Is cfa level 2 derivatives hard?

I would say that CFA level II is the most difficult of the three levels. That said, with proper planning, one can easily overcome level II of the CFA. Personally, fixed income and derivatives seemed to me to be the most difficult issues. Derivatives can be an abstract topic if it's not something you've studied or experienced before.

Each LOS reading for derivatives is relatively short compared to the rest of the CFA curriculum. It also scores low on the exam, along with portfolio management and alternative investments. Remember that the portfolio management material will be deepened in the level III exam, so it's a good idea to have a general understanding of the concepts here. CFA Institute does not endorse, promote, review or guarantee the accuracy or quality of the products and services offered by Kaplan Schweser.

This model was introduced in Quantitative Methods, so it may be familiar and will be used in more detail in Level II. Level II delves into the concepts of portfolio and investment management and tests your ability to apply these concepts to real-life scenarios. The Level II exam redirects its focus toward evaluating asset classes and applying the concepts learned at Level I. The CFA Level II exam is quite difficult and requires applying the concepts rather than simply understand them.

Level II focuses on the pricing and valuation of term commitments and contingent loans, which were briefly introduced at level I. An example of the CFA for derivatives is to “describe the basic characteristics of derivative markets and contrast the markets for over-the-counter and exchange-traded derivatives”. Statements about learning outcomes while studying for a CFA exam refer to the specific skills and concepts you should possess within an exam topic, while exam topics describe the broader set of knowledge you should have. Passing the level II exam also demonstrates your dedication to your career and learning, and can create more opportunities in your professional life. While the Level I exam focused on basic knowledge and understanding of investment valuation tools and concepts, Level II focuses on the application of these concepts.

Anyone who wishes to complete the exam must have a bachelor's degree or equivalent education and must have passed the CFA Level I exam. The level and amount of technical content evaluated at level I in the case of derivatives are much lower than in the case of topics such as fixed income. While derivatives are a small part of the CFA Level I exam, they are available at all three levels, so it's important that you gain a solid understanding of the fundamental concepts at this stage of your application. I'm studying for the second level right now and, after finishing the Economics section, I already feel like I don't remember much of that.

We recommend that you start by reading the Schweser CFA Level I SchweserNotes for Derivatives, which also provide illustrative examples and module questionnaires so that: check your understanding.

Serena Lubahn
Serena Lubahn

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