Number One Study Tip For The CFA Exams

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Many successful CFA charterholders merit their success in the CFA exams with their study habits. As mentioned in my other post, “What To Expect On The CFA Level 1 Exam,” only 43% of the exam candidates who sat the two CFA Level 1 sittings in 2017 actually passed it. In the same year, the pass percentage rises in the CFA Level 2 and 3 to 47% and 54% respectively.

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So, why repeat myself? The answer to which of the three exams is the hardest has been the subject of much debate for generations. Personally, I believe it is different for each person and depends entirely on your advance preparation. It is arguable that the pass rate for the CFA Level 1 exam is weighted lower in comparison to the others because candidates really have no idea what to expect and so need to study even more to make up for the uncertainty.

Six Degrees Of Preparation

Which brings us back to preparation. Not only is it vital that CFA exam candidates study the material, but it is important that they are able to apply their learning to theoretical scenarios on the exam paper. This level of financial understanding and practical application takes time and effort to mature. The recommended 300 hours of study may seem excessive, but trust me, it’s necessary. And depending on how you use your available study time, you can have very different results. It’s crucial, therefore, to get into a routine with your studying and stick with it.

The Big Reveal

Most of the CFA exam questions will not ask you to regurgitate memorized material. They will require you to employ your problem-solving abilities and apply learned knowledge to situations you may eventually encounter on the job. Which brings me to my number one study tip!

Practice problems.

Concentrate your focus on practicing problems over reading material. Don’t get stressed about how many you get wrong in the beginning. Instead, use the questions to teach yourself the core concepts. If you do nothing else, this is most important thing. And worth repeating; practice problems! Nothing will better prepare you for the actual CFA exam environment. Forget highlighting text, and don’t take your reading material to bed with you. Just start practicing problems.

When Questions Count

Here is how I did it. I got hold of hard copies of all the available CFA exam practice questions I could find. Like below.

Example CFA Level 1 Exam Question:

Quantitative Methods

A technical analyst discovers that ABC stock has a head and shoulders pattern with the peak being at $75, the neckline at $66 and shoulders around $70. On today’s trading session, the stock breaches $66 to the downside.

What is the most probable outcome the analyst predicts for the stock?

  • A) The stock will rebound to $70
  • B) The stock will rebound to $75
  • C) The stock will keep going down to $57

I used to cut a page of three questions into three pieces. Then I simply stacked up hundreds of questions and moved through the pile to see if I could solve them. If I got the right answer, I put them on the right corner of my desk. If I couldn’t solve them, then I would stop; read the material; and create notes and a flash card to help make sure I understood the subject.

Let’s say I started with 300 questions. The first time I went through them, I could perhaps only solve maybe 30. Which left me with 270 to read more about and make a flash card to help me revise. The second time round, I only had to worry about 270 questions. Those that I got right would again go to the right-hand corner of my desk. In this manner, I would continue focusing and reviewing the material until I had cycled through the full 300 and I could solve them all.

Testing, Testing, 123

This testing technique will ensure you’ve mastered the concepts embedded in the questions. You’ll also go through the entire curriculum in this process where all those topics are covered.

Don’t just take my word for it though. Research studies show conclusive evidence that, “Repeated testing produced superior retention and transfer on the final test relative to repeated studying.” (Butler, 2010)

This is because the continuous retrieval practice encourages superior transfer. The research findings support that argument that testing may promote subject transfer because it improves the retention of information. This makes the recall component of the subject transfer possible. “Repeated testing may also improve people’s understanding of the material, enabling them to better perform the execution component of the transfer process (i.e., the ability to apply the knowledge to a new situation).”

With this study tip, not only will you be able to improve your understanding of the comprehensive material, but you’ll also be able to recall and apply it practically in the exam. This honed talent for practical application will be crucial in passing the CFA exams at every level.

Don’t forget to check out my series on What To Expect On The CFA Level 1 and 2 Exams

The Valuation Master Class can also help you achieve a head start in terms of gaining practical experience for the valuation portion of the CFA exams. Over the course of five modules, you will accumulate a portfolio of 56+ practical valuations on real-world companies—an advantage that no other valuation course across the globe offers. Sign up today!

Many successful CFA charterholders merit their success in the CFA exams with their study habits. As mentioned in my other post, “What To Expect On The CFA Level 1 Exam,” only 43% of the exam candidates who sat the two CFA Level 1 sittings in 2017 actually passed it. In the same year, the pass percentage rises in the CFA Level 2 and 3 to 47% and 54% respectively.

So, why repeat myself? The answer to which of the three exams is the hardest has been the subject of much debate for generations. Personally, I believe it is different for each person and depends entirely on your advance preparation. It is arguable that the pass rate for the CFA Level 1 exam is weighted lower in comparison to the others because candidates really have no idea what to expect and so need to study even more to make up for the uncertainty.

Six Degrees Of Preparation

Which brings us back to preparation. Not only is it vital that CFA exam candidates study the material, but it is important that they are able to apply their learning to theoretical scenarios on the exam paper. This level of financial understanding and practical application takes time and effort to mature. The recommended 300 hours of study may seem excessive, but trust me, it’s necessary. And depending on how you use your available study time, you can have very different results. It’s crucial, therefore, to get into a routine with your studying and stick with it.

The Big Reveal

Most of the CFA exam questions will not ask you to regurgitate memorized material. They will require you to employ your problem-solving abilities and apply learned knowledge to situations you may eventually encounter on the job. Which brings me to my number one study tip!

Practice problems.

Concentrate your focus on practicing problems over reading material. Don’t get stressed about how many you get wrong in the beginning. Instead, use the questions to teach yourself the core concepts. If you do nothing else, this is most important thing. And worth repeating; practice problems! Nothing will better prepare you for the actual CFA exam environment. Forget highlighting text, and don’t take your reading material to bed with you. Just start practicing problems.

When Questions Count

Here is how I did it. I got hold of hard copies of all the available CFA exam practice questions I could find. Like below.

Example CFA Level 1 Exam Question:

Quantitative Methods

A technical analyst discovers that ABC stock has a head and shoulders pattern with the peak being at $75, the neckline at $66 and shoulders around $70. On today’s trading session, the stock breaches $66 to the downside.

What is the most probable outcome the analyst predicts for the stock?

  • A) The stock will rebound to $70
  • B) The stock will rebound to $75
  • C) The stock will keep going down to $57

I used to cut a page of three questions into three pieces. Then I simply stacked up hundreds of questions and moved through the pile to see if I could solve them. If I got the right answer, I put them on the right corner of my desk. If I couldn’t solve them, then I would stop; read the material; and create notes and a flash card to help make sure I understood the subject.

Let’s say I started with 300 questions. The first time I went through them, I could perhaps only solve maybe 30. Which left me with 270 to read more about and make a flash card to help me revise. The second time round, I only had to worry about 270 questions. Those that I got right would again go to the right-hand corner of my desk. In this manner, I would continue focusing and reviewing the material until I had cycled through the full 300 and I could solve them all.

Testing, Testing, 123

This testing technique will ensure you’ve mastered the concepts embedded in the questions. You’ll also go through the entire curriculum in this process where all those topics are covered.

Don’t just take my word for it though. Research studies show conclusive evidence that, “Repeated testing produced superior retention and transfer on the final test relative to repeated studying.” (Butler, 2010)

This is because the continuous retrieval practice encourages superior transfer. The research findings support that argument that testing may promote subject transfer because it improves the retention of information. This makes the recall component of the subject transfer possible. “Repeated testing may also improve people’s understanding of the material, enabling them to better perform the execution component of the transfer process (i.e., the ability to apply the knowledge to a new situation).”

With this study tip, not only will you be able to improve your understanding of the comprehensive material, but you’ll also be able to recall and apply it practically in the exam. This honed talent for practical application will be crucial in passing the CFA exams at every level.

Don’t forget to check out my series on What To Expect On The CFA Level 1 and 2 Exams


The Valuation Master Class can also help you achieve a head start in terms of gaining practical experience for the valuation portion of the CFA exams. Over the course of five modules, you will accumulate a portfolio of 56+ practical valuations on real-world companies—an advantage that no other valuation course across the globe offers. Sign up today!

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Dr. Andrew Stotz, CFA is the CEO of A. Stotz Investment Research, a company providing institutional investors with ready-to- invest portfolios in Asia that aim to beat the benchmark through superior stock selection. The company also provides buy- and sell-side clients with financial models to value any company in the world and World Class Benchmarking to determine what companies are financially world class. Previously, as Head of Research at CLSA, Andrew was voted No. 1 Analyst in Thailand in the Asiamoney Brokers Polls for 2008 and 2009. He was also voted No. 1 Analyst in Thailand in the 2009 Institutional Investor magazine All-Asia Research Team Report. Andrew earned his PhD in finance at the University of Science and Technology of China in Anhui province, with a focus on answering questions raised by fund managers and analysts during his career about picking stocks and managing portfolios. In addition, Andrew has been a lecturer in finance for 22 years at various universities in Thailand. Since 2013, he has been the president of the CFA Society of Thailand. He is also the author of How to Start Building Your Wealth Investing in the Stock Market.