Late September is supposed to be already cold here, but it
feels like summer this week. The temperature is a bit odd in a season where
leaves are changing colours. The short fall is one of the two seasons I like in
a year; it’s short and sweet. I am sure
everyone is full on CFA and having a productive weekend so far. 2 more months
to go, it’s getting REALLY close.
To continue the topic yesterday, I will list a few things
you absolutely must clear out for passing the level 2 exam. The l2 exam built
on the foundation of l1 is a test of your understanding of the application of
securities valuation tools. I always believe L1 is a test for your knowledge
base, you will pass the l1 exam if you simply have a knowledge base. L2,
however, requires candidates to apply the knowledge base, especially focus on
security valuations. So the key here is to know what tools/techniques are
available to you, and know how to apply these tools.
- Securities valuation is key in l2, so logically, you need to make sure the sections on securities are well covered, that is equity (SS10, 11, 12), fixed income (SS14, 15), derivatives (16, 17), and least importantly alternatives (SS13). Here I would focus my study on chapters where the application of models is discussed and practice questions on those topics. For equity, SS11 and SS12 focus on the application, the DCF models, multiple models and private company valuation will be key to any valuation modeling. For fixed income, it’s a short chapter, there’s only two readings but weighted from 10 to 20%, so don’t miss out on that. I personally struggled when I was studying for l2 Derivatives, topics like forward contracts i.e. FRA, currency forwards took me a lot of time, you will need to practice a few questions at least on each type of forwards before the exam, you just never know what will be on the exam. And of course there are alternatives, which I’m not too worried about.
- FRA (SS5, 6, 7): the good old FRA is also key in l2 because that’s what’s driving the valuation engine. Financial ratios and their implications will be important throughout this topic, the employee compensation and pension sections were also very important when I took the exam 2 years ago.
- Corporate finance (SS8, 9): this section is weighted 5-15% of the exam, where the key topic highlights will be related to optimizing capital projects, capital budget analysis, capital structure of a company, and dividend/repurchase analysis.
At this point, your strategy should shift from studying the
materials to focusing on what will make you pass the exam. The above sections
in total will count for 70% of the exam, large enough to determine your exam
score, remember you will need (and only need) 70% to pass any of the 3 exams. I
didn’t mention other topics because they are either not the main component of
the l2 exam (this doesn’t mean you should not study them), or candidates have
seen enough of them in level 1. Topics like quant, economics, I would expect l2
candidates to have a solid knowledge base on those topics when they pass l1,
and only need to review in l2 and practice more questions. Stuff like portfolio
management is nice to have, but it only worth 5-10% of the exam, plus PM is the
main theme in l3, not l2. And lastly, there’s the ethics, like I mentioned in
previous post, you should be reading the code and standards during your
commute, or whenever you are waiting for something, focus on the examples they
provided in the books, understand how they positioned each scenario, this
section probably has the highest reward for the number of hours you put in.
One last note, remember level 2 is an entirely different
beast than level 1 in that you are no longer answering an individual questions,
so you can’t use the same exam taking techniques you exceled in l1, you must
adapt to the new dynamic on exam day. Closer to the exam I will write my
strategy on exam day and how I approached each individual question in l1, and
each question set in l2 and l3.
Still warm out, but it’s time to do more readings or
practice questions. For me, I need to get back to work too. Have a productive Sunday.
16 comments:
Wow, I didn't expect a new post, this is a very pleasant surprize! Thanks a lot. This is very helpful post as I'm doing level 2. Great blog! I enjoy more and more your blog and already refer it to friends doing cfa.
Thanks so much for the post, very helpful. Actually I wrote a very long comment but my computer crashes. So lost the comments before I could submit it. Just want to say how much your blog is helpful for me especially this last post. Reading your previous few post and comments, I could tell you are very busy but you still take your time to write the post to help us, that's very nice of you and extremely generous. I and I'm sure other reader think you have enough for this weekend. You should enjoy life and spend time with your gf or bf or significant other. You don't need to do cfa like us, so don't suffer like us. Thanks again, your blog is really very phelps up.
Thanks a iot for the post! Very helpful! Your blog looks very professional. Really like your blog a lot.
Thanks so much, this is extremely helpful as I'm doing level 2. The way you explain and your personal touch make the study easier to digest ! Thanks ! You should write a book on investment.
Thanks Anonymous guys and thanks Lisa for your comments.
The level 2 studying is different from level 1 in terms of the depth of material and the application of these concepts, I will write more on how to execute your plan and what to expect on the exam. At the end of the day, no one can replace your hard work and you must understand the material. But that's not all it takes, it also takes time management skills, exam taking skills and reading skills etc so you can locate the information you need to answer each question. I will create another post on these topics closer towards the exam.
Lisa, thanks for your long comment! and sorry to hear that it got lost. Yes, I was quite occupied this last few weeks, went through 5 rounds of intensive meetings just this week. gf just told me I tried so hard for cfa, spend so much time for my job and the blog, but only giving her very little time. Life is complicated and we all juggle between what's on our plate, I guess being mindful and prioritization is important. So thanks for your comment, I really appreciate it.
Good luck studying everyone.
Thanks for your post, really very helpful. Like other, I really hope I can pass level 2, with a lot of practices, and reading your blog. If you have any more new tips or things to focus for level 2, it will be much appreciated.
But no worries, just take your time, I still have a lot iof reading, so please spend more time with your gf (it is good to know you are a guy...always wonder if you are male or female...:)
I think your gf must be someone very special to accept you do cfa and still allow you with this blog that's only beneficial for us. My gf always want me to quit, she says if u don't pass this time, I should quit orelse it is her who quits me. On top of my cfa study, I'm the one cooking at home, washing dishes, throwing garbage and doing all kind of chores, and doing & paying all groceries...but she still complains I don't spend enough time with her...it is very hard on me...I'm not sure if it exists a girl out there who can support a guy study, cook, do all those chores including buying groceries. Just like this morning when I was studying, all I wish is just a cup of coffee but at the end it is me ending up doing for my gf. Sorry for venting out...since I know you are a guy, I was just wondering how is your gf? Not that I want to know your private life, but just to see if your gf has been supportive of your cfa and your blog....thanks for your blog, going back to my study now.
Thanks a lot for this post, very helpful. I didn't expect you would put new post as you mention you will be quite busy.
It is also interesting to read all the comments including yours...agree with Brian, at least we know you are a guy now...actually I thought you were a girl because similar to Brian, at home it is my gf who commands...it is already very hard for me to make her accept my cfa study...and if I ever pass all the levels, no way she will accept I spend time writing blog instead if spending with her. Not sure how is your gf but Brisn, I'm with you man on this, me too, cannot even expect a cup of coffee, so forget the cooking. I cannot put my name as my gf knows I'm reading this blog, so don't want to be in trouble. PassCFAExams, thanks for your inspirational blog! It is really big mental support...
OMG, your blog really save me from becoming insane ! Thanks so much. Studying non stop level 2 for the second time...the only thing i do is work, commute, study, sleep (only little) and in between all those tasks i still need to do chores at home and entertain my gf (like Anonymous, I cannot write my name as she may read your blog). I thought I was too weak or not normal, but i am glad to read the comments from Brian and Anonymous. It makes me feel a bit more normal. Me too, no cup of coffee in the morning, but worst, my gf is yelling me constantly if i don't do the list of chores she gives me on a weekly basis and whenever I cook (she is just sitting watching tv), I have to bring the food to her and she will criticize how it tastes badly. Many times we argue as she doesnt seem to understand I am not a cook and I dont have time to cook. She keeps nagging me that i dont spend enough time with her and i should go learn to cook. When she is not nagging at home, she is going out all the time and when she is back, she smells alcohol and sometimes drunk. So Brian and Anonymous, I completely understand your situation, but i dont think it is as bad as mine. On top of that, i also need to entertain her mom and pay for their "going out" or vacation. I also wish someone tells me if there is a girl out there who can supports 100% my study, cook, do dishes, laundry, throw garbage and just stay at home with me when Im studying, just for the coming few months...and understand I need to complete this study. What is your experience on this field PassCFAExams? As Brian mentions, not that we want to know your private life, but it will be nice for us to get a bit of your personal experience on that....are you experiencing the same thing as us during your study?
omg omg, i cannot find any words...when i read the above comments, it is like reading my life ! Brian and the 2 Anonymous, I feel your pain! Similar to you guys, I am the one doing all the chores, cooking and my gf still complained I don't spend enough time nor do enough at home. Just few hours ago, she yells at me for not being romantic when i was trying to understand financial analysis! She is now going out with her friends (also probably coming back drunk)....sometimes i feel if i am very sick, she wouldn't even know ! Me too, have to entertain her mom and take her mom out tomorrow for lunch and probably give my gf my credit card for her to shop with her mom.
My life sucks....What is your take on this PassCFAExams ?
Thanks a lot for the post. Very helpful. I will definitively use all your strategy...hopefully i can pass by just practicing and reading your blog. Been studying non stop. I also find all the comments very entertaining. After reading all the comments, I realize how I am quite blessed with my gf. She cannot cook and she doesn't cook, she doesn't wash any dishes nor laundry, nor do groceries or garbage. She doesn't really like to listen to me talking about my study, nor is very supportive about my study. She also complains and nags and yells at me all the time, especially when I don't cook enough spicy. She never change the rabbit cage although it is her rabbit. She always give me the cold shoulder when I don't spend enough time with her. Whenever I am sick, she will go back to her parents house to make sure I don't contaminate her.
Whenever I am not sick, she is sleeping in her master bedroom when I am sleeping on the sofa-bed because it is my fault for snoring. She never pays any bills nor groceries and I need to make sure that my credit card has money in order for her to shop once in a month.
She is very harsh and aggressive and a bit tomboyish
So why am I blessed? because she is making instant coffee for me on every sunday and she is very cute:) Guys, look at positive side, your gf must have some other qualities that attract you. If not, then either you guys move on or learn to accept the situation without complaining. What is your experience PassCFAExams on this matter?
Hey Brian, 2 anonymous guys, Greg, and Gary,
Gary, you are doing pretty well, I agree with you on your last point. Brian, Anonymous guys, Greg, I am sorry to hear that your relationships do not help you in this already difficult situation. Based on your comments, it seems to me that your gf’s are not very supportive of your studies, now I can’t assume anything when I read your comments, each of you may be in a different stage in your relationships. I know when you first start a relationship, it is normal to have more demands than understanding. Your gf’s may not understand what it takes to pass this exam, and how important it may be for you and your career. I found many people often don’t appreciate the hard work simply because they don’t really understand how hard the exam is, and for those who understand it’s a hard exam, they appreciate a lot more.
There’s two sides to this argument. I always believe a job is very similar when compared to a relationship, I guess it’s also true the other way around. You made a conscious decision to be with someone is like you accepted to work for an employer, you make your decision based on what you know, how much you are paid. If you can’t take your job anymore, you would go look for another job right? Obviously there’s something that’s holding you if you don’t quit, be it love, personality, look or anything else. So that something is precious to you and is what you need in your life, okay, so in that case, you will just have to suck it up.
Here’s the other side of the story though, I recall a guy called Pinto said something insightful in a lecture, and this fits everyone, boys or girls. If Your partner doesn’t support you, complain about not having your attention a few hours a day for a few months a year, and they quit you for cfa, you should let them go because they don’t get it. They don’t appreciate your hard work, don’t realize the long term benefits of cfa, and the fact that you keep challenging yourself intellectually, and trying to make a better living, they don’t know what they are losing. A smart woman or man would understand and support their partner’s undertaking in any initiatives in life, not someone who does nothing to help and asks you to quit something important to you simply because it takes too much time. That’s not a healthy relationship. The truth is if your partner can’t stay with you on this, how can they go through other difficulties in life with you that may be much worse than an exam.
All in all, this exam is a test. It’s tough doing this, it’s tougher being the person you want to be, and I guarantee you will learn so much from it, not just CFA material but learn about life in general. I have been lucky that cfa was not a deal breaker in my relationships (went through couple of break-ups for other reasons). I don’t want to influence you guys so I won’t say how I’d approach this. If you ask me, I would look at both sides, ask if I am committed to a relationship, and make up my mind whether it’s time to move on or learn to accept.
Thanks a lot for the post, and all the comments. It is my 3rd time doing level 2. I passed level 1 after 4 times. Now studying very hard level 2. Hopefully your blog can help. Not sure if you guys Anonymous and Brian want to get my advice, I think PassCFAExams has a point, but before you guys decide anything, think well because you guys may regret. I'm talking from my own experience. I also went through 2 breakup during level 1. No regret for those 2 breakup, as you said they were not understanding nor supporting my study. I think they didn't even really care or love me.
My last gf was a bit supportive and understanding, she never cook, we always bought take-away food and she is almost never home, which was not perceived well by my mom. But my last gf cares for me and has a good heart. Reason of breakup was partially due to my study, but more due to my mom not liking her which creates a lot of tension in my relationship, it was also the constant argue from my gf who also complains and nags about all kind of things that made me very annoyed, and that included the fact I never consider her feeling and always put her on the bottom of my priority (I always argued back it was not true, but retrospectively looking back, sometimes she was right). Thinking back now, being more mature, I think I was inconsiderate and kinda selfish. Somehow Deep down I always regret for this break up, but I always said no regret and made myself busy with study and work and taking care of my mom that I felt numb about this last break up until few months ago, when I met her at a common friend's wedding. That's when the regret feeling came back. She was with a guy (I assume it is her new bf or husband) and they were having a really cute kid. I was happy for her but really sad, as I could be that guy. Just last week I found out something that is not necessary to disclose here, but I can tell you guys that my regret feeling for the lady breakup exponentially double. I think if I have to choose all over again, I rather have my gf back and not pursue this study. Every relationship is different, but this is hat I learn: no matter if your gf or bf can cook or not, get along with your family or not, do your coffee or chores at home or not, support fully your cfa study or career or not, no matter how much she nags or complains, all of these things shouldn't be a factor in your decision to break up. If your gf is someone who really cares for you and if you guys have a special bond or chemistry, try to work it out, and as my mom taught me you guys are guys so make the first step. Actually my mom also regret for my last breakup...hopefully my story can help you Brian and Anonymous. My life pretty much sucks too especially now I realize I lost the love of my life and my kid doesn't even know my existence and calling someone else dad....All I can hope now is to pass all the levels ASAP, find a better job and buy a house for my mom and me. As for my last gf, i have been very selfish during my relationship with her, so now I don't want to disturb her happy life...I just need to live with this regret. She knows I am still doing my cfa as a lot of our common friends...if they mention to her about this blog, maybe she will ready this comment..In that case, she should know how I'm sorry as I'm not someone who vents out like this.
Thanks for the post. Your blog us very inspirational. Similar situation as Brian and Anonymous, PassCFAExams, so much appreciated for your tips and advice. Also appreciate the insight of Raj...I guess I really need to reflect on myself too, instead of blaming all the tine on my gf not understanding.
Going back to my study...looking forward your new post.
Thanks for the post. Your blog is very helpful and inspirational. I think your blog has also become a platform for guys to vent out...hahaha...I'm a bit in similar situation as Brian, so I feel your pain, but it is good to know I'm not alone! :) I think you should have a section for people to vent out all their frustration :)
You made me very curious, so now we know you are a guy, so what kind of job are you dealing with? And it would be nice if you can share with us a bit about how your gf is treating you. Are you also in similar situation as Brian? It is just for curiosity and entertainment a bit, I think your blog us only entertainment we allow ourselves. Ok going back to study.
I agreeing everyone. Your bpist is very helpful and extremely inspirational. Thanks for sharing with us your tips, and I really like your personal touch in your writing. You should definitively write a book. I will buy it!
I mean your blog is very helpful and inspirational. Sorry for typo. I think you are helping lot if people including myself without you realize it. I'm doing me el 2. So will very appreciate if you can post more on level 2. A key summary of all the things to remember and hit ulna will be nice. Thanks a lot.
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