How Hard Are the CFA Exams?

Tips for Taking the CFA Exam: Part 2

Investopedia sat down with Peter Mackey, the head of exam development for the CFA Institute, to discuss how to prepare for the CFA Level I, II and III exams. 

Reviewed by Ebony HowardFact checked by Patrice WilliamsReviewed by Ebony HowardFact checked by Patrice Williams

Attaining designations—a series of initials after their name—can make or break a career for financial advisors. Among these, the chartered financial analyst (CFA) stands out as among the most widely recognized and respected. Those who receive it are likely to open doors to a rewarding career in the investment industry.

Earning the CFA does more than demonstrate your expertise. It also signals dedication since attaining it is no mean feat: candidates typically study at least 300 hours, after which they must surmount a rigorous, computer-based three-level exam series. Each level must be passed to get to the next, given that each builds on the knowledge in the previous level. If you want to obtain the CFA charter, you’ll need hundreds of hours to study, practice test materials, and four years of qualified work experience in finance and investing. For many, that’s still not enough to pass.

Key Takeaways

  • A chartered financial analyst (CFA) is a professional designation awarded by the CFA Institute to those who have passed a three-level exam and had four years of work experience in investing.
  • In 2024, 49% of those who took Level I passed, better than the historical average going back a decade (43%) and from the exam’s beginnings in 1963 (46%).
  • The CFA exams consist of three levels: CFA Level I, CFA Level II, and CFA Level III. Each builds on and requires passing the previous.
  • Those preparing tend to set aside at least 300 hours for studying and taking mock exams.
  • You register for each exam level individually. Registration windows are typically open a few months before each exam date.

In February 2024, less than half (44%) of about 17,000 candidates passed the Level I exam at over 400 test-taking centers worldwide. Below, we take you through essential aspects of the CFA exam, including its structure, what knowledge it tests, how candidates prepare, and some example questions so you can see if you have what it takes to be among the relatively few with those initials after their names.

What’s On the CFA Exam?

The CFA exam consists of three levels, each with its own specific curriculum and focus. Each level requires its own six-hour exam, and you register for them individually. As a whole, the test covers ethics and professional standards, quantitative methods, economics, financial reporting and analysis, corporate finance, equity investments, derivatives, alternative investments, portfolio management, and wealth planning.

The breadth is what makes 300 hours a minimum for many studying for the exam. It’s also what makes the designation stand out to hiring teams and clients needing a quick signal of someone’s bona fides.

The CFA Institute offers many books and other materials necessary to prepare for the exam. Many candidates also use prep materials from various online and offline alternatives, including those from Kaplan Schweser.

One tip for those studying is to use a variety of materials (videos, multiple-choice questions, reading material, etc.) to see the same topics from various perspectives and pedagogical methods. It’s not true that learners are just auditory or visual; these are outdated, if stubborn, myths. Most people learn best through a mix of different sources.

Below are the topics covered on the different parts of the exam.

Main Topic Subtopics Level I: Question Types and Percentage of Total Level II: Question Types and Percentage of Total Level III: Question Types and Percentage of Total
Ethics and Professional Standards CFA code of ethics, standards of professional conduct, global investment performance standards Multiple choice (15% to 20%) Item sets (10% to 15%) Item sets (10% to 15%)
Quantitative Methods Time value of money, probability, statistics, hypothesis testing, regression analysis Multiple choice (8% to 12%) Item sets (5% to 10%) N/A
Economics Microeconomics, macroeconomics, international economics, monetary and fiscal policy Multiple choice (8% to 12%) Item sets (5% to 10%) Item sets and essays (5% to 10%)
Financial Reporting and Analysis Financial reporting quality, income statements, balance sheets, cash flow statements, financial analysis Multiple choice (13% to 17%) Item sets (10% to 15%) N/A
Corporate Finance Capital budgeting, cost of capital, corporate governance, mergers and acquisitions Multiple choice (8% to 12%) Item sets (5% to 10%) N/A
Equity Investments Market structure, equity market indexes, valuation techniques, fundamental analysis Multiple choice (10% to 12%) Item sets (10% to 15%) Item sets and essays (10% to 15%)
Fixed Income Fixed-income securities, bond pricing, yield measures, term structure of interest rates, credit analysis Multiple choice (10% to 12%) Item sets (10% to 15%) Item sets and essays (15% to 20%)
Derivatives Types of derivatives, pricing and valuation of derivative instruments, risk management applications Multiple choice (5% to 8%) Item sets (5% to 10%) Item sets and essays (5% to 10%)
Alternative Investments Real estate, private equity, hedge funds, commodities, infrastructure Multiple choice (5% to 8%) Item sets (5% to 10%) Item sets and essays (5% to 10%)
Portfolio Management Portfolio theory, risk and return, planning and construction, performance evaluation Multiple choice (5% to 8%) Item sets (10% to 15%) N/A
Wealth Planning Wealth management, estate planning, tax planning, behavioral finance, investment policy statements N/A N/A Item sets and essays (35% to 40%)

Passing Rates

CFA exams are notorious for their low passing rates, which have been trending downward since the program’s beginning in 1963. Historically, Level I and Level II passing rates typically fall between 37% and 52%, with Level III being slightly higher. However, when the exams were first introduced, pass rates were significantly higher, indicating the increasing difficulty and competitiveness of the program over time.

In recent years, the rates of those passing have fluctuated year to year. The CFA Level I exam pass rates have generally been between 35% and 44%. These rates are the best for assessing its difficulty: many candidates quit after failing to clear this initial hurdle.

CFA Level II passing rates have typically fallen within the range of 44% to 52%, depending on the exam session. The CFA Level III exam, which is the final hurdle for those seeking the CFA charter, has had passing rates between 45% and 56% in recent years. While these rates are slightly higher than for Level I and Level II, it’s pretty compelling about the program’s difficulty.

Suppose you took the Level I exam in 2022. You’d be among the 37% that passed that year. You sign up for Level II the following year, with about 47% making it past that gauntlet. Finally, in February 2024, you take Level III, with just under half (49%) making it through.

If there’s any saving grace, the CFA allows up to six attempts at each level. However, you’re limited to two attempts a year (at least six months apart).

Exam Questions

The test material is tough, and exam answers often rely on subtle differences in finance. For this reason, candidates should take many practice tests to know exactly what types of questions they can expect. In addition to the table above, here’s what you need to know:

  • Level I has 180 multiple-choice questions, split between two 135-minute sessions (session times are approximate). Each question has three possible answers. There is an optional break between sessions. For more on Level I, including a suggested study schedule, see our Best Way to Prepare for the CFA Level I Exam.
  • Level II consists of 22 item sets comprising vignettes (short financial scenarios) with 88 multiple-choice questions. It’s split into two equal sessions of 2 hours and 12 minutes, with an optional break between. For more on Level II, including what you’ll need to study, see our What To Expect on the CFA Level II Exam.
  • Level III combines item-set questions and short essays. For more on Level III, see our What To Expect on the CFA Level III Exam.

Example CFA Questions

Do you think you have what it takes to be among the relative few who pass the CFA exams each year? Question 1 below is a regular multiple-choice question like those you’d find on Level 1.

In addition, many questions on levels II and II are vignettes. They are typically two-page scenarios about a company’s financial health, including its recent financial statements, an overview of its industry, and the specific challenges it faces. Questions 2 to 5 below derive from a simplified scenario. Answers are at the bottom.

Multiple-Choice Example CFA Question

1. Jane Doe, CFA, is a management consultant for a financial services firm. She’s been brought in to lower the firm’s high staff turnover, especially among its CFAs. In the last year, the company lost three of its six most senior managers, each of whom told their exit interviewers that they were leaving due to systematic unethical practices at the company. To reduce staff turnover by encouraging ethical behavior, which of the following would be least appropriate for Doe to recommend?

  1. Create and provide all employees with a whistle-blowing policy.
  2. Suggest raises for those who remain on staff.
  3. Create, provide to all employees, and monitor a company code of ethics.

Item Set Example CFA Questions

Scenario: CFA Corporation is a midsized manufacturing company operating in the consumer goods industry. The company has experienced steady growth over the past five years but recently faced a decline in profit margins due to increased competition and rising material costs. The chief financial officer (CFO) has provided the following financial data in the income statement for the most recent fiscal year:

  • Revenue: $500 million
  • Cost of Goods Sold: $350 million
  • Operating Expenses: $100 million
  • Interest Expense: $10 million
  • Taxes: $8 million
  • Net Income: $32 million
  • Balance Sheet:
  • Total Assets: $800 million
  • Total Liabilities: $300 million
  • Shareholders’ Equity: $500 million

The CFO is concerned about the company’s liquidity and debt management and is considering various strategies to improve financial performance.

2. Financial reporting and analysis question: Based on the provided income statement, what is CFA Corporation’s net profit margin?

  1. 6.4%
  2. 7.0%
  3. 8.0%
  4. 9.2%

3. Corporate finance question: Which valuation method would be most appropriate for CFA Corporation?

  1. Discounted cash flow (DCF)
  2. Comparable company analysis
  3. Precedent transactions
  4. Liquidation value

4. Fixed income question: What impact would a 1% increase in interest rates have on CFA Corporation’s debt-to-equity ratio?

  1. Increase
  2. Decrease
  3. No change
  4. Insufficient information

5. Portfolio management question: What are the implications of the company’s liquidity ratios on its short-term financial health?

  1. Positive; indicating strong liquidity
  2. Negative; indicating poor liquidity
  3. Neutral; no significant impact
  4. Uncertain; depends on further analysis


  • Question 1: B is correct because offering increased benefits won’t stop the unethical behavior causing staff turnover and would suggest ethical employees are right to ignore it. CFA charterholders must dissociate themselves from unethical behavior under Standard I(A)–Knowledge of the Law. Implementing a whistle-blowing policy and a corporate code of ethics would help build a strong ethical foundation.
  • Question 2: A is correct because the net profit margin is calculated as net income divided by revenue: 32/500 × 100 = 6.4%
  • Question 3: A is correct because DCF is typically used for companies with steady cash flows, making it the most appropriate method here.
  • Question 4: A is correct because an increase in interest rates would generally increase interest expenses, affecting net income and potentially altering retained earnings. This would affect the debt-to-equity ratio.
  • Question 5: D is correct. Without specific liquidity ratios provided, an inference based on general financial data is needed.

What Are the Other Financial Designations Future Financial Professionals Consider?

A few other notable designations include those for a certified financial planner (CFP), who focuses on financial planning for individuals, including retirement, estate planning, and taxes; certified fund specialist (CFS), who focuses on mutual fund investments and analysis; chartered financial consultant (ChFC), who is like a CFP, but is more concentrated on financial planning in particular; and certified public accountant (CPA), who specializes in accounting, auditing, taxation, and business law.

Which is Harder To Attain: the CFA or CPA?

The CFA is often considered harder than the CPA. Princeton Review, the company behind exam guides in many industries, notes that the CFA has “high barriers to entry” compared with the certified public accountant (CPA) designation, which has “low barriers to entry.” That said, your interests and background will say far more about the relative difficulty for each person.

What’s the Job Outlook For CFAs?

Pretty good. Overall employment of financial analysts is projected to increase by about 11% from 2024 to 2032, faster than the average for most occupations. In addition, about 40% of financial advisors say they expect to retire in the next decade, adding to the openings beyond the additional jobs expected.

The Bottom Line

While the CFA exams are undeniably challenging, candidates can significantly improve their chances by adopting a comprehensive and disciplined approach to studying. This includes dedicating over 300 hours to exam preparation using a variety of prep materials. You’ll want to focus on practice questions and creating a structured study plan that balances out any weaknesses you might have.

CFAs are respected across the finance industry, and the knowledge gained through the program helps them find their place in investment careers. In addition, the designation grants access to a global network of like-minded professionals, providing prospects for networking, collaboration, and continuous learning.

Read the original article on Investopedia.