Chartered Financial Analyst
CFA Level - 2
Eligibility and Registration
Bachelor's degree must be completed before exam registration. Or, qualify through the 4,000-hour work/education path. Register once you've passed Level 1.
Eligibility and Registration
Bachelor's degree must be completed before exam registration. Or, qualify through the 4,000-hour work/education path.Register once you've passed Level 1.
About the Exam - CFA Level 2
CFA Level 2 is the second level of the Chartered Financial Analyst (CFA) examination, offered by the CFA Institute. This stage of the CFA program focuses on the application and analysis of investment tools and concepts introduced in CFA Level 1. It offers a more in-depth exploration of core topics including equity valuation, fixed income, derivatives, portfolio management, and corporate finance, with a strong emphasis on data interpretation and real-world scenarios.
The curriculum is designed with the assumption that candidates have a solid understanding of Level 1 concepts. However, CFA Level 2 also introduces more advanced and nuanced material, including complex valuation techniques and industry-specific applications. It is both a test of knowledge retention and the ability to apply concepts to realistic investment situations.
About the Exam - CFA Part 2
CFA Level 2 is the second level of the Chartered Financial Analyst (CFA) examination, offered by the CFA Institute. This stage of the CFA program focuses on the application and analysis of investment tools and concepts introduced in CFA Level 1. It offers a more in-depth exploration of core topics including equity valuation, fixed income, derivatives, portfolio management, and corporate finance, with a strong emphasis on data interpretation and real-world scenarios.
The curriculum is designed with the assumption that candidates have a solid understanding of Level 1 concepts. However, CFA Level 2 also introduces more advanced and nuanced material, including complex valuation techniques and industry-specific applications. It is both a test of knowledge retention and the ability to apply concepts to realistic investment situations.
CFA prep resources
CFA Level 2 is composed of Ten modules
Each with its respective weighting as follows:
5-10%
Quantitative Methods
5-10%
Economics
10-15%
Financial Statement Analysis
5-10%
Corporate Issuers
10–15%
Equity Investments
10-15%
Fixed Income
5-10%
Derivatives
5-10%
Alternative Investments
10-15%
Portfolio Management and Wealth Planning
10–15%
Ethical and Professional Standards
Ethical and Professional
Standards
This module lays the foundation of ethical behavior in the investment industry. It explains the CFA Institute's Code of Ethics and Standards of Professional Conduct, helping candidates apply ethical practices in real-world scenarios, ensuring integrity and professionalism in decision-making.
Quantitative Methods
This section equips candidates with essential tools such as time value of money, probability, hypothesis testing, and regression. These techniques support data-driven investment decisions and form the basis for financial analysis across the CFA curriculum.
Economics
The Economics module provides insight into both micro and macroeconomic principles. It covers supply and demand, market structures, monetary and fiscal policy, and international trade, helping candidates understand how economic forces influence investment markets.
Financial Statement Analysis
This module focuses on interpreting and analyzing financial statements using IFRS and US GAAP. It emphasizes income statements, balance sheets, and cash flows, while teaching tools to assess a company's performance and financial health.
Corporate Issuers
Introduces corporate governance and capital structure. Covers financing, investment, and dividend decisions and how firms plan to maximize shareholder value within operational and strategic frameworks.
Equity Investments
Covers equity markets, security types, and valuation techniques. Teaches industry and company analysis, dividend discount models, and price multiples used in stock evaluation.
Fixed Income
Focuses on bond and debt securities. Introduces yield measures, valuation, term structure, duration, convexity, credit analysis, and interest rate risk used in fixed income portfolio management.
Derivatives
Introduces futures, forwards, options, and swaps. Covers their uses for hedging and speculation, valuation basics, and payoff diagrams essential for understanding risk-return trade-offs.
Alternative Investments
Covers real estate, private equity, hedge funds, commodities, and infrastructure. Explains alternative asset valuation, due diligence, and diversification benefits.
Portfolio Management and
Wealth Planning
This module ties everything together by introducing portfolio construction, diversification, risk management, and investment policy statements. It teaches the principles of modern portfolio theory applied to managing client assets.
Composition and Exam Structure
CFA Level 2 consists of 88 questions arranged in item sets (vignettes) with multiple questions each. The exam is split into two sessions of 2 hours 12 minutes, all computer-based. The questions test application, interpretation, and analysis of financial data across key topics in the CFA curriculum.
Composition and Exam Structure
CFA Level 2 consists of 88 questions arranged in item sets (vignettes) with multiple questions each. The exam is split into two sessions of 2 hours 12 minutes, all computer-based. The questions test application, interpretation, and analysis of financial data across key topics in the CFA curriculum.
Preparation Tips
Preparing for CFA Level requires careful consideration and effective management of various key issues:
1. Conceptual Depth:
CFA Level 2 emphasizes complex concepts and requires candidates to go beyond memorization. Understanding valuation techniques, financial modeling, and accounting standards is critical to succeed.
2. Vast Syllabus
CFA Level 2 includes 10 topic areas covered across numerous readings and LOS (Learning Outcome Statements). The wide coverage requires early planning and regular review cycles.
3. Application-Oriented:
The exam format is vignette-based. Each item set tests application and synthesis of concepts in real-world scenarios. Practice solving case-based questions is essential.
4. Integration of Concepts:
Many questions span across topics such as equity, fixed income, and financial reporting. Candidates must be able to connect concepts across the curriculum to solve integrated item sets.
5. Depth of Knowledge:
CFA Level 2 builds upon Level 1 foundations. A solid grasp of concepts like time value of money, ratio analysis, and ethics is essential to understand and apply advanced Level 2 material.
6. Time Management:
With 44 item sets (vignettes) to solve in two sessions, pacing is key. Practice with timed mock exams helps build the speed and accuracy needed for success.
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Frequently Asked Queries
CFA Level 2 focuses on application-based learning, whereas Level 1 is more about memorizing concepts. It includes case study-based item sets rather than simple multiple-choice questions.
CFA Level 2 consists of 88 multiple-choice questions, structured as item sets (vignettes). The exam is divided into two sessions, each lasting 2 hours and 12 minutes, and is conducted in a computer-based format.
The CFA Institute recommends 300-350 hours of study for CFA Level 2, but many candidates spend more time due to its complexity.
The passing rate for CFA Level 2 is typically 40-45%.
Yes, candidates should: - Focus on practicing case study-based item sets. - Strengthen financial analysis and valuation skills. - Revise ethics, as it carries significant weight in the exam.
Yes, but you must schedule the exam for a later testing window.
There is no limit to the number of attempts, but candidates must wait for the next exam window to retake the test.
CFA Level 2 is significantly harder than Level 1, as it requires deeper understanding and application of concepts rather than memorization.