Becoming a financial analyst is the first step to many prestigious careers on Wall Street, including that of hedge fund manager. There are three types of financial analyst exams from Level 1 to Level 3.
Passing the exams at each level is a big challenge and requires adequate preparation. The exam pass rate is usually less than half, which only shows you the best financial analysts.
However, if you have the right strategy, you can pass the exam. The following six strategies should help you pass the financial analyst exam:
If you want to pass the financial analyst exam, it would be best to study at your own pace and not rush anything. Therefore, you should start studying for the exam as soon as possible, so that you are not in a rush as the exam date approaches.
Going at your own pace will ensure you fully understand the course material and you can get help with any parts you don’t understand. You should leave the last few weeks before the exam for review, practice questions and practice exams.
Most people choose to take prep courses for the CFA (chartered financial analyst) program, and while it has many benefits, you need to progress at the speed of the course, which might be too fast for you.
Focus on the CFA Institute curriculum
Everything you will encounter on the CFA exam at any level will come from the CFA Institute, so it would be best to focus on the institute curriculum. By reviewing their curriculum, you will know exactly what to expect for each level.
The good news is that the entire CFA curriculum is available on the CFA website. You should review the exam preparation materials and study tips from the CFA website.
This will allow you to focus only on the most tested hardware. Many people make the mistake of relying on too many sources of information instead of using the one that matters most. Also, you only have six months, so be sure to focus on the CFA program.
Use available tools
To best prepare for the CFA exam, you need to use the tools at your disposal. Many students make the mistake of trying too hard to find resources they can use and ignoring the basics.
The CFA Institute website has most of the tools you’ll need, including plenty of test questions, guides, and other resources to help you prepare. You should consider study tips that help improve your memory, which is crucial for the CFA exam.
Don’t make the mistake of thinking you have to hire tutors and buy expensive courses to pass the CFA exam. If you use what you have, you will pass the test.
Know the format of the exam
An essential aspect of preparing for the CFA exam is knowing the test format that you will encounter in the exam hall. The Level 1 exam lasts three hours and consists of 120 multiple-choice questions.
You’ll leave for a two-hour lunch break, then return for an additional three hours to answer 120 more questions. Level 2 has item set questions, which include case studies about an investment institution or individual investor, followed by six questions about the case study.
You will also do 60 questions in the morning session and another 60 in the afternoon at level 2. The morning session at level 3 includes short essay questions which may include calculations. The afternoon session includes questions on the item set.
keep up to date
The CFA institute may change its exam format, so it is essential to keep up to date with developments in the exam. For example, in 209, the CFA institute changed its multiple-choice questions to have three answer choices, one correct answer, and two distractors instead of four choices.
It is also crucial to keep abreast of news and developments in the financial sector. Therefore, you should read industry newspapers and publications like Financial Times, Economist, Business Week, Wall Street Journal, CFO Magazine, etc. Keeping up to date with financial industry news and trends will help you learn a lot about finance and also provide references that you can use when reviewing.
Get enough sleep and arrive early
Sometimes the smallest things make the biggest difference. To crush the CFA exam, you need to make sure you go to bed early and get enough sleep the night before the exam.
You want to be well rested so that you have enough energy and concentration for the six hour exam the next day. You should get up early on the day of the exam and have a healthy and nutritious breakfast.
The last thing you want is to arrive early for the exam or not get enough sleep, which will increase your anxiety and lead to poor performance.
Any CFA will tell you that the three exam levels are no joke and there is no substitute for proper preparation. The above six strategies will help you pass the exam with flying colors. Practice is the key to perfection, so give yourself plenty of time to practice and be confident for the exam.
Featured image: Perawit Boonchu, iStock.