I am just beginning my CFA journey and am preparing for Level I exam. For those of you who just completed the Level II exam, can you tell me what are the biggest differences in terms of preparation between Level I and Level II - and the differences in curriculum contents? I have heard Level II is more difficult and more “quantitative / formula driven” in nature but want to verify. Any insight would be helpful. Thank you.
Firstly, don’t worry too much about level 2 at this point in your time. Give it your all to level 1.
Secondly, yes, level 2 is insanely “formula intensive”. I would not say quant intensive because all the math “required” to do the exam is basically 6th-7th grade math at best.
At level 1, you need to “know” all the concepts.
At level 2, you need to “know” and see the “links” among different concepts. Level 2 will open your mind vastly as it will require “analysis”.
I love the dragon analogy. I have seen it before on the boards and it gets me every time. I agree with Finkin, put all of your energy into L1. If you are anything like me, you will need to learn how to study again. Take notes, write flashcards, start early. Focus on L1.
Dont worry about level II as you will have plenty of time to do that only if you pass level I.
I don’t like that the 3rd level dragon looks smaller than the 2nd unless it breathes intense fire–though a hilarious analogy. I’ve failed that 3rd beast 2 times and maybe a 3rd. Level II is hard, tons of formulas, but pulling EVERYTHING together in level III is unreal and daunting. level 3 is godzilla.
L3 is a sneaky bastard. If I had to choose one of the 2 to retake, I would choose L2 no doubt.
It is a big step up from L1 material.
For me this is how I view each level
L1: Covers an undergrad finance program (probably more in depth too unless you happened to be in a very finance centric and rigored program)
L2: L1 topics plus a vast array of compliance, legal, and advanced formulas needed to make an investment decision. Note that L2 mostly focuses on valuation of all types of assets and as someone said above me, they test your knowledge of being able to link one theory to a formula or theory to action and are aware of necessary steps to take to give a proper answer
L3: (Although I have yet to take this) focuses on L1 + L2 but is much more formula intensive on financial instruments, economics and giving a recommendation in PM terms. Seeing as how nearly 50% of the exam is PM, it’s basically asking you if you know how to construct a portfolio of varying securities and reasoning behind each inclusion / exclusion theoretically and mathematically.
I felt Level 1 was more calculative in the sense they would require you to know how to calculate, say Duration, but Level 2 was more conceptual and theortical requiring you to interpret Duration. Not sure about L3.
I think I sat for a different exam, Sid.
Never had to study and apply that many formulae!
The dragon analogy is only accurate if you have a previous understanding of financial theory or accounting. For those of us who had to basically start from scratch with finance this isn’t a good comparison. Level 1 would be a larger dragon, but certainly not bigger than level 2 in this case.
I agree. The only background I had was a measly series 7/66 and about one year of work experience at a life insurance firm before I sat for level I. It was scary, and I’m not quite sure how I passed on my first attempt. Hoping to pull another miracle on level II. (And if I end up passing level III next year, I’m going to have to spin life insurance analysis work as qualifying experience … not sure if CFAI will let that fly.)
Life insurance should work hehe, it’s considered an investment isn’t it?
Yes … there are certainly investment-based life insurance products (that invest in mutual funds, etc.). It’s a pretty interesting “asset class” in its own right that not a ton of people outside the industry really understand. But it’s also not my cup of joe. Looking to get out.
This might not be the best advice but I felt like in level 1 I could get away with not knowing a few concepts, but in level 2 if you skip sections or don’t understand them you’re really playing with fire because you could get an entire item set on them worth 5% of the total exam.
I’d say that this is a pretty fair assessment. That said, no reason NOT to cover everything for level 1 if you have the time.
I say this to my candidates/students all the time: at Level I you can afford to be poor in one or two (small) topic areas as long as you’re (really) good at the rest, but at Level II you know darned well that if you’re poor in any topic area, that’ll be the year that they have the maximum number of item sets in that area.
I agree with some others that the L1 dragon should be much larger in the illustration. L2 was more difficult than L1 but not by an overwhelming amount. Of course, I also haven’t gotten my L2 results yet so depending on that, I may change my opinion.