Friday, August 31, 2012
lowest pass rate since the CFA started in 1963, only 38% of CFA level I candidates passed the exam, what could be the reasons?
The CFA level I examination is more of a screening exam, indeed the number of candidates for the CFA has increased significantly over the past few years bringing candidates from different backgrounds and sometimes with no prior knowledge of finance and investing, that is why is the pass rate is lower than the level II and III.
The main cause of failure is that CFA candidates often underestimate the time and effort they need to put to prepare themselves, indeed the CFA institute recommend at least 250 hours but a a candidate with weak financial knowledge will need much more than this to be 100% ready, in my opinion an optimal preparation for the CFA requires you study for 400 hours before the exam. The CFA level I is not about chance, there are so many questions so it has less to do with luck but more with the number of hours you have spent studying the books and study notes.
Another important factor is stress, many CFA candidates will start stressing out as soon as they register for the CFA examination, listenning to people's stories saying that they failed the level I couple times, indeed the exam is tough but not impossible, if you are performing well on the questions when you are preparing before the exam, you are very likely to pass the CFA comfortably.
The CFA level I exam is just a review of what you can learn in undergraduate degree, so study well the important topics such as Financial Analysis,Quantitative methods, Ethics and Corporate Finance, and you will pass the test easily.
Check out our Preparation Tips for the CFA "Chartered Financial Analyst".