Mastering the Fixed Income Section on the CFA Level 2 Exam

As an expert in the field of finance and a CFA charterholder, I have seen many candidates struggle with the fixed income section on the CFA Level 2 exam. It is a challenging topic that requires a solid understanding of concepts and a lot of practice. In this article, I will share my recommended approach for studying for this section, based on my personal experience and insights.

Priority Topics

When it comes to studying for the CFA Level 2 exam, it is important to prioritize your topics. In my humble opinion, priority should be given to Financial Reporting and Analysis (FRA), followed by equities, corporate finance, and fixed income.

These topics make up a significant portion of the exam and require a thorough understanding to do well. Ethics is also an important topic, but it is something that can be left for the end. However, it is crucial to practice enough problems to ensure you have a good grasp of the concepts. The CFA Institute's curriculum is a great study guide for fixed income, but there are other resources that can be helpful as well.

Elan Guides

If you have already read the CFA Institute's curriculum or have experience in fixed income, Elan Guides can be a useful resource. Their study materials are brief and to the point, which can save you time if you are short on it.

You can spend a week instead of three weeks using Elan Guides and still cover all the necessary material. There is significant overlap between levels 1 and 2 in terms of fixed income, with a focus on bond valuation in level 2.This familiarity can make the transition from level 1 to level 2 of the CFA more manageable and less overwhelming.

Ethics is Key

For candidates who consider themselves to be marginal, it is important to note that the CFA Institute will refer to your ethics score. Therefore, it is imperative to give this topic the priority it deserves. As the CFA exams become computer-based, the CFA Level 2 exam includes a total of 88 multiple-choice questions, with 44 in SESSION 1 and 44 in SESSION 2.The ethics section in level 2 is mostly the same as that of level 1, with the exception of not covering the Global Investment Performance Standards (GIPS) and additional readings on research objectivity standards. These topics may seem daunting, but with enough practice and understanding, they can be conquered.

Order of Topics

The order of topics in the level 2 curriculum remains the same as in level 1.This means that you will encounter familiar topics such as capital budgeting (NPV and IRR) and a new topic on corporate restructuring.

There are also some new readings that were not covered in level 1, but they are relatively accessible to most candidates. However, given the amount of material you need to cover at this level, it is important to find a study method that works best for you. In my experience, there are other resources that can help improve your chances of success.

Building on Level 1

Part of the fixed income section is based on level 1 concepts, such as the Markowitz minimum variance model (also known as the efficient frontier model) and portfolio risk calculations using two or three assets. The good news is that the CFA Institute has confirmed that the design of the readings for each study session is not based on the assumption that candidates approach the material in a specific order. This means that you can use your knowledge from level 1 to build a strong foundation for level 2.However, it is important to note that the level 2 exam will test your understanding of these concepts at a deeper level, so it is crucial to review and practice them thoroughly.


The fixed income section on the CFA Level 2 exam can be challenging, but with the right approach and resources, it can be conquered. Prioritizing your topics, practicing enough problems, and building on your knowledge from level 1 are key strategies for success.

Remember to also give ethics the attention it deserves, as it can make a difference in your overall score. With dedication and hard work, you can master this section and move one step closer to becoming a CFA charterholder.

Serena Lubahn
Serena Lubahn

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