CFA Institute Interview: What You Should Know About the CFA Exam Format & Process

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By Zee

We have a very special post for our readers – we reached out to the CFA Institute and asked if they would be willing to grant us an interview, where we could ask them questions about the CFA exam process, and get direct answers straight from the horses’ mouths. CFA Institute agreed.

Read on to find out how the CFA exam questions are created, what percentage of the Learning Outcome Statements (LOS) is tested each time, why CFA Institute only allows two types of calculators in the exam, and why certain past exams are available while others aren’t.


The Exam Format

Why does the CFA exam heavily utilise multiple-choice questions? 

The multiple-choice format is generally accepted in the education and testing industry as a highly effective method for measuring knowledge and skills. (For example, see Handbook of Test Development, Downing and Haladyna.)


Why the essay question format only for Level III? This seems to throw candidates off quite a lot after two multiple choice exams. Any plans to introduce the essay format for the lower levels, or eliminate the essay format entirely? 

In 1963, exams were all essay format. In 1968, we introduced the multiple-choice format at Level I; the first all multiple-choice Level I exam was 1996.  In 2000, we introduced the item set format at Levels II and III, and in 2001 moved to half item set and half essay at both levels, until 2005 when we changed to all item set for Level II.  

We have no plans to return to the essay format at Levels I and II, but believe the format is valuable in assessing a candidate’s ability to synthesize and extend material rather than simply recall or even apply knowledge. It is not necessarily a higher level cognitive process but it is a different process, and this is a skill that investment professionals and employers value.  

We recognize the essay format represents a different challenge for candidates than multiple-choice questions. Over the years, we have significantly reduced the amount of writing required in recognition that the keyboard has replaced the pen in our working lives. 

We still use the ‘essay’ label but questions are more accurately termed short-answer constructed response format. For many of the essay questions, we provide answer templates to further reduce the amount of writing required and assist candidates in providing simple and complete answers. 

We also recommend that candidates use short phrases and bullet points; complete sentences and well-structured paragraphs are unnecessary. Candidates only need to clearly demonstrate an understanding of the targeted application or concept; grammar and English skills are not considered in grading.

The Level III essay exams are the only exams that we publish — exam questions and guideline answers — to illustrate the structure and difficulty of exam questions. Candidates can use these exams for practice if they wish (before checking the guideline answers, which generally provide more information than required for full credit).

For our star contributor, Sophie’s experience in Level III, read her article: CFA in 18 Months, Part III – How I Passed Level III


The Exam Process

Are there any plans to introduce the Level II or III exam in December? Why / Why not?

Our primary objective is to maintain the high quality of exams and we continue to consider additional exam offerings. The exam development cycle is over a year and engages over 100 members in writing CFA exam questions. In recent years we devoted all available resources to the development of adequate content to ensure that candidates throughout the world are tested fairly and consistently. So, there are no plans in the foreseeable future to introduce a December administration for Levels II and III.  


Can you describe the exam creation process – how the questions are created, weighted, the exam papers compiled, approved, printed, distributed?

Topic weights are determined through our continuous global practice analysis process and published. The weights are primarily based on discussions with investment professionals as to the relative importance of a topic when carrying out their day-to-day responsibilities. We use the weights to guide the development of the CFA Program curriculum and exam.  These weights are published.  Each exam is a sampling of all material that could be tested from the curriculum.  

Our objective is to test only important concepts.  There are:

  • 500+ Learning Outcome Statements (LOS) at Level I;
  • 400+ LOS at Level II;
  • and 300+ LOS at Level III.  

Although some questions test more than one LOS, assuming each question tests only one LOS, we would test about:

  • 45% of the Level I LOS; 
  • 25% of the Level II LOS; 
  • and 30% of the Level III LOS on any single exam.  

Because of the question format, a candidate is exposed to a higher degree of “sample risk” at Levels II and III.

We rely on CFA Charterholder members to develop the exams.  We recruit and train writers who are organized into teams by format (Level I multiple-choice; Levels II and III item set; and Level III essay). Teams generally work in smaller subgroups organized by topic.  Staff and team leaders jointly develop exam blueprints and make final edits and selection of exam questions. Currently, we have over 100 members writing CFA exam questions. Each team is globally and functionally diverse and includes both practitioners and academic experts.

You can read more details on how CFA exam grading is done here: Insights and Secrets of the CFA Exams Grading Process


What was the reason behind using the two specifically approved calculator types (i.e. the HP 12C and BA II Plus)? Are there any plans to use calculators apart from the ones currently being used?

We periodically review calculator policies, including whether to add or drop calculator models. Our last review was in 2010 and was informed by a candidate survey, which showed a high level of satisfaction with the HP and TI models (there are a number of different models that fall into the two approved brands/models).  

We concluded that our policy covered the major styles of keystroke entry and satisfied our need to keep the number of models manageable for checking in large numbers of candidates in short periods of time. We also want to limit memory and programmable features that could give a candidate an unfair advantage. We did not identify other calculator models as superior to the approved models.

To see which calculator will suit your prep better, see our article: How To Choose Your Calculator: Texas Instruments BA II Plus vs Hewlett Packard 12C


Why don’t they make past years’ actual or mock exams available (for a fee if desired) to candidates for all levels? Currently we only have Level III actual past exams available for Level III candidates.

We have historically not made past year’s sample exam and mock exam questions available to candidates because curriculum content changes every year.  In the past, we wrote new exam questions from the latest version of the curriculum so we could be certain that they reflected any and all changes to the curriculum content.

The Level III essay (i.e., constructed response) exams are the only exams that we publish — exam questions and guideline answers — to illustrate the structure and difficulty of exam questions.  At present, we publish for the previous several years.  Candidates can use these exams for practice if they wish (before checking the guideline answers).  The guideline answers are often not the only correct possible answers and generally provide more information than required for full credit.  

For more mock exams and prep material, remember that you can always visit our Offers section to see what deals we have for you!


What would you like us to ask the CFA Institute in addition to the questions above? Let us know in the comments below!
Zee Tan
Author: Zee Tan

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