Hey guys, Am new here and would really appreciate any help. I’m currently working as a credit risk analyst at a bank and was considering taking my CFA. The only thing is that I dropped Maths after the 10th standard. I wouldn’t say that I am bad numbers, in fact I think I am quite good numerically - however, Does any one think that a good knowledge of Maths is essential to complete the CFA examinations? Or will I be fine without it? Thanks a lot!
YES IT’S ABSOLUTELY IMPORTANT!
You need to understand and interpret a lot of forumulas, and if you don’t have a good grasp of math, 1) you will find it very difficult to learn the forumlas by purly memorizing, 2) you are likely to make mathematical errors which will cost you the exam, and 3) most CFA-related jobs are math-focused i would say, so it’s a pre-requisite to be good at math in the industry i think?
NANA
While there are a lot of formula, they are pretty much all ‘plug and chug’. That is, memorise the formula and then plug in the input values given to you in the question.
Lack of maths background may mean that it takes you longer to work through some things and understand the relationships. But its not going to prevent you from getting the charter if you want it bad enough. It just might require a bit more work.
Goodluck.
You;re clearly smarter than I because you’ve passed L II, but let’s be real… all you need is 5th grade algebra to do the CFA. It’s not like you’re not working as a quant for AQR, or Ren Tech
You could get by with college algebra, but it helps to know some higher level numerical analysis to understand where the formulae are coming from in L2.
I’ve only taken level one so far thus can’t comment on the whole curriculum. But for level one there is nothing difficult math wise. My advice would be to go to the khan academy website and look at some materials or download some algebra courses on iTunesU if you have an IPad. Spend a few weeks going through those then dive into the material. Follow the LOS and watch for words like “interpret” being used instead of “calculate”. The CFAI books will walk you through the calculations but many times only understanding and interpreting them are needed.
I don’t know where the 10th standard is. If you are comfortable with basic algebra, then you should be fine with 85% of the CFA material that is at all mathematical in nature. Statistics is a bit wierd if you haven’t seen it before, but having calculus and other stuff doesn’t necessarily help you much there, and lots of people with good mathematical backgrounds have some trouble wrapping their heads around it too the first time they see it.
If you’ve had any calculus, it will help you a bit with the concept of duration, convexity, and some of the economic concepts like marginal cost and marginal revenue, but it isn’t absolutely necessary.
+1
It’s just basic algebra. But as BChad pointed out that statistics in quantitative methods can be nuisance but that carries little weight. CFA is not rocket science, just put in the time and effort, read text, go through examples, do chapter end questions and you’ll be alright.
+1 to this.
For the record–I know absolutely nothing about calculus. I took a college algebra/business calculus class when I was in grad school, and I do not remember a single thing about the calculus part. And I’ve passed Level 2, and 95% sure that I passed Level 3.
If you can do college algebra, you’ve got more than enough math skills to pass the test.
^ +1 to bchad and greenie. My highest level math that I remember was a statistics class. Never took calculus. CFA math is just algebra, so the faster you can accurately figure it out, the better.
Just remember once you’re in a job, calculators and computers do all the tough math anyway. There are very few jobs out there that actually require that you know advanced math (beyond basic stats and algebra) IMO.
I’m confused as to what people are calling “college algebra”, cause the only algebra I ever took in college was linear/matrix algebra and that’s waaaaay beyond CFA. If I recall correctly, Algebra I was in middle school, and the basic 4 years of [US] high school was Geometry, Algebra II, Trigonometry/Precalc, and Calculus in that order (maybe switch the first two).
In the US, college algebra is probably what you would call Algebra 2. It’s required for most (if not all) US bachelor’s degrees. Of course, some majors require that you take calculus and trig and diffyq’s, but if you’re majoring in History or English, then that’s all the math you have to take.
if you don’t love math, good luck. strong correlation between Math and Finance.
I am not sure if i agree with you. Yes, most trivial questions are plug and chug, but during the exam, how often do you get a question like that?
Remember those questions on relations between different ratios, if something goes up or down, how is it going to affect ratio X and Y. And all those questions on fixed income, if you intuitively understand the concepts you are likely be able to understand what the question is asking in the first place, but if you are not grasping the mathematical concept behind the formulas, you may interpret the questions incorrectly (or simply don’t know what they’re trying to get at).
Similar to tax questions on Level 3, i looked at the formulas and they are crazy looking, but if you understand how to derive the answer mathematically, you don’t have to memorize the formulas at all.
There are alot of areas where questions are asking you to interpret the formulas as well (and not straight forward plug and chug), and a lot of them ask you indirectly and test your knowledge on the underlying calculations like derivatives and commodities.
agreed. if you know how to derive the formula and the intuition behind the concept you don’t have to memorize as much. If you had to actually memorize every single formula in the CFA program, god bless you. You are a better man/woman than me. Some of the formulas you will know already anyway just through work/prior educational background.
I think what it’s coming down to is what do you mean by “good at math” particularly since you did say you are “good with numbers.”
For a lot of people, being good at math means that you can do calculus easily, have an understanding of linear algebra, differential equations, and stuff like that. The CFA definitely does not require that level of mathematics.
If by “good with numbers,” you mean it’s not too hard (or even easy) to do the kind of algebra that you typically master before starting calculus, then you should be fine. There’s a fair amount of “what happens to this ratio if that number increases/decreases” types of questions, but if you understand what the ratios mean or indicate, it’s usually not that hard. Probability and statistics may take a little extra work, but to serious statisticians, the CFA stuff is really just baby steps and shouldn’t be too hard to learn with a few drills.
are you serious? I hope this is a joke
You obviously haven’t been here very long.
Fair enough.
For L2 and L3, the questions get more tricky so memorising the formula isn’t good enough. You need to understand what the formula is doing so you can apply it properly to the specific set of circumstances you are given.
You’re right, it’s not always plug and chug. However, you don’t need to know how to derive the formulas in order to understand how they work (eg, that a plus sign indicates that two things are positively related).
I interpreted this person’s situation to be that they are good with numbers (ie, capable of abstract though) but don’t know all the ‘procedures’ that one needs to know in order to, for example, solve differential equations.
@ardeshir said “ Does any one think that a good knowledge of Maths is essential to complete the CFA examinations? Or will I be fine without it?”
If you are embarking on CFA good knowledge of maths may be ( ‘may be’, not ‘is’) an asset ( ‘may be’, not ‘is’ , otherwise all those who are good in maths would have been successful in CFA) but by no means “good knowledge of Maths” which include calculus, advanced algebra and trigono0metry etc, is not at all ‘essential’ for completing CFA. With reasonable intelligence (which in any case is a minimum expectation to clear all levels of CFA) and commitment you may learn the additional maths and stats that you would need to complete the curriculum. In worse case you have to provide a few hours extra (not more than 25-30 hours) to be at par with those who are good in maths and are doing CFA with you. If you are good numerically, your working as credit risk analyst has made you understand the basic principles of finance/risk management and are prepared to update your maths knowledge as and when you need – go ahead and enroll. But be advised - it may not be a cake-walk!
By the way, have you seen the details of FRM as it may be highly relevant to your work /field.