What are the Differences Between CFA® Level II and Level III Exam?

What are the Differences Between CFA® Level II and Level III Exam?

Congratulations on passing level I and level II CFA exam. However, you have probably heard that level III CFA exam is different. Let us look at some of these differences and accommodate these changes into your new study routine.

Exam Question format

The first difference between the CFA level II exam and the CFA level III exam is the question format. CFA level II exams focus on testing how you apply financial analysis knowledge to real situations. You should have the skills to use analysis tools and relationships to assess financial data and determine asset value.

The level II exams include questions organized as vignettes consisting of four to six multiple-choice questions testing on a single topic. These questions test your understanding of financial analysis using tables, texts, or financial statements to describe a financial situation which you should solve.

Level III CFA exam is the most advanced level of the CFA program, which requires you to demonstrate the ability to carry out financial analysis, make judgment calls and explain them. The first part of the Level IIII exam consists of eight to twelve response questions, which is the most significant difference from the level II exam. Response questions are open-ended, which require constructed answers on a blank paper without multiple choices to pick from.

On the other hand, the second part has vignettes with multiple-choice questions.

Integration of topics

Level III CFA exam questions can integrate two or more topics, unlike level II questions. Therefore a candidate can expect to find a constructed response question that combines concepts from different topics. Additionally, level III questions are more particular than other levels. For instance, the candidate should identify the best portfolio from a cluster of portfolios.

Pass rates

The good news for level III CFA exam candidates is that the average pass rate is higher than that in level II. With more than half the students passing the exam compared to level II, the average pass rate for the last five years was 54%. In comparison, the average pass rate for level II in the previous five years was 46%.

The biggest challenge for level III CFA exam candidates is the constructed response section which explains the almost average pass rate. However, nearly half of Level III candidates fail the exam even though they are more qualified.


The CFA Institute announced curriculum changes in 2021, with level II consisting of 48 readings and 14 study sessions. On the other hand, level III of the CFA program curriculum has 38 readings and 16 study sessions.

Topics and Their Exam Weights

CFA program level II has ten topic areas, and the highest topic weight is 10-15%, while level III has seven core areas, with the highest topic weight in portfolio management being 35- 40%.

Furthermore, level II candidates report spending an average of 325 hours studying. However, CFA program level III candidates spent more than 358 hours in exam preparation.

Exam Study Tips for CFA Program Level III Candidates

To achieve success, you need to be focused and have an innovative study plan. The following study tips will help you pass your exam and get your CFA charter.

1. Start a Study Routine as Early as Possible

To pass your Level III exams, you need to understand the material and have the skills to apply it. The exam will test how to apply what you learned to different scenarios.

You should put in at least 358 hours of study to attain such a high level of understanding and application skills, and starting a study routine as early as possible will go a long way in helping you achieve this.

2. Take Note of the Core Topics

During your study sessions, it is essential to understand the topics that carry more weight in the exams versus those that do not. Therefore, you should note the core topics that weigh more in the exams you are studying.

3. You Should Be Aware of the Specific Learning Outcomes

Specific learning outcomes refer to what you should be able to do by the end of your CFA program. It is the actual knowledge, skills, and abilities that the lecturer or instructor intends for you to learn or develop.

As a result, you should plan out your study sessions around the core topics and the specific learning outcomes. Planning study sessions around the core topics will help your study sessions be more focused and successful.

4. Relate Your Knowledge to Real Situations

The CFA exam tests not just your knowledge of the material but the skill to apply that knowledge to realistic situations. You need to apply what you have learned to solve problems rather than replicate memorized information.

You should always keep in mind that you will need to use the material you learn to work in the real world. You can make your learning material simpler to remember by relating it to real-life situations.

5. Practice Taking the exam

The last but equally important step in preparing for your Level III CFA examinations is to practice taking the exam as much as possible. You should simulate realistic exam conditions while practicing.

Taking mock examinations will enable you to identify any knowledge gaps and adjust your study sessions. You will also understand the terms used during testing, the calculations required, and how to apply the knowledge to solve problems.

Enroll in the CFA program study packages from Analystprep.com and access additional revision materials and guidance from our experts. Candidates who get guided study and participate in student study groups are more likely to pass their exams. In addition, we have a vast up-to-date library of practice questions and mock exams to give you the best chance at success.

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