio administration and wealth planning.
exam StructureThe format of the exam, which is barely offered in June, is a mix of item set questions (corresponding to level II) and essay class questions. like the different checks, the level III exam is also carried out in two components - the morning and afternoon session. within the morning session, there are 10 to fifteen essay class questions. each and every query incorporates varied materials such as A, B, C, etc., which help you prepare your answer in a template. These questions might also provide you with a situation and ask you to advance your own recommendation or answer. within the afternoon session, there might be 10 merchandise units. each and every item set contains a case remark adopted by way of six assorted-alternative questions. The exam is graded for 360 features, which corresponds to one aspect per minute.
examination CurriculumAs outlined earlier, the focus of the exam is on portfolio management and wealth planning, however additionally covers seven themes that are grouped into two other areas, namely, ethical and knowledgeable standards and Asset courses. here desk provides weighting of those themes and extensive areas for the exam:subject area level III ethical and professional standards (complete) 10 investment tools (complete) 0 company Finance 0 Economics 0 economic Reporting and evaluation 0 Quantitative methods 0 Asset classes (total) 35-forty five choice Investments 5-15 Derivatives 5-15 equity Investments 5-15 mounted earnings 10-20 Portfolio administration and Wealth Planning (total) forty five-55 completea hundred
As is evident from the table, the Ethics and knowledgeable requirements gets as an awful lot significance as within the different tiers of the exam. The investment equipment don't seem to be demonstrated one by one, except economics, which is part of the portfolio administration and wealth planning section for stage III. the vast majority of the examination revolves round portfolio administration and asset courses within the portfolio context.
StandardsIn level III, requirements essentially consist of the Code of Ethics and global investment efficiency requirements (GIPS). standards account for 10% (i.e., 36) of the 360 viable facets. The Code of Ethics area will undoubtedly be an item set in the afternoon session. besides the fact that children, GIPS could be proven both as an essay question within the morning session or as an item set within the afternoon session.
Asset ClassesThe exam checks your knowledge on all of the important asset classes, together with option investments, derivatives, fairness investments and fixed-earnings investments. youngsters, the focus is now on the portfolio administration facets of these investments. as an example, a whole session is dedicated to the administration of energetic and passive fastened-earnings portfolios, covering investment ambitions, benchmarking, return evaluation, portfolio immunization strategies, relative price analysis and so forth. The syllabus also covers innovations used in foreign and emerging markets and how derivatives are used to manage activity fee and credit hazards in mounted-revenue portfolios.
The 2d asset class is equity securities, that are an essential component of most investment portfolios and crucial for the portfolio's success. The discussion here surrounds fairness investment techniques, evaluation of equity fund managers and equity indexes. The syllabus additionally discusses the company governance considerations concerning conflicts between managers and shareholders that erode value and have a direct have an impact on on fairness portfolio managers. at last, there is discussion on measuring and managing portfolios in overseas and emerging markets.
The area on option investments essentially discusses the option investment classes and how spinoff devices equivalent to swaps, futures and forwards are used to control some choice investments.
Portfolio administration and Wealth PlanningThis includes the largest portion of the exam and will account for as a minimum 180 points out of the 360 feasible facets. Portfolio management ideas will dominate each the morning and afternoon sessions. The syllabus is very complete and introduces new ideas such as behavioral finance, which forms the foundation for fiscal decision making. risk administration ideas, overlaying equipment and recommendations for measuring and managing possibility are additionally discussed. aside from these, you're more likely to be demonstrated on questions involving individual and institutional wealth.
The number of concepts that may also be tested are restricted but are vital. One such essential conception is the investment coverage commentary and its accessories, which is extremely testable. Economics, which changed into part of the investment tools in level I and II, is blanketed beneath portfolio management in the exam. other important concepts are managing portfolios of institutional traders, asset allocation, risk administration purposes and evaluating portfolio performance.
within the portfolio management section, the CFA Institute gives no guidelines about which subject matters are greater important. however, it does make available essay questions from previous years, which can be very useful for working towards and setting up your examination strategy.
The backside LineThe stage III exam is considerably some of the tougher tests for the CFA, as many of the questions are posed in essay layout. the important thing to success is to follow as many essay class questions as viable and master subject matters in particular involving portfolio management, which is at the heart of this exam.
All about CFA® exam sample and layout June three, 2016 CFA, cfa examination pattern, CFA crucial dates, CFA Registration, CFA outcomes
Chartered monetary analyst® designation is knowledgeable credential it truly is offer by using the CFA institute to the monetary and investment experts. The designation of the Chartered economic Analyst or CFA® charter is probably the most identified and respected credential in the box of investment banking. it is a globally diagnosed credential.
There are three stages in CFA® program that college students will need to go through. in line with the old records, flow fee for the CFA® examination is read CFA-Level-IIIy forty p.c. there is a wide range of issues related to investment administration, shares, derivatives, economic analysis which offer you outstanding figuring out of every thing you want so as to turn into a more robust financial Analyst/funding banker.CFA® stage I examination:
here is the first examination that students will have to move through. In level one, students will have to center of attention on the concepts and tools that are utilized to investment management and valuation.
The CFA® stage 1 examination is performed in two classes, every three hours lengthy. It incorporates 240 diverse-alternative questions in two periods of a hundred and twenty questions each and every. The questions are designed in keeping with the subject weightages given in the CFA® level 1 examination Syllabus, with very slight deviation.CFA® stage II examination:
this is the 2nd examination that students will have to move through after passing the CFA® stage I examination. In level II, college students will must contend with the assets valuation. students need to have the capacity to observe the ideas and tools that they have got discovered in degree I.
There are total 20 merchandise set questions, break up in two sessions. The morning and evening sessions have 10 merchandise set questions each and every. the whole variety of questions within the CFA® level II exam is one hundred twenty. The duration of the examination is 360 minutes. probably the most CFA® level II subject matters are coated most effective within the morning session and other subject matters are lined best in the night session.CFA® stage III examination:
here's the last CFA® exam that college students will should circulate to turn into a CFA® charterholder. within the level 3 examination, students will must go through portfolio management in depth. CFA® level I and CFA® level II revolved around fundamental fiscal advantage, funding valuation comprehension and the utility of both. CFA® degree III examination makes a speciality of portfolio administration and wealth planning.
The exam layout of CFA® stage III is a mix of item set questions and essay class questions. The length of the examination is 6 hours long and is written in two sessions. The morning session and the evening session.
within the morning session, there should be 10-15 essay classification questions. The questions always describe both a case examine or a hypothetical circumstance to which college students need to either construct a solution and clarify it or imply measures to handle it.
in the afternoon session, there are 10 merchandise sets. every item set consists of a case commentary adopted by six varied-choice questions.Overview of CFA® exam layout: CFA exam degree I degree II degree III Morning evening Morning evening Morning night No of Questions 120 120 60 60 12 10 type MCQ MCQ 10 Set of presents10 set of itemsEssay Set of giftsperiod 6 Hours 6 Hours 6 Hours Passing rating 70%* Above 70%* 50-70%* Approx. Passing quotes 42%* 46%* 53%*
observe: * These numbers range every year. this is simply an approximation based on the old facts.
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2011_CFA_Level_III_mock_exam_questions.pdf - 2011 level III...
How lengthy does it truly take to circulate CFA stage III?
How historical will you be in case you conclude the CFA?
the day before today became CFA stage III results day. For the first time in a long time, the pass fee truly multiplied: fifty four% of people passing the third and closing exam, more than at any time for the reason that 2006, when the flow rate was a heady 76%.
CFA effects forums are predictably full of ecstatic individuals who spent ultimate nighttime engorged with alcohol. They’re also domestic to the sad minority who failed, a few of whom are questioning whether it’s all value it. As is smartly usual, every CFA examination requires 300 hours of study CFA-Level-III. Three CFA checks for this reason require 900 hours. If these hours are outfitted in after work and at weekends, at a cost of 15 hours per week, that means 60 weeks of examine. This sounds low-priced. except it doesn’t work like that….Will it truly take you seven years to circulate CFA three?
in case you embark on a quest to become a CFA Charterholder, you need to be organized to sacrifice a lot of lifestyles.
The CFA Institute itself says that it takes the typical candidate 4 years to complete the programme. In some circumstances, despite the fact, this appears optimistic.
one of the most contributors to Analyst forum confessed yesterday that he’d been getting to know for CFA exams considering that 2007. He took CFA level I twice, CFA degree II twice and CFA level III 4 times earlier than passing. “I actually have passed!,” he declared, proudly.
a further contributor become less fortunate. Having began getting to know for CFA tests seven years in the past, he failed degree I once, degree II 3 times and then failed level III on his first are attempting in June. “I’ll be taking my 8th CFA exam next 12 months. This in reality sucks,” he complained.Does discovering for CFA assessments wreck your domestic life?
a couple of CFA III candidates, a success or not, lamented that every one their researching had been bad for their relationship.
“27 feminine and married, i believed I may ultimately get my household existence again.however no, another 12 months of work/study CFA-Level-III fatigue,” mirrored one exhausted fail.
a further candidate referred to she’d handed whereas her husband had failed, which turned into inflicting tension and making it tricky for her to celebrate. And yet another said his spouse became unexpectedly ecstatic about his success and return to family existence: “was amazed by wife’s response … was happier than me ….realized how a whole lot it intended to her …”are you able to circulate the CFA exams in 18 months?
the most completed CFA candidates pass all three checks in 18 months. How is that this achieved? one among the day past’s 18-month-passers stated it’s about getting to know challenging, however not too hard. “18 months complete. level 1 in December 2012, level 2 in June 2013, stage 3 in June 2014. degree 2 and three were very narrow pass each and every time – capacity I took care now not to over-analyze :),” he mirrored.
essentially the most magnificent circulate the day gone by changed into the 29 12 months-historic mother of two little ones under three years historic who begun getting to know when her first baby was only seven months. “June 2012 – My baby is 7 months ancient, I sat CFA degree-1 exam. passed with All >70%. June 2013 – First baby is 1.8 years, I’m 8 months pregnant. Sat CFA degree-2 examination. handed. June 2014 – Two children, husband, family unit tasks. Sat CFA level-three examination. passed,” she wrote, including that, “I managed to beginning and conclude my charter while on maternity leave… I had no help with the little ones except 1 month before each examination, after I requested my folks to babysit full-time.”linked articles:
CFA or MBA: Which is ultimate for a finance career?
What’s the minimum score that you would be able to get on CFA stage I, and still move?
How I handed CFA stage II handiest 4 months after passing level I
The Secular bear Market In CFA level III pass quotes Has Entered Its 51st 12 months
results for the notoriously tricky Chartered financial Analyst (CFA) level III examination are out.
And simplest forty nine% of candidates handed.
The curriculum, which incorporates three levels, is largely regarded to be the most elaborate to acquire by means of finance specialists (and it has its share of unbelievable horror stories).
Fewer than 20% of candidates move all three tests on the primary go, and the average adult takes 4 years to conclude all three.
This yr, the move price dropped under 50% for the primary time for the reason that 2010.
As finance as a container has grown, so too has the number of verify-takers. however it seems the verify has been getting tougher to circulate on the grounds that its inception in 1963. right here's the ancient circulate rate.
CFA Institute, enterprise InsiderSEE also: a private equity CEO Tackles The Age ancient query — Is It value It To Get Your MBA?
You’re going to get tired of me saying this, but the level 3 CFA exam is all about the essays. This is the first time you will be asked, not only to pick out the right solution but also to integrate the curriculum and create your own solution. This isn’t to say that the item sets are not important as well, they are still worth half of the exam. But using a condensed study program like FinQuiz will help you get through the afternoon section while spending most of your time concentrating on the morning essays.
The CFA Institute makes available the last three years’ essay questions and guideline answers on their website at: http://www.cfainstitute.org/cfaprogram/courseofstudy/samples/Pages/index.aspx
You should download the exam and the guideline answers to follow along as we work through the questions.
We will practice through all three years’ individual and institutional questions, looking at the guideline answers and learning HOW to approach the 2012 exam. We may cover some of the other essay questions time permitting or if they seem particularly important. You MUST practice through these exams to be ready for the test in June. Not only must you understand the material but you must also be able to be able to provide the solution that the grader is looking for in a timely fashion. ** Write out your practice** Not only will you learn better (active learning) but you will also train your hands to write for up to 3 hours straight without cramping up.
**Following is how I worked through the exam when I took it last year. If certain parts of the system do not feel comfortable to you, then experiment with other ways of doing it. No singular right way exists.**
The first questions in the morning are ALWAYS Individual followed by Institutional portfolio management. Learn these sections, be ready for them on the exam and finish your first two questions with confidence!
Question 1&2 of last year’s exam was a portfolio mgmt problem for the Becker’s. The instructions told you there was a total of 38 minutes (meaning 38 of 180 points as well) and 6 parts (A,B for #1 and A-D for #2).
I skim through the questions for the vignette to get an idea of what I am looking for. (I don’t do this for the item sets because the questions are often more involved and there are six as opposed to 2-4 in the essays). For part A, we have to determine the appropriate trust for each objective, for part B we have to identify who is illustrating the behaviors. Though we now know that we can probably just read the two objectives and the four behavioral/discussion statements I would still read quickly through the scenario to get a feel for the big picture.
** Note where the first questions say Answer Question 1-A in the Template provided on page 5** I would write “TEMPLATE” directly next to the question and underline it to remind myself not to write on the lined answer sheet but in the template boxes. As easy as it may seem to remember, a lot of candidates mess this up and do not get their answers graded because the did not use the template boxes.
Look at the template boxes provided (starting on page 5). This is typical of the template box questions. Three columns with the left being a question/description, the middle column being a multiple choice, and the right column a space to justify why you chose the middle column response.
The key to estate planning is transferring assets with minimal taxes and the specifics of ownership (legal claims, claw back provisions). Objective 1 in the question clearly asks about the tax issue and requires reading some of the vignette to decide taxation of capital gains. Objective two doesn’t even require the candidate to read through the vignette because we know that irrevocable trusts include protection of assets from legal claims because of ownership.
The candidate could just as easily use bullets here with something like:
The revocable trust will minimize total taxes by:
- Current taxes same for both trusts (20%*$1.8 million)
- No estate taxes in irrevocable trust
- Estate taxes not due in revocable until death, then cost basis increased to market value
This cuts the candidate’s writing in half and still gets the point across. Remember, graders are not looking for grammar or spelling. They have a checklist of points they want to see (did candidate mention: mark to market on revocable estate taxes, did they mention current taxes same, etc).
**These type of ‘circle one’ and give a reason questions are usually worth one point for the correct circled answer and the remaining points for your reason. Even if you are not sure (or have no idea) circle an answer and give a couple of intelligent guesses for the reasons. You may guess correctly or get a couple of partial-credit points. The question above (worth six points total) would be worth one point for circling each of the middle-column responses and a total of two points for each of the third-column responses.
The readings for behavioral finance in the level 3 CFA curriculum have changed, so there is little to be gained from going over the answers to part B specifically. Just pay attention to the format of the question. **Notice it asks for circling ONE item in the second column and give ONE reason in the third column. The grader will only look at the first reason given. Even if you know several reasons to explain a selection, you only need to give ONE. Don’t waste time providing information that is not required or will not be graded.
Question 2 represents one of two types of questions you will see on the individual portfolio mgmt section, either a single-period return calculation or required return (multi-period) calculation with IPS questions. This is an extremely important part so we’ll wait to cover it in the next blog post.
Let me know if you have any questions on the essay question covered or generally how to approach the essays.
Thanks for reading. Happy studying,
Joe Hogue, CFA