It’s practice exam season now.
Besides being the most effective way to prepare for the CFA exams, it’s also always a good idea to really get to know the exam format well – hence our focus on completing 4-6 practice exams!.
Regardless the preparation level, there will be times during the exam where you simply haven’t got a clue to what the right answer is. Here’s a quick review of tips that may help you guess intelligently during the exams, and more importantly, what you should avoid doing to improve your chances of getting the correct answers.
Let’s dive in!
These set of tips are meant to be a last resort – when you just don’t know what else to try.None of these tips consistently work all the time, so use them only if you have to.
1. Eliminate answers that don’t really answer the question.
Congratulations! You’ve just eliminated one answer possibility, thus increasing your likelihood of being right to 50% instead of 33%.
2. If two alternatives say the same thing, both are probably wrong.
Very occasionally, in the CFA exams you may manage to find out that e.g. two answers, although different combinations of financial instruments will result in the same investor position relative to market movement.
Since they can’t both be the answer, they are probably both wrong.
3. If two alternatives are mutually exclusive, eliminate the third choice.
These questions with mutually exclusive answers are awesome as it improves your chances to getting it right straight away, because 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.
4. The answer to one question is sometimes implied in another question. (L2 and L3 only)
Level 1 questions are independent of each other, so this does not apply to Level 1.
5. Don’t apply definitions from outside the CFA curriculum.
This may sound like it’s against the spirit of education, but in the end if there is a question that is based on outdated information (for example), answer it according to the CFA curriculum.
6. Never argue with a question.
Try not to get angry. Read it twice to make sure you’ve really understood the question, and answer it the best you can.
Don’t waste time having a mental debate with no one during the exam. Don’t worry –if it does turn out that the CFA Institute made a mistake or worded a question ambiguously, they would award points in favor of the candidate.
7. When all else fails: choose the alternative that makes the best sentence, when added to the open-ended question.
IMPORTANT: None of these tips consistently work all the time, so use them only if you have to.
What NOT to do for the CFA exams
If you’ve done reasonably well in high school and university, chances are there are many other tricks you’ve relied on through multiple choice questions. Not all of them will work in the CFA exams.
Here are some that I know have little chance of working in the CFA exams…
- Sticking to your first answer, even if you feel like changing it. If you feel like your initial answer is not right, don’t be reluctant to change it. Studies have shown that although candidates often believe that changing answers is bad, it generally results in a higher test score. In these studies, the percentage of “right to wrong” changes is 20%, whereas the percentage of “wrong to right” changes is 58%, nearly triple – there are benefits of changing initial answers once in multiple choice questions when in reasonable doubt.
- When 2 answer options deal in different ways with one concept, one of them is usually right. This doesn’t work. The odd one out could be a double-bluff.
- If two answers contain a similar sounding word, either could be the answer. Yeah, that doesn’t work either. Not a valid indicator at all.
- If two answers are almost identical except for a few words, either could be the answer. Again, don’t trust that – it could be a trap!
- When in doubt, choose B (or A, or C). Some people believe that there is a human bias towards setting answers in the ‘centre’ of the selection, hence B is a good bet if you have no idea. This will not work in the CFA exam – randomness is practically guaranteed.
Want more help practicing for the CFA exam? These guides will help: