CFA Level 2: Part Deux Re-deux

So the CFA exams are over and I’m enjoying closing all the open windows on the computer containing PDFs of mock exam questions, answers, and errata. I was hoping that another year of study would make Level 2 a cakewalk this time around, but it was anything but that. Hard, hard, hard!

The AM section seemed the most difficult, but perhaps I just started the whole AM itself off on the wrong foot. I woke up in a fog, feeling like I had jet lag after my body decided prematurely that 4 hours of sleep was all I would need for The Big Day. That’s not atypical and I’m still mostly functional when this happens so I told myself to relax and grabbed some coffee. Eating breakfast at the computer, I repeatedly missed easy, easy All-Current and Temporal currency translation questions from the Schweser problem bank. The coffee pot was empty so I decided to call in reinforcements by raiding the diet coke machine by the hotel elevator.

CFA Test Site

Pack-up, check-out, and departure took longer than normal and I arrived at the test center (a local high school) later than planned. Most of the candidates had already found their way to their classrooms but a handful of us last-minute stragglers were following the posted CFA Level II Exam signs complete with arrows -> pointing -> our path, only to end up at a locked gate. Standing nearby was a proctor whose only function seemed to be to inform us that the gate wasn’t supposed to be locked, but didn’t seem to be actively trying to do anything about it.

While waiting to see if something or someone would turn up, we noticed other late-arriving candidates now passing us on the way to their classrooms on the other side of the gate! We gave up on Frau Proctor, found a path into the school through a fortuitous unlocked door, and zoomed down a corridor, taking occasional turns wherever intuition led us. Something about sneaking along in an empty school hall, past rows of lockers, with a small group, on the weekend, gave the whole thing a sort of Breakfast Club detention time warp feel.

We eventually arrived on the other side of the gate and found our way to the classrooms. While we waited to check in I tried to make small talk with one of my Brat Pack compatriots. It didn’t work.

Me: “You feel ready?” (big smile, with teeth!)
Him: “Don’t matter now.” (no expression)

… silence … silence … silence …

Me: “Well good luck to you, all the same.” (smaller smile, no teeth)
Him: “… yep …” (eyes staring past me, into the classroom)

Eventually it was my turn to check in so I handed over my admission ticket, calculators, and passport (the preferred ID, according to the CFA Institute) and waited for the proctor to go through her TSA-lite checklist.

Proctor: “…um …”
Me: “hmm?…”

Proctor: “…um… uh….”
Me: “wha?…”

Proctor: “…sir, uh….”
Me: “WHAT IS IT?!!!!”

I look down at my passport, see what she sees, and my heart sinks. It’s a picture of my wife.




The all out panic gives way to Heart Attackus Interruptus as I remember that I also have my driver’s license in my wallet. My blood, which had all drained to my feet, begins returning to the other extremities. I hand my license to the proctor as she hands back my wife’s passport. I slip it into my back pocket and now it feels great to have on me – like a good luck charm since she’s not here. The shot of Relief Endorphins puts me in a wonderful mood so I tease the proctor about actually being the person in the passport photo since my hair is long too.

I sit down and notice that all the proctors are wearing bright yellow reflective vests this year, like elementary school crossing guards. Is this supposed to make them look official? Or keep the candidates from running over them on the way to the bar afterwards?!

I start chatting with the guy sitting in front of me. He works as a public accountant and says his firm is actually against him doing the CFA! It seems they’re afraid he’ll use it as a launching pad to some other career at some other company. Kinda like your girlfriend telling you NOT to exercise and get into shape because she’s afraid you’ll find someone better…

The accountant tells me he saw one candidate in a full pinstripe suit. I smirk internally at my greater maturity by not stooping to useless Jedi Mind Control tricks in an attempt to boost self-esteem and thus performance. No sir, nothing but good, hard studying for me!

Another guy starts telling stories of one of his co-workers who passed a December Level 1 exam, then turned right around and passed Level 2 six months later! Supposedly the Study Machine, as he was called, kept track of his efforts and logged an amazing 436 hours of preparation. Now I feel like a slacker and think I probably could do with the help of a fresh haircut, pinstripes, ANYTHING.

Final chatter before the test is about how many CFA candidates there are now. Someone spouts a statistic about more people sitting for CFA exams this year than there are actual CFA charterholders. I assume it’s true but don’t know what to make of it, so my mind tries analogies. What if there were more people currently in your college than had ever graduated from it? More people currently at the airport than had ever flown? Is this impressive? I still can’t really decide but it feels like I should be amazed so respond appropriately. “Wowwwww!!!”.

As for the test itself, well the proctors remind you more than once that you’ve signed a statement saying you won’t discuss its specific contents. But my general impression was that the Level II questions specialized in having some sort of twist, and we’re talking about a lot more than just re-labeling Cost of Goods Sold as Cost of Revenue! I’d come across a problem that I knew how to work backward and forward in the study guides, but there’d be some new element to it, like footnotes to financial statements or additional line items that were not obviously superfluous or important.

This was where pure memorization would fail you. You really have to understand the logic and theory behind “the rules” to hit the numerous exam curve-balls. You will not simply be handed β, Rf, and Re and asked for the required rate of return! I may very well be doing Level II again next year.

Lunch time is a quick trip to a local Publix for sushi and diet coke. I call my wife briefly but spend most of the break sitting in my car flipping through Schweser pages on Defined Benefit Pension accounting with my left hand while my right deftly chopsticks the spicy tuna roll. This revives me enormously and my jet lag disappears.

Back in the class room for PM Edition, a candidate is complaining that his boss, who earned his CFA 20 years ago, can’t understand why he’s having so much trouble passing the exams. Ha! ha! everyone laughs. It was soooo much easier 20 years ago! FAR less material! Ha ha! But do any of us really know that that’s true?

One guy says he would have passed last time but his inconsiderate wife decided to produce their first child just weeks before the last exam. Another has a similar story, with his previous Level II fail the result of an ill-timed marriage and honeymoon. My pity-party has been all about how being a self-employed contractor, I have multiple part-time jobs that add up to much more than one full time job. And I don’t sleep well. And…

And then I realize that all of us in the room are smart people who aren’t used to failing at much. It’s easier on our egos to paint ourselves as victims of circumstance. The reality is that (a) no one has enough time to study as much as they’d like and (b) the CFA program is HARD, even for smart people. Internally I say to all of them, and to myself, in my best Alabama accent: “Quit yer whinin’!”

Tagine and Rioja

The proctor hears us complaining and marvels at how dedicated we are to keep coming back. “There must be some sort of great thing you get when you finish, right?”

This strikes some existential terror in all of us, as to why we’re really here. Is it the pursuit of knowledge or ambition fueled ego? We’re all totally dumbstruck and silent. One candidate finally comes up with a response that seems conventional and acceptable. “Well, we’ll get more money.” Everyone else nods a silent “yeah, what he said!”

Post exam I meet back up with my wife, dog, and sister-in-law out at the beach. They’d been on a shopping spree and I discovered that I’m the proud new owner of a bottle of celebratory rioja as well as a new tagine and cookbook. Life is hard for the Luminous…

And life returns to normal since we’re all now all on summer holiday (with jobs). Good thing as I’ve played so much ukulele during study breaks that it actually hurts to shampoo. Only guitar players will understand what I’m talking about…

16 thoughts on “CFA Level 2: Part Deux Re-deux”

  1. My Level II morning session was a bit challenging – contentwise and timewise. I spent so much extra time trying to get the numbers right on an FRA problem that I had lot of pressure on the remaining ones. And my exam center (in San diego) did not have a clock. Unfortunately I was counting on them to have one, since I don’t wear a watch.

    Well, the afternoon session felt better but not entirely good. Overall I dont have a good feeling.

    That concept from Quant comes to mind. You just need to answer the questions statistically and hope that your significance of error is less than error-tolerance of the exam setters .. ๐Ÿ™‚

  2. Thank god you wrote that –

    It was my 3rd time writing level 2 and I thought it was hard. Now before I continue let me say: I have never had a hard time with an exam in my life, I have a Physics Undergrad and an MBA from a good school scored 710 on my GMAT – passed level I on my first try. But this level 2 has gotten me shaken up.

    The first time I wrote it, it was just after passing level 1 in November of that same year and I was under prepared and really didn’t deserve to pass – some crazy personal circumstances too.

    Last year, however, I thought I passed, had no personal distractions while studying and studied hard. And scored in the 9th decile of failures!!! ahhhh

    This year, had worse personal circumstances but studied very hard but don’t feel good about it. A part of me wants to stop writing – but then I just don’t want to think back and say I gave up.

    Good luck and I hope you passed!!

  3. Hey Lumi,

    What an exam day experience you ended up having this time around! I know you must have had a real moment of terror when presenting your passport, that is unbelievable!

    I just sat for Level III and spent countless hours preparing for it, but never really felt like I was 100% ready for it. Now I just keep thinking about which problems I got wrong…hopefully I don’t have to do this again, but don’t have the best feeling either…

    Best of luck to you on passing II. I know we’ll all enjoy the summer now!


    PS- I play the saxophone, but wasn’t able to touch it for like 6 months almost. Maybe we should start a CFA Band over the summer?!?

  4. Shiva – ditto on having time problems. I had maybe 3 minutes left after finishing all the AM problems. the PM was easier, but not easy. ๐Ÿ™‚

    Giwa – thanks for chiming in. I’ve never had problems with tests either. The amount of time taken to properly prepare for one of these exams must be phenomenal. If you’re thinking of stopping I’d suggest doing so only after you pass level 2.

    Bob – best of luck to you too. I really hope you passed. With the uke and sax I’m sure we could do a mean rendition of 12th Street Rag. Ping us back in August and let us know how you did.


  5. Agree on many counts. LII AM session was HARD. Time was not on my side either. PM was not as HARD, more of what I expected. Seemed like the whole idea of knowing “core concepts” went out the window on this exam. Not even any Residual Income questions? I expected an item set with EVA, etc. I thought we were all about measuring the “economic impact” in the CFA curriculum?

    Instead this test seemed to specifically concentrate on peripheral information. I am not saying it was unfair, just very hard and unexpected.

    My guess is this will be the lowest pass rate ever for the Level II Exam. Perhaps that will push them to consider a December retest with the same curriculum ๐Ÿ™‚ ?

    Either way, good luck to all on getting that miracle!

  6. I was taking the level II test in washington dc. Interestingly I felt the opposite way: the morning exam was easier and I had >20 mins left; the afternoon exam was harder and I had no time left and there were some questions I had to guess.

    Lumilog, I enjoyed reading your post. Like you I have an engineering background but I have been doing IT consulting for the last 10 years but is very interested in finance in the last 3 years.

  7. I think AM Session was tough. PM session was a bit easy. The Private Company valuation topic was a complete surprise. I guess many few were able to manage that topic. Also AM sesstion was qualitative and PM Sesstion was quantitative.

  8. Hm…more money. That’s a nice thought. The thing is that a certification only guarantees more money if and only if your employer values your particular certification. In my case, my employer couldn’t give a hoot.

    Seriously though, if it weren’t for the CFA and MBA, I don’t think I would have picked up the interest for quant trading, so perhaps there is more money (hopefully not the losing of) in the future.

  9. True enough. Would have maybe been cheaper to just pick up a copy of The Quants or More Money Than God for the motivation. ๐Ÿ™‚

  10. I posted earlier in June and to my surprise I passed level II – congrats to you too for passing!!!

    All the best for level III

  11. mate, I’m really glad I stumbled across your blog; this post particularly (congrats on passing level 2 btw – the ‘king of the world’ comment was fitting).
    I just failed L2 (band 9) after stupidly attempting to get x hours of sleep the night before – x ended up being 0… No excuses though, I admit I wasn’t well enough prepared. Currently firing back up for a second attempt – getting good value out of your comment re the exam still being a bastard even after a second year of study… Wishing you all the best for level 3!

  12. Your blog came up tops when I googled ‘Time required for a CFA’. lol. Just did my level 1 in London, mysteriously managed to pass it, and contemplating the all dreaded level 2. Guess the scene is pretty much the same where ever in the world you write the paper – eager beaver proctors in bright jackets, and a room full of candidates hoping that there’s a silver lining to the CFA cloud…somewhere!

  13. Thanks for stopping by AV! And best of luck on Level 2. I’m not sure what the silver lining is either, perhaps the program will cure me of all temptations in the future of signing up for something difficult just to prove something to myself!

    All best,

  14. Just wanted to update previous (Oct 6) post. Found out today that I passed L2! 5 topics >70 and 5 topics btw 50-70. I am now king of the world! haha. Wishing you L3ers all the best for your upcoming results. Goodluck.

  15. Congrats Matt! And thanks for the good lucks – we may very well both be doing L3 next June. :0 Enjoy the rest of summer!
    – lumi

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