Which CFA Level Exam is the Most Difficult?

Ask a candidate about what keeps him up at night and you may hear one of two responses, “What is the meaning of life?” and, “Which CFA level exam is the most difficult?”
A little ridiculous when you think about it like that but the question is constantly on the forums as if candidates get one ‘get out of exam’ card and need desperately to know on which to use it. I won’t lie. I wondered it myself as a candidate. A bit of morbid curiosity and a little, “it couldn’t get worse, could it?”
A recent post on the LinkedIn group offers some ideas:
One comment reasons that the pass rates are a guide to the most difficult. The ten-year pass rate for level I through III is 38%, 43% and 55%, with last year’s exam rates matching these pretty closely. If you figure that only the most prepared make it to the level III exam, and only half of them pass then it must be the most difficult.
One candidate reasons that the third exam is the most difficult because candidates are usually older at that point and have other responsibilities with which to juggle life and studying.
Another candidate writes that, while I and III are tough they do not compare to the level of depth and quantitative detail required in level II. I have to agree here. I found the second exam to be most difficult for the quantity and complexity of the formulas.
The truth is, as many candidates point out in the post, that each exam offers its own hurdles. Your most arduous exam may not be the same as another candidate’s.
How each exam stacks up
Level I is tough simply because most candidates do not know the level of difficulty for which they are preparing. Even for those with financial backgrounds, the breadth of information is not usually something they deal with everyday. The material on Ethics is difficult in the first exam because most candidates assume that because they generally make ethical decisions, they will know the correct answers on the exam. The skim the material then face an ambiguity in exam questions for which they are unprepared.
While candidates are better prepared for the degree of difficulty in the second exam, the depth of information and number of required formulas is extremely tricky. The second exam includes just as many topic areas and study sessions as the first, but now candidates must learn and apply practical details within each. The formulas, sometimes involving as many as six steps, were some of the most difficult I have seen.
Often a winner for most difficult, the third exam requires candidates to synthesize the material for essay questions. Many candidates are unfamiliar with writing and run into a severe time constraint. The topic areas in the third exam are inter-related and candidates must use material across the curriculum to answer each essay.
Want to know the true answer to this question, the answer that is most important to your passing the exams? The answer is…that it will have to wait until next week’s post. We’ll hit it next week with the start of a five-part series covering the top reasons why candidates do not pass the exams.
Until then, you might want to check out previous posts on specific strategies for each exam’s toughest characteristics. Linked here: Level I, Level II, Level III
‘til next time, happy studyin’
Joseph Hogue, CFA

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