What To Expect On The CFA Level 2 Exam

Valuation Master Class

This post was originally published here.

If you’re reading this then you’ve already probably passed your CFA Level 1 exam and are in the midst of studying Level 2. (Either that or you’re getting yourself prepared for the long road to CFA charterholder status well in advance of all three!) As discussed in the first blog post of this series, in Level 1 you build a foundation of core investment valuation knowledge. The CFA Level 2 exam becomes about the practical and theoretical application of that knowledge.

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Just as in the CFA Level 1 Subjects, the exam weights at Level 2 are still rather evenly distributed over the same topics. The ranges remain between 5-25% overall. However, Level 2 requires you to take a more in-depth dive into dealing with investment management and portfolio distribution. The emphasis is more on complex analysis with a concentration on valuing assets. The exam tests your skills at handling equity analysis situations by examining how you solve ‘real-world’ valuation problems.

CFA Level 2 Exam Date

CFA candidates only get one chance a year to sit and pass both Level 2 and 3 exams. The 2018 exam date is just around the corner on June 23rd. For more information on key calendar dates, check out the table here.

CFA Level 2 Exam Differences

There are a number of differences between sitting the Level 1 exam and progressing onto Level 2. Where Level 1 is compiled of stand-alone multiple choice questions, the format for Level 2 is more complex. Over the morning and afternoon session, expect to complete a total of 20 ‘item set’ questions. Each item set comprises a mini case study-like vignette with six multiple choice questions to follow. The 20 item sets are all equally weighted, so each answer is worth 3 points each. Therefore allow 18 minutes for each item set to address each problem equally.

CFA Level 2 Exam Weights For 2018

Topic Exam Weight
Ethical and Professional Standards 10-15
Quantitative Methods 5-10
Economics 5-10
Financial Reporting and Analysis 15-20
Corporate Finance 5-15
Equity Investments 15-25
Fixed Income 10-20
Derivatives 5-15
Alternative Investments 5-10
Portfolio Management and Wealth Planning 5-10
Total 100

(Cfainstitute.org, 2018)

My Tips for Passing CFA Level 2 Exam

  • The topics at CFA Level 2 build on from Level 1. So, be sure that any of your weak points on the foundation level will really start to show through here. Knuckle down on those subject areas that haunt you from Level 1. Otherwise, the cracks in your knowledge will only get worse from here on.
  • Don’t skip readings! Skipping a reading on Level 2 stands to lose you 5% of the exam if it happens to show up in an item set. The risk is not worth it.
  • Bear in mind you’re a year older and wiser than when you sat the Level 1 exam. Take into account the extra distractions you may have in your life now and renew your commitment to study. Only putting in the necessary study hours will help you achieve that significant pass rate at Level 2.
  • Remember that Ethics maintains a high weight on the Level 2 exam, so don’t put it off! I always point out that ethics is where a CFA charterholder can make a huge impact. Check out this video I recorded advising financial people to ‘Care for clients as you would your mother.

Over the last three years, the pass rate for CFA Level 2 is only 3-4 points higher than at Level 1. Don’t get psyched out into resting on your Level 1 pass laurels. Stay determined. Remember there’s a year’s wait before you can retake the exam, so don’t waste time. Be Level 2-prepared the first time around!

(And don’t forget to check out my #1 study tip for passing the CFA exams here too!)


The Valuation Master Class provides you with the head start needed to achieve the equity analysis edge you need on the CFA exams. Over the course of five modules, you will accumulate a portfolio of 56+ practical valuations on real-world companies. No other course provides the same opportunity to hone your equity analysis skills in the same way.

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About the Author

Dr. Andrew Stotz, CFA
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.

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