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Guide to the CFA Exam

Guide to the CFA Exam

What is the CFA?

The CFA (or Charter Financial Analyst) is a designation given to professionals in the field of finance that signifies a thorough understanding of financial analysis. A CFA is an international professional designation offered by the CFA institute to those financial professionals who complete a series of three examinations.
To earn a CFA, in addition to passing each of the three six-hour exams, candidates must also possess a bachelor’s degree from an accredited institution and have at least 48 months of qualified, professional work experience. In addition to these requirements the CFA Institute requires all candidates to adhere to a strict code of ethics and standards, which govern their professional conduct. 

The CFA is a qualification for finance and investment professionals, particularly in the fields of financial analysis (evaluation of stocks, bonds and derivatives) and investment management. The CFA institute is a non-profit international organization whom developed this program to ensure that portfolio managers and financial analysts are knowledgeable, honest and professional individuals. As of December 2010, the CFA Institute has more than 110,000 members, including roughly 93,000 CFA chaterholders.
That being said, the difference participating in the CFA program and holding a charter is significant—members of the CFA Program solely need a bachelor’s degree, be present in the final year of a university degree or have at least four years of qualified, professional work experience in an analyst or manager role. By contrast, the obtainment of the designation requires the candidate to pass all three levels of the CFA exam.

What is the CFA Exam?

To obtain the CFA charter a candidate must have completed a university degree, four years of qualified, professional work and pass all three levels of the CFA Exam. This academic portion of the CFA program is extremely difficult; each level of the CFA exam is given separately (most candidates take one per year assuming they pass the first attempt).
Each level of the CFA exam is 6-hours in length and will questions test the candidate’s knowledge in various aspects of finance. As of December 2010, fees for each exam range from $730 to $965 depending on the date on which the candidate registers to take the exam. In addition to these fees, new members enrolling in the program will be required to pay an additional $450. 

The CFA exam is known for its difficulty; only 42% of candidates pass the first level, 39% pass the second and 46% pass the final level. All three levels of the CFA exam maintain a strong emphasis on ethics; however, each level will focus on different aspects of finance.

What is on the CFA Exam?

• The first CFA exam will emphasize tools and inputs and ask questions regarding financial reporting and analysis, portfolio management techniques and asset valuation

• The second CFA exam will revolve round asset valuation, including questions revolving around economics, financial reporting and quantitative methods in alignment with asset valuation

• The third CFA exam will revolve around portfolio management and include strategies for the applying inputs and rolls in managing equity, derivative instruments and fixed income for private investors and institutions.