What Is The Best CFA Level 2 Study Order?

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Level 1 Topic Order • Level 2 Topic Order • Level 3 Topic Order

There are 48 readings in CFA Level 2 curriculum. But should you study the topics in order? Or is there an optimal CFA Level 2 study order?

We often get these questions in the 300Hours forum (which, by the way, you can join for free CFA advice).

For reference, John Bowman, CFA (previously a managing director & co-lead of Education at CFA Institute) has this advice for readers:

While there is no hard fast “official” order of the Study Sessions, the published flow mirrors the content progression of the competences taught in the Program.

For Levels 1 & 2 it is Ethics -> Tools ->Asset Classes -> Portfolio Management.

Since Level 3 is basically all Portfolio Management, the flow follows the portfolio management process and is Ethics -> PM Framework -> Asset Class Strategies -> Client Needs -> Execution -> Performance Evaluation.  

However, the design of the readings in each study session do not assume that the candidate approaches the study sessions in any particular order. Generally the same holds true for readings within a particular study session but the best approach is to follow the order of the readings within a study session. Alternatively, some candidates tackle areas of weakness or less familiarity first.

We would also stress to cover Ethics both at the beginning and end given its importance.  

So what should be your ideal CFA Level 2 study order?

We have some advice in this area as well. Simon Holohan, CFA, Head of CFA Training at Fitch Learning, has also chipped in on this subject with his expertise for 300Hours readers.

Simon will be analyzing each study session, what you should expect, and recommend a plan with the best CFA Level 2 study order.

The Recommended Study Plan for CFA Level 2 Topics

best CFA Level 2 study order

One important contributing factor to our success in helping CFA candidates prepare is our deep understanding of the topics and the links between them.

We have developed our own study plan to ensure candidates have sufficient time to master the difficult and high-weighted topics, and benefit from the linkages between certain topics.

This study structure has been followed by thousands of candidates and leads to success time and time again.

1st: Financial Reporting Analysis (10-15%)

This is a highly-weighted topic area and for those candidates that are not trained in accounting, it is usually one of the most difficult.

For these reasons we believe it is imperative this is the first topic studied. The focus at Level 2 is much narrower than at Level 1.

The exam primarily focuses on a small range of topics but candidates are required to know these topics in detail.

One of the hardest of these topics is the accounting treatment for pension liabilities. Given the depth required and the technical difficulty, you need to allow plenty of time in order to master this area.

2nd: Fixed Income (10-15%)

There is considerable overlap between Levels 1 and 2 here, with the main focus of the readings being the valuation of bonds.

It starts with simple bonds and gradually builds up to valuing bonds with embedded options. This latter group requires you to master the binomial tree approach to valuation.

The binomial tree approach is also included within the Derivative Investments study session and so it is important you master this topic within Fixed Income before you tackle Derivatives.

3rd: Quantitative Methods (5-10%)

Although not a particularly highly weighted exam topic (5-10%) this area does contain technically difficult aspects of regression and time series analysis.

Elements from this study session are need to fully appreciate certain aspects of the Equity readings and also the Portfolio Management readings.

4th: Equity Valuation (10-15%)

What Is The Best CFA Level 2 Study Order? 1

This is the largest topic area, both in terms of exam weighting (10-15%) and content.

A key element is the valuation of stocks using both discounted dividends and also free cash flow.

The latter requires you to be confident using the “Indirect method” for deriving cash flow from operations. This builds on your Level 1 knowledge and to a certain extent the Level 2 FRA knowledge.

5th: Portfolio Management (5-15%)

As noted above, it is important to have studied the Multiple Regression reading within Quantitative Methods to appreciate elements of the Portfolio Concepts reading. For this reason we suggest studying this topic shortly after the completion of Quantitative Methods.

Part of this topic builds on from Level 1, such as the Markowitz Minimum Variance model (often known as the efficient frontier model) and the calculation of portfolio risk using two and also three assets.

This familiarity helps you get into this topic, making the jump from Level 1 to Level 2 more manageable. This area represents 5-15% of the exam.

6th: Derivatives (5-10%)

This area breaks down into three main areas: Forwards and Futures; Options; and finally Swaps.

Throughout, the focus is on understanding the pricing and valuing of these derivatives. The option readings, as noted above, include the Binomial Tree model which is also covered within Fixed Income.

In our opinion, the Fixed Income readings cover this aspect in a clearer and more thorough manner which is why we recommend studying Fixed Income before Derivatives.

This topic area accounts for 5-10% of the exam and is likely to be one of the most technically challenging areas of the Level 2 curriculum – you’ve been warned!

Focus on identifying the “low-hanging fruit” and you should stand a good chance of scoring reasonably well here.

7th: Alternative Investments (5-10%)

This topic is often overlooked and yet it has the same exam weighting as most of the other topics (5-10%) and the content is not that technical.

The main focus here is understanding the valuation of real estate and analyzing the performance of private equity funds.

8th: Corporate Finance (5-10%)

What Is The Best CFA Level 2 Study Order? 2

Builds on from Level 1 in the areas of Capital Budgeting (NPV and IRR) and also Corporate Governance.

There are other readings that were not addressed in the Level 1 curriculum but these tend to be relatively accessible for most candidates.

This means you ought to be able to cover this 5-10% topic relatively quickly.

9th: Economics (5-10%)

The main focus here is on foreign exchange rates and the various economic theories that purport to explain movements in foreign exchange rates.

There is overlap here with Level 1 which will help you cover this study session.

This topic accounts for 5-10% of the exam.

10th: Ethical and Professional Standards (10-15%)

There are two very different approaches used by candidates to tackle Ethics (10-15%).

  1. Some leave this topic to last (but not too late!) and then “blitz” the readings near to the exam date and rely on their short term memory.
  2. Others prefer to spread this topic over their whole study period and spend 20-30 minutes a day on this topic. This “little and often” approach will help you understand the Standards of Practice rather than merely memorize them. We recommend this latter approach.

Most of Ethics at Level 2 is exactly the same as Level 1 except there is no coverage of the GIPS and there is an additional reading covering Research Objectivity Standards.

Remember, for candidates that are deemed to be marginal, CFA Institute will refer to the candidate score on Ethics, so it is imperative this topic is given the priority it deserves.

If you have any questions about the CFA Level 2 study order, just post a comment below!

P.S – these resources may be helpful:


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