5 Avoidable Mistakes When Answering CFA Exam Questions

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By Sophie 

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When going through the review and practice phase, I recall doing all the endless stream of questions, sometimes it can be overwhelming when you see a pattern of mistakes you constantly make.

​Here’s my quick summary of 5 things you should watch out for to minimize the common errors made in CFA multiple choice questions.

#1. The “Do-The-Right-Thing” Ethics Mistake

Commonly found in Ethics questions, I frequently found myself choosing an answer that sounds like “the-right-thing-to-do” or “oh, that’s ethical and good”. 

You can’t ignore learning CFA Code of Ethics, you need to nail it to pass – see our Cheat Sheet on Ethics here. There’s a marked difference between what the Code of Ethics says and what you may ordinarily think is “right thing to do”. Apply the principles you’ve learned in the CFA curriculum into your thought process when choosing your answers. Remember that the question often asks whether the subject is performing what is right for their clients and their duty as a professional investor. Other aspects of their behaviour, especially if they’re nothing to do with investing, may not be relevant.

#2. The “Adding-Salt-and-Pepper” Mistake

We’re all creative people. Sometimes the mind can wander when we read a lengthy vignette in the item set questions, and there’s a tendency to:

  • glaze through information without registering much
  • miss important clues in the text that provides direction to your answers
  • and finally, most importantly – our creative minds sometimes add or infer extra information to the context of the question. 

The first 2 points above are easily rectified by introducing some activity when reading a long vignette – namely underlining or circling keywords or phrases to remind yourself of key information. 

However, the last habit of “adding salt & pepper” – adding extraneous information or making unnecessary assumptions can cause costly mistakes. Do answer each question solely with the information given. 

#3. The “Overthinking” Mistake

Over-thinking questions has always been a source of my mistakes, back in the days of taking my Level I, Level II and Level III practice exams. It’s highly likely that if your solution to a question is complex and cumbersome, you’ve probably gone off tangent. 

In the grand scheme of things, the CFA examiners are there to test your knowledge about the assigned readings, rather than trying to trip you up and trick you all the way. Usually if one is ‘tricked’ it’s due to not reading the question properly.

By adopting an attitude of not overcomplicating things, all questions can be answered in a straightforward manner by applying the principles contained in the readings.  

#4. The “Ignoring Absolutes” Mistake

This is an 80/20 rule: whenever I see answers with absolutes, alarm bells start ringing in my head to pay more attention whether such answer could be eliminated given the strong statement. Examples of absolutes including (but not limited to) usage of these words:

  • never
  • always
  • all
  • only
  • just
  • none
  • not
  • must
  • every
  • no

However, I’m not saying that all answers with absolutes are incorrect. All I’m saying that when there’s a sentence with absolutes, pay attention to it and determine whether it’s wrong (then eliminate it) or correct (your job’s done, move to the next question).

#5. The “Mutually-Exclusive Answers” Mistake 

Counterintuitive perhaps, but I frequently glance at the answers first before reading questions to have an idea what the question is about. Why? I wanted to scan the answers and see if there are obvious mutually exclusive answers (meaning both answers can’t be true at the same time) without the bias of risk of incurring Mistake #1 and #2 above if I’d read the question first.

These questions with mutually exclusive answers are awesome as it improves your chances to getting it right straight away as you can just ignore the third choice. They do pop up from time to time, so look out for them. Not just in the format of words, you can easily eliminate answers with “+” or “-” sign right away if you know which ‘direction’ the answer should be. Ignoring this and rushing through the questions may lead to missed opportunities.

Over to you…

Does this jibe with your experiences so far? Do you have any other tips on common mistakes candidates may make? Share it with us in the comments below!

Zee Tan
Author: Zee Tan

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