The Key Differences Between CFA Level 1 and Level 2 Exams

As a financial expert with years of experience in the industry, I have encountered numerous questions from aspiring Chartered Financial Analyst (CFA) candidates about the differences between the three levels of the course. One of the most common inquiries is regarding the gap between CFA Level 1 and Level 2 exams. In this article, I will provide you with a comprehensive understanding of the key differences between these two levels, including their curricula, exam formats, and question structures. First and foremost, it is important to note that there is no maximum gap between CFA exams, unlike other financial certifications such as Financial Risk Manager (FRM), which has a maximum gap of four years. However, it is highly recommended to take the exams within a reasonable timeframe to ensure that the knowledge and skills acquired in the previous level are still fresh in your mind. The curricula at both levels of CFA share similar themes, but there are significant differences in their exam formats and question structures.

The Level 1 exam is computer-based and consists of individual multiple-choice questions, while the Level 2 exam includes bullet points with multiple-choice questions. This means that for Level 1, you will need to focus on memorization, while for Level 2, you will need to demonstrate in-depth knowledge and understanding of the material. In addition, the approval rate for Level 1 is lower compared to Level 2.This is because Level 1 covers a larger part of the curriculum and its questions are relatively simpler compared to those in Level 2.As a candidate for Level 2, you will be tested on your ability to apply your acquired skills to analyze financial data, value assets, and establish relationships between variables. The CFA Level 1 curriculum covers ten topics, each with a different weight on the exam, which changes regularly. It also consists of 19 study sessions and 57 readings. On the other hand, the Level 2 curriculum has the same topics as Level 1, but with a different range of weightings per topic.

This means that Level 1 candidates have an advantage as their knowledge provides a solid foundation for understanding the concepts in the Level 2 curriculum. However, this advantage is not significant as the material covered in Level 2 is more complex and requires a deeper understanding of the concepts. This is because the Level 2 exam questions are at a higher level compared to those in Level 1.As a candidate for Level 2, you must develop the necessary skills to identify which information is relevant to each question and apply your knowledge accordingly. Another key difference between the two levels is the structure of their exam questions. The Level 1 exam consists of individual multiple-choice questions, while the Level 2 exam consists of four to six questions organized in series based on a vignette. This means that for Level 2, you will need to read and analyze a case study before answering the questions, which adds an extra layer of complexity to the exam. In terms of content, the material covered in Level 1 is relatively simpler compared to that in Level 2.This is because Level 1 focuses on remembering definitions and memorizing formulas, while Level 2 requires candidates to demonstrate a deep understanding of complex concepts and their applications. Lastly, it is worth noting that previous knowledge does not give Level 2 candidates an advantage in their curriculum.

This is because the questions in Level 2 are designed to test your ability to apply your knowledge and skills rather than just recall information from previous levels.

Serena Lubahn
Serena Lubahn

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