What To Expect On The CFA Level III Exam
The CFA Degree III examination is the final within the sequence of three exams performed by the CFA Institute. Coupled with not less than 48 months of related work expertise, profitable completion of the ultimate stage yields a constitution membership.
Whereas the primary two ranges revolved round fundamental monetary data, funding valuation comprehension, and the appliance of each, the CFA Degree III examination focuses on portfolio administration and wealth planning.
Contents
Key Takeaways
- The CFA Degree III examination is the final within the sequence of three exams performed by the CFA Institute, and it’s held twice yearly—in Could and August of 2022 and in February and August of 2023.
- Coupled with not less than 48 months of related work expertise, profitable completion of the ultimate stage yields a constitution membership.
- The CFA Degree III examination focuses on wealth planning and portfolio administration, and most of the questions are posed in essay kind.
- The examination is split into two periods; one within the morning and one within the afternoon.
- The syllabus may be very complete and introduces new ideas. These embrace behavioral finance, danger administration ideas, and instruments and methods for managing danger are additionally mentioned.
What To Count on On The CFA Degree III Examination
Examination Construction
The format of the examination, which is obtainable in Could and August of 2022 and in February and August of 2023, is a mixture of merchandise set questions (just like Degree II) and essay kind questions. Like the opposite exams, the Degree III examination can be performed in two components: the morning and afternoon periods.
Within the morning session, there are 10 to fifteen essay-type questions. Every query consists of a number of components akin to A, B, C, and so on., which assist you to arrange your reply in a template. These questions might give you a scenario and ask you to develop your personal suggestion or resolution. Every session can have both six merchandise units and 5 essay units or 5 merchandise units and 6 essay units.
The examination is graded for 360 factors, which corresponds to 1 level per minute.
Examination Curriculum
As talked about earlier, the main focus of the examination is on portfolio administration and wealth planning, nevertheless it additionally covers seven subjects which are grouped into two different areas, specifically, Moral and Skilled Requirements and Asset Lessons. The next desk offers weighting of those subjects and broad areas for the examination:
As is obvious from the desk, the Ethics and Skilled Requirements will get as a lot significance as within the different ranges of the examination. The funding instruments should not examined individually, besides economics, which is part of the portfolio administration and wealth planning part for stage III.
The vast majority of the examination revolves round portfolio administration and asset courses within the portfolio context.
Requirements
In stage III, requirements primarily include the Code of Ethics and World Funding Efficiency Requirements (GIPS). Requirements account for 10% (i.e., 36) of the 360 doable factors. The Code of Ethics part will almost definitely be an merchandise set within the afternoon session. Nevertheless, GIPS may very well be examined both as an essay query within the morning session or as an merchandise set within the afternoon session.
Asset Lessons
The examination checks your data on the entire main asset courses, together with different investments, derivatives, fairness investments, and fixed-income investments. Nevertheless, the main focus is now on the portfolio administration elements of those investments.
For instance, an entire session is devoted to the administration of energetic and passive fixed-income portfolios, protecting funding targets, benchmarking, return evaluation, portfolio immunization methods, relative worth evaluation, and so forth. The syllabus additionally covers methods utilized in worldwide and rising markets and the way derivatives are used to handle rate of interest and credit score dangers in fixed-income portfolios.
The second asset class is fairness securities, that are an integral part of most funding portfolios and essential for the portfolio’s success. The dialogue right here surrounds fairness funding methods, analysis of fairness fund managers and fairness indexes. The syllabus additionally discusses the company governance points associated to conflicts between managers and shareholders that erode worth and have a direct affect on fairness portfolio managers. Lastly, there’s a dialogue on measuring and managing portfolios in worldwide and rising markets.
The part on different investments primarily discusses the choice funding courses and the way spinoff devices akin to swaps, futures, and forwards are used to handle some different investments.
Portfolio Administration and Wealth Planning
This includes the biggest portion of the examination and can account for not less than 180 factors out of the 360 doable factors. Portfolio administration ideas will dominate each the morning and afternoon periods. The syllabus may be very complete and introduces new ideas akin to behavioral finance, which varieties the premise for monetary choice making. Danger administration ideas, protecting instruments and methods for measuring and managing danger are additionally mentioned. Aside from these, you might be prone to be examined on questions associated to particular person and institutional wealth.
The variety of ideas that may be examined are restricted however are vital. One such vital idea is the Funding Coverage Assertion and its parts, which is very testable. Economics, which was part of the funding instruments in Degree I and II, is included underneath portfolio administration within the examination. Different vital ideas are managing portfolios of institutional traders, asset allocation, danger administration purposes, and evaluating portfolio efficiency.
Throughout the portfolio administration part, the CFA Institute offers no hints about which subjects are extra vital. Nevertheless, it does make accessible essay questions from earlier years, which will be very helpful for training and creating your examination technique.
Attempt Our CFA Degree 3 Quizzer
Examination Particulars
Time Restrict: 6 hours
Value: Varies
Variety of Questions: 11 multi-part essay/structured response
Passing Rating: Varies Yearly
Passing Charges: As of August 2022, 54%
Format: Essay Questions
Stipulations: Passing grade on CFA Ranges I & II examination, and a U.S. Bachelor’s diploma or equal.
Corequisites: So as to obtain your designation as a CFA constitution holder upon profitable completion of stage 3, you might be required to have not less than 4 years of expertise in a associated discipline.
Examination Date(s): February and August
Examination Outcomes: Often offered inside 90 days. The Degree III examination is graded by hand.
Official Examination Website: CFAInstitute.org
The Backside Line
The Degree III examination is taken into account one of many harder exams for the CFA, as most of the questions are posed in essay format.
The important thing to success is to apply as many essay kind questions as doable and grasp subjects particularly associated to portfolio administration, which is on the coronary heart of this examination.
