Chartered Financial Analyst
CFA Level - 3
Eligibility and Registration
Must have passed Level 2 and either: Completed your degree, or Have 4,000 hours of relevant experience. Register via CFA Institute once eligible.
Eligibility and Registration
Must have passed Level 2 and either: Completed your degree, or Have 4,000 hours of relevant experience. Register via CFA Institute once eligible.
About the Exam - CFA Level 3
CFA Level 3 is the final step in the Chartered Financial Analyst program. It emphasizes portfolio management, wealth planning, and how to apply investment tools in a real-world context. The exam features both item-set and constructed response (essay) questions. The curriculum focuses on integrating concepts learned in Levels I and II to develop practical, client-oriented solutions.
About the Exam - CFA Part 2
CFA Level 3 is the final step in the Chartered Financial Analyst program. It emphasizes portfolio management, wealth planning, and how to apply investment tools in a real-world context. The exam features both item-set and constructed response (essay) questions. The curriculum focuses on integrating concepts learned in Levels I and II to develop practical, client-oriented solutions.
CFA prep resources
CFA Level 3 is composed of six modules
Each with its respective weighting as follows:
15–20%
Asset Allocation
15–20%
Portfolio Construction
5–10%
Performance Measurement
10–15%
Derivatives and Risk Management
10–15%
Ethical and Professional Standards
30–35%
Pathways (Portfolio Management or Private Markets or Private Wealth)
Asset Allocation
This module builds the foundation for strategic and tactical asset allocation decisions. It covers frameworks for developing capital market expectations, macroeconomic analysis, and methods to forecast asset class returns. Learners also explore the core principles of asset allocation and how to adapt them to real-world constraints such as taxes, liquidity, and regulations.
Portfolio Construction
This module emphasizes practical aspects of building and managing portfolios across different asset classes. It covers equity and fixed income portfolio management, allocation to alternative investments, and the unique needs of private wealth and institutional clients. The module also includes trading costs, market structure, and a real-world institutional case study to tie everything together.
Performance Measurement
This section focuses on evaluating portfolio and manager performance. Candidates learn to analyze risk-adjusted returns, apply performance attribution methods, and select investment managers. It also introduces the Global Investment Performance Standards (GIPS) to ensure ethical and standardized performance reporting practices.
Derivatives & Risk Management
This module introduces derivative strategies using options, forwards, futures, and swaps, designed to manage or enhance portfolio risk/return profiles. It also covers the fundamentals of currency management, including techniques to hedge foreign exchange risk in global portfolios.
Ethical & Professional Standards
Ethics is a cornerstone of the CFA Program. This module reinforces the CFA Institute Code of Ethics, Standards of Professional Conduct, and the Asset Manager Code. Through practical case studies, it prepares candidates to navigate complex ethical challenges encountered in real-world investment management.
Composition and Exam Structure
CFA Part 2 consists of 80 questions, all with equal weighting. These questions are presented in a multiple-choice format, where you choose the correct answer from a set of options. The exam is conducted in a computer-based format (CBT), providing a modern and efficient testing experience. Candidates are granted a four-hour window to complete the examination, during which they navigate through the questions and select their responses. This format aims to assess candidates’ knowledge, application, and decision-making skills within the defined time constraints.
Composition and Exam Structure
FRM Part 2 consists of 80 questions, all with equal weighting. These questions are presented in a multiple-choice format, where you choose the correct answer from a set of options. The exam is conducted in a computer-based format (CBT), providing a modern and efficient testing experience. Candidates are granted a four-hour window to complete the examination, during which they navigate through the questions and select their responses. This format aims to assess candidates’ knowledge, application, and decision-making skills within the defined time constraints.
Preparation Tips
Preparing for CFA Level 3 requires strategic planning and a deep understanding of portfolio management principles:
1. Emphasis on Portfolio Management:
CFA Level 3 heavily emphasizes portfolio management and wealth planning. Candidates need to master asset allocation, investment policy statements, and client-specific recommendations, making it essential to focus on applied knowledge.
2. Curriculum Breadth:
With six topic areas—including Ethics, Asset Allocation, and Performance Evaluation—the syllabus is broad. Candidates should prioritize topics based on weightage, especially Pathways which make up over 30% of the exam.
3. Focus on Application:
The exam is less about calculations and more about applying concepts in case-based scenarios. Practice writing structured responses and understanding how to approach client objectives and constraints.
4. Mastering the Essay Format:
The constructed response (essay) section is unique to Level 3. It's crucial to practice under timed conditions, understand command words, and write concise, direct answers to maximize scoring efficiency.
5. Ethics Still Matters:
Ethics remains a key component and can be a tiebreaker. Make sure to revise the CFA Institute's Code of Ethics and Standards of Professional Conduct thoroughly, as this section is nuanced and vital.
6. Time Management:
Time pressure is real, especially during the essay section. Develop a clear exam strategy, stick to allocated time per question, and avoid writing more than required to stay on track.
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Frequently Asked Queries
CFA Level 3 introduces essay-based questions (constructed responses) in addition to case-study-based item sets. It focuses more on portfolio management and wealth planning.
- Morning Session: Constructed response (essay-style) questions. - Afternoon Session: Item set (case study) questions.
- Practice writing concise, structured answers. - Use bullet points where necessary. - Review past CFA essay questions available on the CFA Institute website.
The passing rate is typically 45-55%, making it the highest among all levels.
- Morning session: Graded manually by CFA Institute graders. - Afternoon session: Computer-graded multiple-choice questions.
Candidates must apply for CFA Institute membership and meet the work experience requirement (4,000 hours over 3 years) to become a CFA charterholder.
- Focus heavily on portfolio management topics. - Master the essay-writing format. - Revise CFA Ethics and Standards of Professional Conduct thoroughly.