http://www.bloomberg.com/apps/news?pid=20601103&sid=a4OhsRkOet0k By Michael J. Moore July 28 (Bloomberg) – A higher percentage of hopefuls for the Chartered Financial Analyst designation passed the first test in a three-step process that may give them a hiring edge during Wall Street’s worst shakeout in at least three decades. Forty-six percent passed the Level 1 test of the CFA exam, up from 35 percent in December and 35 percent a year ago, the CFA Institute said on its Web site today. A record 128,600 people enrolled to take one of the three levels of the exam in June, the Charlottesville, Virginia-based institute said. Results for Levels 2 and 3 will be released on August 18. A CFA is a valued credential on Wall Street held by Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., and Abby Joseph Cohen, Goldman Sachs Group Inc.’s senior investment strategist. It’s especially true after financial firms cut more than 328,000 jobs since global markets started to unravel in 2007, according to data compiled by Bloomberg. Candidates take the CFA exam betting the certification can become a path to better jobs, higher salaries and a deeper understanding of finance. The not-for-profit CFA Institute recommends candidates spend at least 250 hours studying for each phase of the test. Completing all three levels costs about $2,500 and takes an average of four years. 154 Countries There are about 84,000 CFA charter holders globally, according to the institute. About 35 percent of the 44,063 people passed the first test in the process last June. Candidates from 154 countries were scheduled for three levels of the CFA exam. The first level of the exam is offered in December and June; the final two levels are administered only in June. Last year, 46 percent passed the second test and 53 percent of participants passed the final level. To qualify for CFA designation, a person must be employed in a financial job, such as a broker or an analyst, and have four years of relevant experience. Topics range from ethical standards and securities valuation to financial statement analysis and portfolio management. The CFA program started in 1963 and stems in part from Benjamin Graham, a pioneer of value investing who mentored Warren Buffett and advocated a rating system for financial analysts. To contact the reporter on this story: Michael J. Moore in New York at mmoore55@bloomberg.net. Last Updated: July 28, 2009 11:18 EDT
Ha for a second I thought that was Michael Moore the dbag - that would be hilarious if he tried to do an expose on this
I think 3 choice answer def helped. Everybody who I know passed got almost >70% in all the sections. Back in the day people would be giving you mad dap for hitting it home with so many sections with >70%.
MattLikesAnalysis Wrote: ------------------------------------------------------- > i’m gonna go with the fact that the 3 choices > helps those who don’t know very much a lot more > than those who get the top scores… thus the MPS > was approximately the same but the lucky guess % > was higher for those on the cusp. thats part of > it. This implies that the “extra,” say 10% who passed this year would have chosen the “obviously wrong” answer they removed. I agree with this implication. I’m writing Level I in December and I don’t like the fact that it now appears to be easier.
L1 pass rate of 46% is disgraceful I am currently awaiting the results for my Level 2, I hope it goes to like 10% (since I’m sure I will be in that 10%).
A Candidate’s score = [questions he knows the answers to] + [questions he guessed], assume 70% is the passing score then a person needs to get 168 total question right. Solve for x as the number of sure right answers a candidate must have in his head to pass. The remaining questions are “guesses” which will be dependent on the number of choices 4 choice format: 168 = 100%*(x) + 25%*(240-x), yields x of 144 3 choice format: 168 = 100%*(x) + 33%*(240-x), yields x of 132 So hypothetically speaking, a person who only knows 55% (132/240) of the knowledge will pass in a 3-choice format and fail the 4-choice format which requires a 60% understanding (144/240). This proves that a slacker who studied 55% of the exam can pass a 3 choice format, whereas he will fail a 4 choice format (law of big numbers need to apply). Lets see if they change it to T or F… 168 = 100%*(x) + 50%*(240-x), yields x of 96… LOL
Hum… Somehow, I’m not too happy about such a high pass rate… Congrats to the people that passed. But let’s hope the Institute maintain high standards for Charterholders.
Historically, the 46% pass rate is not very high at all. The .pdf file below shows that the pass rates did not fall off a cliff(consistently under 50%) until 2001. http://www.cfainstitute.org/cfaprog/pdf/candidate_results.pdf I have a friend that completed his charter around 2000 and he says he thinks that deteriorating study habits have played a factor in the recent drop in the pass rate. I think that the prestige of the CFA charter will survive a few years of lazy candidates. :O)
thanks for this link gmays
Bacaladitos Wrote: ------------------------------------------------------- > That’s a very high passing rate. I hope they don’t > compensate that by failing more L3’s… Dude, you wrote this on three different threads.
^^ He thought had a clever response and wanted to make sure that everyone saw it.
Had nothing to do with clever, but with putting an end to misinformation. so yes, I did want to make sure many people viewed it to put it to an end.
gmays: How the F#ck is this putting an end to misinformation? Bacaladitos Wrote: ------------------------------------------------------- > That’s a very high passing rate. I hope they don’t > compensate that by failing more L3’s… As for the pdf, there are a multitude of possible reasons why the pass rate has dropped over time: 1) it’s possible that study habits have gotten worse 2) once one is a part of an exclusive club, he wants it to become more exclusive 3) higher number of candidates would generally lead to lower pass rates (as more and more unqualified people sit). Obviously, there was an exception in this case, but there are also a multitude of possible reasons for that. Unless the higher pass rate is strictly due to a more qualified candidate (on average), then it is kind of a joke. However, if it wasn’t, then I would say it really doesn’t matter in the long-run anyway. After all, L2 and L3 will weed most of the candidates out anyway.
kevin0118 Wrote: ------------------------------------------------------- > A Candidate’s score = + , assume 70% is the > passing score then a person needs to get 168 total > question right. > > Solve for x as the number of sure right answers a > candidate must have in his head to pass. The > remaining questions are “guesses” which will be > dependent on the number of choices > > 4 choice format: 168 = 100%*(x) + 25%*(240-x), > yields x of 144 > 3 choice format: 168 = 100%*(x) + 33%*(240-x), > yields x of 132 > > So hypothetically speaking, a person who only > knows 55% (132/240) of the knowledge will pass in > a 3-choice format and fail the 4-choice format > which requires a 60% understanding (144/240). This > proves that a slacker who studied 55% of the exam > can pass a 3 choice format, whereas he will fail a > 4 choice format (law of big numbers need to > apply). > > Lets see if they change it to T or F… > > 168 = 100%*(x) + 50%*(240-x), yields x of 96… > > LOL The question of effect on changing from 4 to 3 answers came up on another thread. My thinking is the # of people who ultimately benefit is pretty small, my 2c: what are the chances that guessing correctly moves you from a fail to a pass? Maybe there’s a handful of people who are one question away from passing and they correctly guess on a question to put them in the “pass” pile. How many are 2 questions away? 3 questions away, etc? If my calcs are correct, you have a 3.5% chance of guessing 3 out of 3 correctly and an 11% chance of guessing 2 out of 2 correctly. Next steps: how many LIII candidates did we have? Can we safely assume that scores were quasi-normally distributed around the MPS? Given this info we can estimate the potential pool of guessers that need 2 or 3 in a row correct and apply the probabilities above. Do the same excercise under a 4 option scenario and you can estimate the delta. My guess is that the actual number of people who benefited (moved from fail to pass) is relatively small.
When CFAI announced the decision to go to 3 choices, they said that the 4th answer ( I believe they called it the low-quality distractor ) was only chosen 2% of the time.
dlpicket Wrote: ------------------------------------------------------- > When CFAI announced the decision to go to 3 > choices, they said that the 4th answer ( I believe > they called it the low-quality distractor ) was > only chosen 2% of the time. I have a tough time believing that at level 1. You would have, on average, more unprepared candidates.
You must be tired…or something. There were well over 100,000 taking all three levels of exams this year. If only 20% get through (and I think it’s far higher, but it’s hard to tell these days from CFAI figures), there will be 20,000 more people who have passed Level III. You call that exclusive? ================= This is good strategy on the part of the CFA machine. Everybody who passed L1 this year will tell their buddies that it was easy and more people will sign up. L2 and L3 is where it gets tricky hence the CFA can still maintain the exclusivity of the charter and still rake in decent cash (just because more people pass L1 does not mean there will be more CFA charterholders).
look, sometimes pass rates are high and sometimes they’re low. no big deal. why talk about something that is unknowable utlimately. the important thing is level 3 pass rates are under 35%.
I wouldn’t go so far to call the pass rate “disgraceful” like mister modesty over there. The financial sector happened to shed a monumental number of jobs over the last year. It logically follows that many of these job seekers enroll in the CFA program to get a competitive edge when trying to find a new job. Since they are unemployed they have a very large amount of time to study until their brains boil. It is impossible that the Institute could compensate for a greater pool of prepared candidates by making the test harder than usual (and in some ways, from a bird’s eye view of trying to piece back together our industry under major duress - it wouldn’t be the most ethical thing to do either.)