How to Be Great at Answering CFA Level 3 Essay Questions

The CFA Level 3 essay questions (constructed response) tends to be many candidates’ Achilles heel, even when they accurately self-grade the essay practice questions during practice.

However, there is a quick way to substantially improve your constructed response section’s performance. 

Knowing the best strategies on how to answer essay questions is almost as important as knowing the actual CFA curriculum content, and a lot of candidates don’t stop to think about this enough.

That’s why, we have put together an ultimate guide to answering CFA Level 3 essay / constructed response questions better.

Check it out!

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CFA Level 3 exam structure: a quick overview

CFA Level 3 has a mix of constructed response (essay) and item-based multiple choice questions (MCQ).

Item-set based multiple choice questions (MCQ), whereby questions in each item set must be answered based on the information in the vignette. Each item-set has 4-6 questions related to it. Each question is worth 3 points.

Recently, CFA Institute has sensibly decided to mix both constructed response and MCQs in each Level 3 session to help candidates average things out and complete their exams better.

CFA Level 3 exam will take 4 hours and 24 minutes, split into 2 equal sessions of 2 hours and 12 minutes each:

• This means that each CFA Level 3 exam session has either 6 item sets and 5 essay sets, or 5 item sets and 6 essay sets.
• The total number of questions for Level 3 exam doesn’t change: 11 essay sets and 11 item sets, with 12 points each.

For some CFA Level 3 example questions, see this item set sample provided by CFA Institute, as well as sign up for our free CFA Level 3 practice test to get more questions!

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Reasons why candidates fail CFA Level 3

Before we go through various strategies and tips on how best to answer CFA essay questions, it is worthwhile taking a step back to understand the main cause of CFA Level 3 failure:

1. Not following a customized study plan that prioritizes the topic weight.
2. Lack of attention on the Learning Outcome Statements (LOS), which focuses on the things you need to know for each topic.
3. Insufficient studying time, probably due to sleep deprivation or trying to balance work and studying.
4. Not doing sufficient practice exams under timed condition
5. Poor time management during exam, probably due to exam anxiety

To minimize the risk of failure, do create your personalized CFA study plan that fits around your worklife, expect at least 350 hours of quality studying time (including practicing mock exams) and be mindful of the LOS you need to know as you go through each chapter.

OK assuming those are covered, let’s take a look at the top tips on how to approach CFA essay questions better.

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CFA Level 3 questions: reading tips

Read the question before its case information.

• Typical essay questions include significant amounts of ‘case information’, which is needed to answer the accompanying question parts. It might be tempting to dive straight into the case information, but don’t.
  • Focus your attention on the questions right at the start. After reading and understanding the questions, then move onto the case information. This should provide you with a better sense of purpose and focus now that you know what you’re looking for.
  • Finally, reread the question again before answering concisely – for more tips on answering essay questions, see the next section.

Read and highlight.

• Read the question quickly but actively, highlighting key words (yes, there’s a function for that now in CBT exams)
• Highlighting key words helps because you’ll need to refer to the question a few times, flipping back and forth between the case information and the question itself.
• CFA Institute have made this easier by bolding key command words in their questions to provide a guide. Here’s the complete list of 17 CFA LOS command words and what they mean:

CFA LOS Command Word	Definition
Analyze	To examine the constituent parts of something and how the parts relate to each other and to the whole.
Calculate	To compute, to determine by mathematical processes
Compare	To state the similarities and differences between
Contrast	To state the differences between
Define	To state exactly the meaning of
Demonstrate	To show practical mastery of
Describe	To state characteristic features of something, to portray it in words
Determine	To decide on through analysis of alternatives, to find or ascertain definitely
Discuss	To examine critically from various points of view, considering pros and cons and relevant details
Estimate	To determine an approximate value for something; to reach an informed but possibly imprecise evaluation of something
Evaluate	To reach a conclusion about something by application of knowledge and judgment
Explain	To make clear and intelligible, provide insight into
Formulate	To express in a precise form; to devise
Identify	To recognize, to correctly pick out or name
Interpret	To explain the meaning or implications of something, to reach a conclusion about something by application of knowledge
Justify	To provide good reasons for, to show to be valid or appropriate
Recommend	To advise as suitable or fit for purpose

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How to answer a CFA Level 3 essay questions

Short answers – no essays.

• Although everyone calls it an ‘essay’ question, do NOT answer in essay form – you’re wasting time.
• Legible, concise, straight to the point answers are essential to keep within the exam time limit.
• No long sentences or paragraphs needed – bullet points are fine. In the current computer-based exams, using the hyphen (“-”) sign is fine as a bullet point.
• Keep your answers short yet understandable. This is because answers are graded only on content, not on language or style.
• Focus on addressing the bold command words used in each question. Answers that are unclear or ‘not answering the question’ will get 0 points.
• If a question asks for 1 advantage or 2 reasons, provide no more than the number of advantages or reasons requested. Only the first advantage and the first two reasons that you provide will be graded, so there is no point writing more.

Show all the calculations and formulae you can.

• For calculation answers, always show as many steps and formula as you can. While this step is optional, it does help you get partial credit in case you make a mistake somewhere in your calculations. In theory, you can write just the answer, and if it is correct, get full credit for it anyway.
• In the Math Editor tool, use the multiplication sign (x) instead of an asterisk (*). The latter will either delete or convert the text to italics.
• If appropriate, state any assumptions that support your approach to solving the problem.

Know when to guess and move on.

If you’re not sure of the answer, type your best guess down (don’t leave anything blank as there are no negative marking), and come back to it later if you have time. Then move on to the next question. Don’t dwell on it and waste precious time.

Make sure you answer questions on the correct page or template.

• Each question should have specific directions on where to answer that question. Make sure you get that right.
• Answering questions on the wrong page or template will get you zero points.

Abbreviate.

Well known abbreviations can be used, especially when they’ve been used in CFA curriculum, e.g. PV for present value, arrows to indicate up or down (↑ or ↓) in answers are fine.

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How to manage time on the constructed response paper

Know how much time you should spend.

• Each question part in the CFA exam has its recommended allocated time indicated.
• 1 minute is indicated is equivalent to 1 point in the exam. This indication provides a great guide on how long to spend on reading and answering.

Move on or skip when you have to.

• There is rarely extra time in the essay session.
• Mark the time you’ve to move on at the start of each question.
• Do what you can and skip to the next section or question once time is up.

Use these rules of thumb.

• You should be spending more than half the time reading, thinking, and deciding, and you should be spending less than half the assigned time in actually writing out the answers.
• Think first, then type!

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The recommended process of answering CFA essay questions

Pulling all of the above together, this is how we recommend to approach each CFA essay question:

1. Read all the question parts in the whole case.
2. Read the question’s case information.
3. Read the specific question part you want to answer.
4. Answer concisely in the right page and template.
5. Move onto the next question part when finished. If the allocated time is up and you’re still not done, type what you can and move on.

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Are you facing your CFA Level 3 this exam cycle? Hope the above helps your constructed response strategy! We also have a free Level 3 practice exam for you that you can take now.

Meanwhile, here are other related articles and resources that may be of interest:

• CFA Level 3 Tips: Top 10 Advice from Previous Candidates
• CFA Level 3: How to Prepare and Pass CFA in 18 Months
• What Is the Best CFA Level 3 Topic Study Order?
• How I Passed CFA Level 3 In My First Attempt