CFA® Exam Grading

The long wait for the release of CFA® exam scores by CFA Institute can be a period filled with a lot of uncertainty. Did you pass the exams? Did you not? Should you be saving up for the next level or a repeat? Are the results going to be disappointing or exhilarating?

In this article, we will look at, among other things, how CFA exams are scored.

Recap of CFA Exams

Starting in 2021, CFA exams are attempted within two hours and fifteen minutes.

The level I exam is a multiple-choice exam comprised of 180 questions.  In each session, a candidate attempts 90 equally weighted questions.

Level II of the CFA exam comprises of item sets, which consist of case statements/vignettes. Each vignette consists of four or six multiple-choice questions. Vignette questions can be more straightforward or more challenging than the individual level I questions, depending on a candidate’s understanding of the tested concepts.

Level III of the CFA exam comprises of both vignettes and essays. It is the only level of the CFA exams that is not a fully multiple-choice exam. In addition to attempting vignette questions in the afternoon just like in level II, candidates must write essay-type questions in the morning session.

Grading of the Exams

The multiple-choice exams, including the multiple-choice section of the level III exam, are graded with a machine’s help. However, to ensure accuracy and quality control, a small percentage, say 5-10%, of the multiple-choice questions, is hand graded.

On the other hand, the level III exam’s essay section has to be hand graded by a globally selected team of top-notch investment professionals. These top selected investment professionals work in groups, with each group handling one question. A question will pass through the junior, senior, and finally, the grader of graders within each team, a practice that ensures a high level of accuracy.

Exam Results

All CFA Program candidates receive their results via email. Level I and II candidates receive their results 60 days after completing the exam. Because of the essay section, level III candidates receive their results a month after level I and II candidates. The results sent to a candidate’s email will inform a candidate whether they have passed or failed. To get detailed results (individual topic performance and comparison with other test-takers), candidates will have to log into their accounts.

Minimum Passing Score

The minimum Passing Score, MPS, as the name suggests, is a measure used to determine whether a candidate receives a pass or a fail. The MPS is determined by the Board of Governors of the CFA Institute. It varies each year and for each level. It is set such that it reflects the degree of difficulty of the exam. For this reason, individual scores, say a 70% score, is not released.

Instead, candidates are just informed whether they passed or failed. Generally, a pass implies that a candidate exceeded the MPS set for that year and for that level. On the other hand, a fail indicates that a candidate did not manage to attain the minimum pass score set by the Board of Governors.

For the detailed results on topical performance, candidates receive a range of scores, for example, a score between 60 and 70%, and not an individual score, of say, 68%.

It is important to note that there is a “maximum point” available on each topic. The maximum point achievable is dependent on the topic weightings of the individual topics. For example, Financial Reporting and Analysis in level I has a topic weight of 13-17%, whereas Alternative Investments has a topic weight of 5-8%. A 75% score on both topics will not hold the same value. A 75% score in FRA will carry more weight than a 75% score in Portfolio Management.

Candidates should equally note that a good performance in one topic will not compensate for a poor performance in another topic. i.e., getting a high score in Equities and a low score in Fixed Income does not mean that the high score in Equities will make up for the low score in Fixed Income. To be safe, candidates need to go through all content thoroughly.

Generally, to be on the safe side, since the Institute never releases its MPS, a candidate should target to score a 70%, 65% on the lower end, in almost all topics. Mock exams and question banks are a great way to monitor your scores in each topic and improve your weakest areas. You can find AnalystPrep’s Learn + Practice package for level I of the CFA® exams here: https://analystprep.com/shop/cfa-level-1-learn-practice-package/

All 3 Levels of the CFA Exam – Complete Course offered by AnalystPrep

Role of Ethics in Exam Grading

The CFA Institute is well known for its high ethical standards. The ethics topic is examined in all three levels. With a topic weighting of 10-15% in all the levels, ethics is a vital topic in the CFA Program curriculum. In addition to having a high topic weighting, and thus, a considerably high number of questions, especially in level 1, ethics can influence a candidate’s results. With a good score in ethics, a candidate at the borderline gets a pass. With the same measure, a candidate at the borderline with a low score in ethics gets a fail.

As a quick rule of thumb, candidates must target at least 70% in each individual topic and an even better score in the ethics section. Good luck as you prepare for your exams.