Know Your Exam #2 — CFA

In this widely diversified world of career options, along with seeing a decline in enthusiasm in engineering and medical courses, there has been a stark increase in interest in the field of economics & finance and for people aspiring to make a career in this industry, the CFA exam stands one of the most popular choices till date.

About the Exam?

CFA, short for Chartered Financial Analyst is designated as one of the highest-ranking credentials for investment professionals, especially in the areas of research and portfolio management. The CFA designation is given to individuals who successfully complete the requirements (3 levels of tests of ethics, professionalism, and precise knowledge of finance & economics) by the globally recognized CFA institute.

As mentioned above, CFA is conducted in 3 levels. From the next year(2021) the exam would be held 4 times a year and in an online mode, although not remotely. The tentative schedule for 2021 would be as follows

  • February: Level I only
  • May: All Levels
  • August: Level I and Level II
  • November: Level I and Level III

Why is CFA so important?

While preparing for CFA, one will come across a wide range of topics and courses closely dealing with finance on multiple grounds and thus this certification is the most globally recognized one for financial professionals across the globe. Not only employers but customers also acknowledge this and consider CFA charters to be financial experts. Career advancement due to the CFA designation is no brainer. This program is extremely useful for individuals interested in Investment Banking, Portfolio Management, Investment Research, and Security Analysis, etc.

JP Morgan, UBS, Morgan Stanley, Royal Bank of Canada, BlackRock, and Goldman Sachs stand out to be the most aggressive recruiters of CFA charters. Salaries offered though can be widely varying ranging from about $50,000 to 150,000 annually or even more depending on experience.

And as good to know stuff Bill H. Gross, founder of PIMCO, and Howard Marks, founder of Oaktree Capital Management are also CFA Charter holders.

What to expect from the exam?

Now that you know why CFA is important, one obvious question you may be asking is what do I need to know to appear for the exam?

So, all three levels span almost the same modules but with different difficulty levels.

Various sections of the exam include :

• Ethics and professional standards

• Quantitative methods

• Economics

• Financial Reporting

• Corporate Finance

• Equity investments

• Fixed income

• Derivative Investments

• Alternate Investments

• Portfolio & Wealth Management

The importance and weightage of each section for each level can be well understood in the tables below

Where do I study from and how do I study?

CFA provides a very detailed curriculum and course study books and material to students who register to appear for the exam. Apart from this, there are multiple online courses and books specially to train candidates for this course.

Typically, 6 months of regular studies is recommended for each level of the course with approximately 250–300 hours of dedication for the preparation. Yes, people do crack exams by preparing for lesser times but obviously, shorter the time, higher is the effort and lower is the success probability. The above-mentioned figures are the most recommended ones by CFA charters themselves.

Passing Rates and Results

CFA results are usually announced after eight weeks of the CFA Exam date. Pass rates vary from year to year, but since the first exam was given in 1963, the overall rate is 44%. Moreover, fewer than 20% of the candidates pass all three tests in the first three attempts, so it is important for candidates not to get discouraged.

CFA Culture at IIT Guwahati

Every single year, there has been an increase in the number of students from various disciplines being interested in finance and related careers and hence more and more applications are reaching CFA from IITG. Last year has been very proud of our community because 5 students from the college cleared level 1 of CFA which generally has the lowest passing rates. So, kudos to them.

And best of luck to each and everyone aiming to make a career in finance.

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The Finance & Economics Club (FEC) functions as a platform for enthusiastic students to come together and learn the intriguing and fun world of finance.

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Finance & Economics Club, IIT Guwahati

Finance & Economics Club, IIT Guwahati

The Finance & Economics Club (FEC) functions as a platform for enthusiastic students to come together and learn the intriguing and fun world of finance.

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