Moving from CFA® Level I to Level II

First of all, if you are reading this you probably got through Level I, which is no mean feat. It is fair to say that for many people Level I is the hardest of the three exams. This is not because individual questions are tricky, but because there are just so many of them! Also, you have to judge each exam you sit in life on relative terms i.e. what are you expected to know to pass compared to what you knew when you started studying. If you think of that as a ratio, I think the ratio is biggest for CFA® Level I.

So is Level II easier? Well, not in absolute terms as it brings in a lot of technical detail. However, if you have a solid foundation of knowledge from Level I, then Level II does not have to be a big shock to the system.

So how can you prepare yourself for a smooth(ish) ride at Level II?

The first thing to do is to not throw out your Level I books! Some of the Level II syllabus follows hot on the heels of what you learned at Level I, and a bit of time refreshing your knowledge will go a very long way. I will pull out a few key areas where you can’t afford to have any weaknesses:

  1. Understanding flat v effective rates, in particular LIBOR convention and continuous compounding
  2. Statistics, especially Z scores, p-values, T-stats and error types
  3. Analysis of financial statements – you need to be all over your ratios
  4. Fixed income – duration measures and bonds with embedded options
  5. Derivatives – payoffs on forwards and options

If you really want to get ahead of the game, spend a bit of time in October/November/December getting fully confident with these sections, then start studying properly for Level II towards the end of the year or January. Also keep reading that Ethics book. If you start your Level II course with all your ethics material fresh in your mind you are already 10% there.

At BPP Professional Education we run one day intro courses to help you brush up your knowledge and application skills. These are free to returning BPP students but available to anyone who feels they would benefit from a day to get back up to speed. Other than that the best approach would be to make sure you can do all of the CFA®  curriculum questions on the areas above and you will be in a great position to start Level II with confidence.

Good luck!



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