What does CFA stand for?
A chartered financial analyst (CFA) is a globally-recognized professional designation given by the CFA Institute, (formerly the AIMR (Association for Investment Management and Research)), that measures and certifies the competence and integrity of financial analysts. Candidates are required to pass three levels of exams covering areas, such as accounting, economics, ethics, money management, and security analysis.
Before becoming a CFA charter holder, a candidate must meet one of the following educational requirements. The candidate must have four years of professional work experience, a bachelor’s degree or be in the final year of the bachelor’s degree program, or a combination of professional work experience and education totaling four years. For the undergraduate qualification, the bachelor’s program must be completed before registering for the Level II exam. In addition to the educational requirement, the candidate must have an international passport, complete the assessment in English, meet the professional conduct admission criteria, and live in a participating country.
After meeting the enrollment requirements, the candidate must pass three levels of the CFA program in sequential order. Although the exams can be taken as many times as needed, each exam typically requires candidates to study in excess of 300 hours. To receive a charter, each candidate must pass all three exams and have four years of qualified work experience in investment decision-making.
Level I Exam
The CFA Level I examination is administered twice per year in June and December. It focuses on analysis using the tools of the 10 topic areas of the Candidate Body of Knowledge. These areas are ethical and professional standards, quantitative methods, economics, financial reporting and analysis, corporate finance, equity investments, fixed income, derivatives, alternative investments, and portfolio management and wealth planning. The exam format is 240 multiple choice questions to be completed within six hours.
Level II Exam
The Level II exam is only offered once per year in June. It focuses on the valuation of various assets and emphasizes the application of investment tools and concepts in contextual situations. Exam questions referring to Financial Reporting and Analysis are typically based on International Financing Reporting Standards (IFRS). The exam format is 21 item sets (mini case studies) with six multiple choice questions for each set (120 questions total).
Level III Exam
The Level 3 exam is only offered once per year in June. It focuses on effective wealth planning and portfolio management by requiring the candidate to synthesize all the concepts and analytical methods in the entire curriculum. The exam format is between eight to 12 multi-part structured essay questions and ten multiple choice questions to be completed within six hours. The hand-written answers are graded by hand.
How Long Does It Take to Pass the CFA Exams?
The CFA exams are difficult and have a high failure rate. Each exam requires at least 300 hours of study, on average. Successful candidates take an average of four years to earn the designation.
How Much Do the CFA Exams Cost?
Each of the three levels of the CFA exam cost $1,000 (which is reduced to $700 if you register early). In addition, there is a one-time enrollment fee of $350. With early enrollment, you would end up paying a total of $2,450.