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