It is the CFA Exam Level 3 is the final exam in the series of three tests conducted through CFA Institute. CFA Institute. With at least 48 months of working experience, the successful passing the final exam results in a charter membership.
The first two levels focused on basic financial understanding as well as understanding the value of investments and their application CFA Exam Level 3 test is focused on the management of portfolios and wealth management.
Exam Structure
The exam’s format that is scheduled for the months of May and August in 2022, and in February and August 2023, consists of set questions (similar in level II) as well as essay-type tests. 1
Similar to other tests as well, CFA Exam Level 3 is, too. Level III exam is also administered in two phases both in the morning and the afternoon sessions.
In the morning session you will encounter between 10 and fifteen essay questions. Each question is composed of several components, such as A B C, A and C. This will can help you organize your response by using the form of a template. The questions can present you with a scenario and require you to create your own suggestion or solution. Each session will consist of six sets of items and five essay sets, or six sets of items and five essay sets.
Exam Curriculum
As we mentioned the primary examination focuses on managing portfolios and wealth management, but there are also seven subjects that are organized in two additional categories, specifically, Ethical as well as professional Standards as well as Asset Classifications. The table below provides the an assessment of the weightings for these topics as well as broad areas to be covered in the test:
As can be seen from the table, Ethics and Professional Standards gets the same importance as the other sections of the test. Investment tools are not assessed separately, aside from economy, and is component of the wealth and portfolio management section for level III.
The bulk of the test is focused on the management of portfolios and asset classes in the context of portfolios.
Standards
In level III, the standards mostly are comprised of The Code of Ethics and Global Investment Performance Standards (GIPS). Standards comprise 10 percent (i.e. 36) of the possible 360 points. In the Code of Ethics section will likely be a topic set during an afternoon meeting. But, GIPS might be assessed by way of an essay in the morning session , or as an item to be set during the session in afternoon.
Asset Classes
The test tests your understanding about all the principal asset classes, which include derivatives, alternative investments equity investments, as well as fixed-income investments. But the emphasis is on the portfolio management aspects of these investments.
For example, a complete session is devoted to managing active and passive fixed income portfolios, which covers investment goals and benchmarking, as well as return analysis and the portfolio’s vaccination strategies as well as relative value analysis and more. The program also covers strategies utilized in emerging and international markets, and how derivatives can be employed to control the credit and interest rate risks in fixed-income portfolios.
The second type of asset class is the equity securities. These are a crucial part of all portfolios for investment, and essential to the success of the portfolio. The topic here is equity strategies for investing, the evaluation of managers who manage equity funds, and equity indexes. The syllabus also addresses concerns of corporate governance that relate to conflicts between shareholders and managers which reduce value and directly impact the equity manager portfolios. In addition, there is an overview of the process of the measurement and management of portfolios in emerging and international markets.
This section on alternatives to investing mostly examines alternative investment classes and the way derivative instruments like swaps, futures, or forwards are utilized to control certain alternatives investment options.
Investment Management as well as Wealth Management
This is the biggest portion of the test and should be worth at most 180 points out of 360 possible points. The concepts of portfolio management will dominate both session in the morning as well as afternoon. The syllabus is thorough and covers new concepts, such as behavioral finance, which is the basis of financial decision-making. The risk management concepts, including methods and tools to measure and manage risk are also covered. In addition chances are that you will be tested on issues concerning the wealth of both institutions and individuals.
The variety of concepts that are testable is limited, but they are essential. One of the most important concepts can be found in The Investment Policy Statement and its components, which are highly tested. The Economics concept, that was component of investment instruments used in the levels I as well as II is also covered under the heading of portfolio management on the test. Other key concepts include controlling portfolios owned by institutional investors as well as investment allocation and risk management tools and assessing portfolio performance.
In the section on portfolio management within the portfolio management section, the CFA Institute provides no hints on which subjects are more crucial. However, it makes available essay questions from earlier years that can prove beneficial for practice and improving your exam preparation.
