What’s the CFA Exam?
The Chartered Financial Analyst (CFA) designation is one of the most respected in the investment world. To earn it, you need to pass three rigorous exams that test everything from ethics and economics to financial analysis and portfolio management.
Each level increases in difficulty, and Level II is known for its depth and emphasis on applying concepts to real-life investment scenarios.
As of recent changes, all exams are computer-based and offered multiple times a year. Make sure you check the CFA Institute website regularly for dates, fees, and any changes in exam structure.
This guide will walk you through exactly what to expect on the CFA Level II exam—from the format and structure to the types of questions and the weight of each topic.
What’s Covered: CFA Level II Curriculum
Level II builds on the foundation from Level I, shifting the focus toward asset classes and valuation techniques. Below is how topics are weighted and what to expect from each:
| Topic Area | Exam Weight (%) |
|---|---|
| Quantitative Methods | 5–10 |
| Economics | 5–10 |
| Financial Reporting & Analysis | 10–15 |
| Corporate Issuers | 5–10 |
| Equity Valuation | 10–15 |
| Fixed Income | 10–15 |
| Derivatives | 5–10 |
| Alternative Investments | 5–10 |
| Portfolio Management | 10–15 |
| Ethics & Professional Standards | 10–15 |
Key Topics in CFA Level II
Expect 1–2 item sets. You’ll be diving deep into regression analysis, modeling, and interpreting financial data. Be comfortable with formulas and data interpretation.
Economics
Usually one item set. Focus is on macro and microeconomic principles, market regulation, and their impacts. Economics also shows up across other topic areas, so don’t treat it in isolation.
Financial Reporting & Analysis
A big one—expect 4–5 item sets. Key areas include:
Intercorporate investments (IFRS vs. GAAP)
Employee compensation
Multinational operations and currency effects
Financial institutions
Evaluating report quality
Forecasting and modeling
Corporate Issuers
You’ll deal with capital structure, dividends, share repurchases, and ESG-related investment risks. This topic mixes concepts with practical applications, so practice is key.
Equity Valuation
Expect 4–5 item sets. Heavy on formulas and valuation models like:
Dividend discount models
Free cash flow
Market-based techniques
Private company valuations
Residual income models
Fixed Income
Expect 1–2 item sets. Another formula-heavy section with topics like bonds, credit analysis, interest rates, and arbitrage-free valuation.
Derivatives
Often a tough one. You’ll see questions on futures, options, swaps, valuation, and pricing. Understand both American and European-style options well.
Alternative Investments
Expect 1–2 item sets. Topics include hedge funds, real estate, commodities, roll yield, contango/backwardation, and private equity structures.
Portfolio Management
Often tested in 1–2 item sets. Focus on risk/return, factor models, ETF mechanics, backtesting strategies, and comparisons between passive and active management. You’ll build on this in Level III.
Ethics & Professional Standards
Always important. You’ll be tested on your understanding and application of the CFA Institute’s Code of Ethics and Standards of Professional Conduct. This section is not just theory—ethical judgment is a big deal.
Quick sample (Numerical)
Who Can Take the Exam?
To be eligible for Level II, you must:
Have passed CFA Level I
Hold a bachelor’s degree or equivalent
Have at least three years of qualifying work experience
Tips to Help You Pass the CFA Level II Exam
Preparing for the CFA Level II exam isn’t just about grinding through endless material—it’s about studying smart. This level demands application and analysis, so having the right game plan can make all the difference.
Here are some tried-and-true tips to help you crush the exam:
Focus on the Big Picture
Don’t get lost trying to memorize every single detail. Instead, aim to understand the core concepts across all topics. Level II is all about applying what you know—so comprehension beats memorization.
Watch for Trick Words
Words like “EXCEPT,” “LEAST likely,” or “IS NOT” are easy to miss—but they change everything. Highlight or underline these when you see them.
Time Management Is Key
Aim to spend no more than 18 minutes per item set. That includes reading the vignette and answering all the related questions.
Take Mock Exams
Mocks are the best way to simulate the real exam. They help you manage time, improve accuracy, and build the mental stamina you’ll need.
Use Study Tools
Spaced-repetition flashcards, video lessons, question banks—they’re all great for keeping concepts fresh and revisiting weak spots.
CFA Level II is where theory meets practice. It challenges you to go beyond memorization and truly understand and apply investment concepts. The key is consistent study, plenty of practice questions, and mock exams. Identify your weak areas early and give extra attention to heavy-weight topics like FRA, Equity, and Ethics.
We strongly advise you to consider our comprehensive package of practice questions to master your preparation efforts. Access an extensive array of practice questions thoughtfully compiled to closely emulate the actual test format. You can conveniently study these materials at your convenience.