Today’s post is more of a question and my own personal experience on the tests. First, the question. When (if at all) do you decide to pass on a section or formula within the curriculum?
Around this time in my studies, I always found that there were still a few formulas or topics (usually within derivative pricing) that I was just not grasping. Whether from a lack of practice problems or not being able to understand the process in the calculations, I had to decide whether to devote more time to the topic or move on to higher-point areas. A previous post looked at last-ditch strategies for those hard-to-get formulas, but sometimes it seems that nothing will work.
The subject is a little dangerous because when is ‘punting’ on a subject a legitimate strategy and when is it being just plain lazy? Once you’ve decided to pass on a subject, it becomes easier to pass on others. I have talked to candidates that were planning on passing on so many topics and formulas that it became something of a joke. At this point, if you can honestly say that you have devoted time to learning the topic but are still not getting it, I think you can make the decision.
One difference that may help you decide whether to pass on a topic or not is the relative importance of the study session within the curriculum. Some topic areas, notably derivatives, are given a much lower rate than others within each of the three exams. With 5-15% given as the weighting range on the second and third exams by the Institute, you are likely to see one or two item sets or an essay question. Within this, a few of the questions will be conceptual and the ‘problem’ formula may be a two-part question. This decreases the possible point loss from not mastering a formula or topic.
It sounds like a copout but is the off-chance of seeing some of these extremely long and complicated formulas on the exam worth the extra time to master them? Especially when understanding the basic premise behind the section or being able to do the first step of the problem will get you a few of the points or make it easier to make an ‘educated’ guess.
My own experience is mixed on the topic. I definitely did not master all the formulas on the exams and made a conscious decision to punt on a few. There were still others that I put in some more time on practice problems and flashcards and was eventually able to figure it out. On the exams, I can remember two specific incidences where the additional effort paid off with points but can remember a few times when the formula never showed up.
How are you deciding in which sections or formulas to pass?
Joseph Hogue, CFA
It’s simply impossible trying to know everything. There’s not much except do what you can, and hope what you’re familiar with lands on the exam.
Hope. It is the quintessential human delusion, simultaneously the source of your greatest strength, and greatest weakness.
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It’s definitely impossible to know everything, as iteracom already said. But you definitely don’t want to be ‘punting’ on major sections. I remember walking out of level one in 2009 and talking with a buddy who said, “Aww dude, I totally blanked on equity valuation…”. I remember thinking, “Uhm, this exam is kind of geared towards equity valuation, to a degree. Probably not the best section to be drawing a blank on…”
That said, there are smaller sections that, for every exam, I punted on. I only remember level three at the moment, but I believe I scrapped understanding carried interest for private equity, and at some point, I basically accepted that interest rate swaps was gonna be a really weak point for me no matter what.
Punting is really something you want to be “tactical” about - you’ll probably be OK with punting on something that is small and unlikely to be a meaningful portion of the exam (one specific class of alternate investments, using myself as an example). However, it’s really not gonna work if you pick an entire section like, “Oh, I’m really bad at Quant Methods - I’ll make it up elsewhere.” Quant methods is like 10-15% of levels 1 and 2 - you will not make it up elsewhere. Go learn it.
TL:DR; Print this out and put it near the desk where you study. Respect it.
I punted on alternative investments in L2….had no idea what was going on in that section.
Cities teem with evil and decay, let’s give it a good shake and see what falls out!!
variance of a 3 asset portfolio. If that comes up I will happily take my 1/3rd chance at getting it right.
do you get automatically failed on the exam for writing profanity to CFA graders? cuz anything i don’t know is going to be met with a:
“Answer: well this is a bunch of bullshit…”
band 10, here i come
Never skip any topics. To put into simple perspective, you can know a topic very well but it’s hard to score 100% on it, you can easily score 80% if you know it. You can have some knowledge of a topic and get like 50% on it, those are the easy marks. So why skip any topic, it’s not worth getting 0% even if it’s only worth 5% cause to pick up those 2.5% else where it’s very hard!
Never skip any topics. To put into simple perspective, you can know a topic very well but it’s hard to score 100% on it, you can easily score 80% if you know it. You can have some knowledge of a topic and get like 50% on it, those are the easy marks. So why skip any topic, it’s not worth getting 0% even if it’s only worth 5% cause to pick up those 2.5% else where it’s very hard!
@frankz888, man i would love to play poker with you :)
Personally, it depends on how much of the question I already understand. Often, there are things “you know you don’t know.” Those are easy to skip. The hardest to skip are the ones where you’re 80% done with the question and you’re missing a step or two.
Usually, skipping a question like that will result in me randomly remembering something later in the test, allowing me to return and work on the problem.
Anyways, in the last two tests I’ve finished both the morning and the afternoon sessions with over 30 mins to spare, so I’ve always been able to go back and work on what I skipped. For the afternoon L2 last year, I was able to just leave with the 30 mins left and not really have to worry about skipped Q’s.
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There are just some topics that I know will take me forever to understand, so I focus on other areas like the back of my hand. You only need to know 70% of the material to pass.
NO EXCUSES
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this logic is very mis guided. you need 70% to pass doesn’t equal you need to know 70% of the material and the material you know doesn’t gurantee you will get 100% in it.
^^^^^ True, but bpdulog has cleared all 3 levels,
So Question for you guys, bpdulog is:
[ ] Genius
[ ] Lucky
[ ] Wants us to fail
so did I. so do whatever works for you. I am just telling you it’s not worth skiping any topic. cause you never know if it will show up on the MC section where you can pick out the answer.
Just remember, a lot of people will not skip any topics and they therefore have a natural advantage.