Hi. I’ve been reading comments of the like: “this pass rate is a joke”, “passing the exam should be more hard”. I bet most of them come from people who already have the charter or are more than half way through. We should all agree that: 1) Having more charter holders out there is good for all of us 2) but while that is so, getting the charter should be as demanding as it ever was The fact that the program is now so recognized also makes everyone want it more, so it is only natural that both the number of candidates increase (downward push on the pass rate) but also the effort people put in it also increases (upward push). Year after year the pass rate is still at an average of ~40% and it has been like so for a while. (sometimes more, like in June 09, sometimes less like this past Dec 09 exam). Since that number counts people enrolled for the 2nd or 3rd time the odds of passing L1 are LESS than 40%. The odds of passing both L1 and L2 are 0.4*.4 = less than 16%. The odds of passing all three exams are less than 6.4%! Really, LESS THAN 6,4%!! Does anyone really think getting the charter is a piece of cake?
That rate you calculated only assumes one-try-per-exam. You should incorporate in the formula the chance that people pass with multiple takes per exam. Needless to say, 6.4% rate is understated.
Yeah… 6.4% assumes that everyone has an equal chance of passing each exam. In reality, there is a positive correlation between passing each level on the first try. So in theory, the rate of passing all three exams on the first try could be as high as the rate of passing L1 on the first try.
Hello Mister Walrus Wrote: ------------------------------------------------------- > Yeah… 6.4% assumes that everyone has an equal > chance of passing each exam. In reality, there is > a positive correlation between passing each level > on the first try. So in theory, the rate of > passing all three exams on the first try could be > as high as the rate of passing L1 on the first > try. Yeah, some people have about a zero chance of failing a level outside of a personal debacle holding them back. I studied with some of them (maratikus, plyon, Mcleod come to mind). On an individual level you will never know the number. On the aggregate level the CFAI keeps the enough information hidden that you can’t really determine the number without a confidence interval so wide that it is essentially meaningless.
I thought I read that about 1 in 5 candidates eventually gets the charter.
^Yeah, the key word is EVENTUALLY.
Before I got the charter, I was brooding over these statistics too, now that I have the charter, all I can think of is…what can the charter do for me?
"1) Having more charter holders out there is good for all of us " I may be wrong, but how is this good for all of us? Wouldn’t a higher number of holders dilute the value?
if you’re willing to sacrifice your social life and girls, chances of you passing all 3 exams go up. I’m certain of that.
rhyme Wrote: ------------------------------------------------------- > "1) Having more charter holders out there is good > for all of us " > > I may be wrong, but how is this good for all of > us? Wouldn’t a higher number of holders dilute > the value? More charterholders = more people care about the qualification. However, if it gets too easy to get the charter, then yes, it won’t be worth much. So, it seems like the graph of Importance of CFA vs. Number of Charterholders will go up and then go down.
The “less than 6.4%” is the odds of passing the exams on your first try - and to me that’s the important number. Having official numbers would only further skew that number DOWN, never UP. Of course if you’d just count the people who studied 400+ hours, had no family responsibilities, were dead focused and so on then sure the odds would be higher. But on average, the odds are those stated and that’s a pretty low number if you ask me (I’d bet lower than ANY program out there) @Hello Mister Walrus, Totally agree, it was my point exactly. Right now I think it would be great if major CEO’s/CFO’s and PE/HFs managers were all charterholders! There’s a special bond between people that pass the exams: you know exactly how hard it was for you and you value that immensely. So when hiring comes into play and you have a CFA program candidate’s CV on your hands, would you not hire him?
Antonio Major CEOs/CFOs and PE/HF managers have absolutely no incentive to enroll in the CFA Program. The material isn’t even directly relevant to the CEO or CFO role. One could argue it has some loose relevance to the CFO role, but having a CPA is probably more desirable. PE/HF managers only care about one thing: ability and temperament to be a successful investor - which has nothing to do with signing up for a series of examinations. Special bond? Sounds like some sort of homo-erotic mating ritual. I would hire the most qualified candidate irrespective of whether he/she was enrolled in the program. Don’t hold such a narrow view of the CFA Charter. It doesn’t require some super-human intellect or superior investment skills. It requires one thing: time and dedication. Charterholders can fall into two camps: 1.) wow, you must have really studied a lot because I wouldn’t trust you to balance my check book, and 2.) you are legit. Final note: pass rate is irrelevant - it’s a do-able exam. A lot of people hold this biased view of how difficult it is because they like to reassure themselves (on both sides of the camp - pass / or fail).
Hello Mister Walrus Wrote: ------------------------------------------------------- > Yeah… 6.4% assumes that everyone has an equal > chance of passing each exam. In reality, there is > a positive correlation between passing each level > on the first try. So in theory, the rate of > passing all three exams on the first try could be > as high as the rate of passing L1 on the first > try. For you to come to that conclusion you have to assume that the people who fail keep retaking it infinitely and have equal chance of passing. Many drop out along the way 6.4% is the lower bound of the passing rate. That’s all he’s trying to say. The passing rate for the first test is the upper bound.
ShintreH Wrote: ------------------------------------------------------- > Actually, the lower bound for the probability of passing all 3 tests on the first try is 0%. Based on the pass rates, it is possible, for instance, that all people who pass L1 on the first try fail either L2 or L3 on the first try.
There is an optimal difficultly level for the CFA the graph would look similar to the Laffer Curve for optimal taxation. Its a balance mpre peope with the charter and support goes up too many people with the charter and it si considered too easy and worthless. Like the MBA where when somebody says they have one you ask nice but where did you get it from. You don’t want people to ask when you got your CFA to determine its validity. Its like in Canada for the CFP which most people think as the Certified Financial Planner desingation from the Financial Planning Standards Council but there are a bunch of people out there that I beleive had some degree of grandfathering because they had the old CFP Chartered Financial Planner desingation
Hello Mister Walrus Wrote: ------------------------------------------------------- > ShintreH Wrote: > -------------------------------------------------- > ----- > > > > Actually, the lower bound for the probability of > passing all 3 tests on the first try is 0%. Based > on the pass rates, it is possible, for instance, > that all people who pass L1 on the first try fail > either L2 or L3 on the first try. Because a pass rate is 6% doesn’t imply that people don’t fail. We’re constructing an interval for the passing rate, and the various passing rates are the data points. We have to have a 0% passing rate on a test for that to be a lower bound.
ShintreH Wrote: ------------------------------------------------------- > > We’re constructing an interval for the passing > rate, and the various passing rates are the data > points. We have to have a 0% passing rate on a > test for that to be a lower bound. Uh, no… Let’s say there are only 3 CFA candidates: A, B and C. A fails L1 on the first try, but passes L2 and L3 on the first try. B fails L2 on the first try, but passes L1 and L3 on the first try. C fails L3 on the first try, but passes L1 and L2 on the first try. So, the passing rate for each exam is 2/3, but the historical probability of passing all three exams is 0%.
How can the probability of passing all three be zero if A and B pass all three?
The probability of passing all three exams on the first try.
Your players are : L1 L2 L3 A F P P B P F P C P P F The problem is: The passing rate isn’t 2/3 on each try because all the players aren’t sitting for the higher level exams at the same time. The passing rate on the L1 is 2/3 , but in level 2 A can’t take the test because he has to wait to retake level one. So he’s taking level one while A and B are taking level two, therefore the passing rate on level 2 is 0.5. Now in the second level player B fails, so he has to take L2 while C is taking L3, and C fails L3 the first time around, therefore the passing rate for L3 when C takes it is actually 0, that’s why the probability of passing all three exams here is 0.