Level II Changes 2016: CFA Curriculum Updates

Miss these CFA level 2 changes in the 2016 curriculum and risk missing out on those important few points that could get you a passing score
The CFA Institute has published its curriculum changes for the 2016 exams.

The CFA level 2 changes for 2016 are fairly small except for two study sessions.

There are no changes to the topic weights as there were last year. I have always suggested candidates get a jump on studying by reviewing prior year curriculum before their own books arrive but you have to be ready for the changes.

You can download a pdf copy of the CFA level 2 changes for the 2016 curriculum by clicking through this link.

The curriculum changes are available in a combined document or individually for each of the 18 study sessions.

A word of warning to any candidates comparing the 2015 LOS posted on the CFA Institute website.

Many of the author names for readings on the document are incorrect. Comparing the pdf with the 2016 Level II CFA Program LOS will appear that authors have been changed on the readings but it’s not the case.

Level II CFA Program Changes in General

Working through the new readings and LOS for the CFA level 2 changes for 2016, I was just about ready to comment on how little had changed…until I got to the final study session.

In fact, other than in SS18 Portfolio Management, very little has changed from the previous year’s curriculum. There were only two wording changes that I could find in the old LOS along with less than ten new LOS. There is also one new reading in a new subject.

And then you get to SS18 that is almost completely new with three new readings out of four. Make sure you master the new Reading 12 in SS3 but spend as much time as possible studying the new material in Portfolio Management.

Level II CFA Program Changes by Study Session

Study session 3 (Quantitative Methods) includes a new reading, reading 12 – Excerpt from “Probabilistic Approaches: Scenario Analysis, Decision Trees, and Simulations”. Within the new reading are seven new LOS so make sure you spend some time on the excerpt and understand the material.

Understand that from the inclusion of the new Reading 12 in SS3 to Reading 46, the numbers for readings do not match up in the new CFA level 2 curriculum (i.e. old Reading #40 corresponds to new Reading #41).
LOS 6i of Reading 20 (Multinational Operations) includes a wording change from, “…sales affect earnings sustainability.” to “…sales affect the sustainability of sales growth.”
LOS 14c of Reading 43 (Term Structure and Rate Dynamics) is new and requires you to describe how zero-coupon rates can be obtained by bootstrapping.
LOS 14g of Reading 43 includes a wording change to, “…swap spread for a given maturity,” from “…swap spread for a default-free bond.”
LOS 14m of (old) Reading 44 (Embedded Options) – “calculate the value of a capped or floored floating-rate bond” has been removed.
Reading 46 of Study Session 15 “Introduction to ABS” and its nine LOS have been moved to the Level I CFA Program Exam and are no longer in the CFA level 2 exam.

The Institute has almost completely revised the readings in SS18, Portfolio Management.

Three readings have been replaced and only one remains the same from last year. Readings 53 – 55 are new and must be studied in-depth. The three new readings bring with them 26 new LOS.

Again, other than the new reading in SS3 and SS18, there are not many changes to the CFA level 2 2016 curriculum. Make sure you master the material in these new readings and be prepared to answer the LOS on the exam.

Until next time, happy studyin’
Joseph Hogue, CFA

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