What Is The Best CFA Level 2 Study Order? [2021 & 2022]

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

There are 47 readings in CFA Level 2’s 2022 curriculum (48 readings in 2021). But should you study the topics chronologically? 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).

There’s no right or wrong answer here. Studying the topics chronologically as outlined in the curriculum is fine too, especially since 2022’s curriculum moved Ethics readings to the end.

However, we thought there may be something better to improve your odds of success, given the amount of materials to go through in this level.

This article outlines our view on the optimal sequence of topics to study (and why) for both CFA Level 2’s 2021 and 2022 curriculum.

Let’s go!


Recommended Study Plan for CFA Level 2 Topics (2021 and 2022’s Curriculum)

best CFA Level 2 study order

For CFA Level 2, the flow of topics is arranged as:

  • Ethics → Tools → Asset Classes → Portfolio Management, for 2021’s curriculum;
  • Tools → Asset Classes → Portfolio Management → Ethics, for 2022’s curriculum.

The good news is, CFA Institute has confirmed that the design of the readings in each study session do not assume that the candidate approaches the study sessions in any particular order.

CFA Level 2 can often be viewed as the toughest amongst the 3 levels, simply because:

  • there is a significant step up in terms of materials covered vs Level 1;
  • the topic weights are the most evenly distributed amongst the 10 topics compared to Level 1 or 3 (in theory all 10 topics can be evenly weighted at 10%!);
  • the most difficult topics are different for each candidate.

With these in mind, 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.

Here’s our thought process and strategy for the optimal CFA Level 2 study order:

  • Leave Ethics last: The classic move, but make sure you leave sufficient time for it.
  • Prioritize higher weighted topic first: Given the sheer amount of materials to study and that each candidate’s “difficult topics” may vary, we recommend starting with a few heavyweight topics first whiles you’re still fresh, to reduce the risk of not finishing your studies on time.
  • Objectively maximizing your odds of success: Prioritizing the higher topic weights at the start will ensure that you maximize your topic coverage, even though if this means you may find it tough going at the first few months. Even if you fail to finish studying on time, you would have covered more topics when you start doing practice questions.

In short, this led me to the following suggested CFA Level 2 study order for both 2021 and 2022’s curriculum:

Level 2 Topic Study Order2021’s Curriculum
(48 readings in total)
2022’s Curriculum
(47 readings in total)
1) Financial Reporting & Analysis (FRA)Reading 13-18Reading 9-14
2) Fixed IncomeReading 32-36Reading 28-32
3) Quantitative MethodsReading 4-9Reading 1-5
4) EquityReading 24-31Reading 20-27
5) Portfolio ManagementReading 43-48Reading 38-44
6) DerivativesReading 37-38Reading 33-34
7) Alternative InvestmentReading 39-42Reading 35-37
8) Corporate Finance (Corporate Issuers for 2022)Reading 19-23Reading 15-19
9) EconomicsReading 10-12Reading 6-8
10) EthicsReading 1-3Reading 45-47

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

What Is The Best CFA Level 2 Study Order? [2021 & 2022] 1

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% exam weight)

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% exam weight)

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% exam weight)

What Is The Best CFA Level 2 Study Order? [2021 & 2022] 2

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% exam weight)

What Is The Best CFA Level 2 Study Order? [2021 & 2022] 3

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% exam weight)

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% exam weight)

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 / Corporate Issuers (5-10% exam weight)

What Is The Best CFA Level 2 Study Order? [2021 & 2022] 4

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% exam weight)

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% exam weight)

cfa ethics

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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