- On Tuesday, results for Levels I and II of the Chartered Financial Analyst qualification were released.
- Every year, more than 100,000 people take exams to earn the CFA.
- The series of three exams is notoriously difficult — less than 50% of people who take the first level pass.
- Below are seven questions from a recent Level I practice exam.
- Here’s some advice to prepare for the exam.
On Tuesday, thousands of aspiring financiers around the world are finding out how they performed in one of the most mentally grueling exam experiences on the planet, the Chartered Financial Analyst Program.
The series of three exams is designed to ensure that people working in certain parts of the financial industry have all the right knowledge to succeed. More than 100,000 people around the world take the test in more than 100 countries every year.
The exams are notoriously tough — pass rates have hovered around 40-50%. Most people study for more than 300 hours beforehand.
Becoming a CFA charter holder is a huge leg up for anyone hoping to build a career in investment management. But what do the exams involve? Business Insider got hold of a recent practice test from the CFA Institute, which administers the exam, to see just how difficult it is.
We’ve picked a handful of questions from the Level I exam, which is, in theory at least, the easiest one.
The full exam is six hours and consists of 240 multiple-choice questions.
“For many students, parts of the CFA Program exams that commonly cause the most trouble are those covering fixed income and derivatives,” Alex King, a director for examination development at the CFA Institute, told Business Insider.
Check out the questions, along with the answers and explanations from the CFA Institute:
QUESTION: A portfolio of securities representing a given security market, market segment, or asset class is best described as a:
A) Benchmark
B) Security market index
C) Total return index
ANSWER: B
“A security market index represents a given security market, market segment, or asset
class and is normally constructed as portfolios of marketable securities.”
QUESTION: Colin Gifford, CFA, is finalizing a monthly newsletter to his clients, who are primarily individual investors. Many of the clients’ accounts hold the common stock of Capricorn Technologies. In the newsletter, Gifford writes, “Based on the next six months’ earnings of $ 1.50 per share and a 10% increase in the dividend, the price of Capricorn’s stock will be $ 22 per share by the end of the year.” Regarding his stock analysis, the least appropriate action Gifford should take to avoid violating any CFA Institute Standards of Professional Conduct would be to:
A) Separate fact from opinion
B) Include earnings estimates
C) Identify limitations of the analysis
See the rest of the story at Business Insider
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