Level II vs Level I: Why so Difficult?

Hey Everyone-

Congrats to all who got good news today, and keep at it to those who didn’t get the news they hoped for.

I was fortunate to pass level 1 and I am still walking on air as I type this.

I was hoping to get a few bullet points as to what makes the L2 exam so much more difficult than Level 1. I hear the “if you think Level 1 is tough, wait till you get to Level 2” statements made from time to time and was looking for some insight?

Is it the item sets? The formulas?

I will preface that Level 1 really didn’t feel easy to me at all, as I am about a decade out of college and wasn’t exactly the model student cool. I have heard people call it easy and like a college review, but I did not experience that.

Just trying to get a grasp of what I have gotten myself into!

Please provide your insight.

In Level II, IMO we need to understand deeply, not just concepts as in Level I.

The material is just a lot harder in L2. Most of L2 you probably didn’t have in undergrad. As for the actual exam, L2 is not harder in my opinion. I felt better leaving the test room after L2 compared to L1. Point being, study very hard for L2 and you will pass if your smart.

I found it to mostly be the amount of material.

It is not rocket science, it just requires more time and more sacrifice.

The material is not difficult on a stand alone basis. There’s just so damn much of it. The curriculum is probably 20% greater in volume. You have about 500 formulas to know for a 120 question test, of which about 30% you actually need to use the formulas (according to the schweser folks). Also, for L1, you know exactly how many questions from each topic there will be on the test and study accordingly. That’s not the case for L2. You have to know your sh** for this exam. Then there’s the whole vignette thing where CFAI can, and will, throw minute details and nuances you have to be aware of. Other than that, piece of cake :wink:

Thanks for the input.

I used Schweser for reading materials in Level 1. Do you think I should deviate from that at all and become more reliant on CFAI books?

I ain’t that serious, otherwise the exam wouldn’t have such high passing rate lol. Just takes time and focus, but mostly time so it’s a big commitment.

Schweser is fine for level 2. Just know it inside and out. I used Schweser and EOC questions from the official texts.

what makes level 2 so much harder than level 1 is that you have to have a deeper understanding of the material. This requires a lot more time and effort. In the end though it is just an exam that if you study and study right, you can pass.

WYLAT pretty much hit the nail on the head. It’s the breadth of the curriculum combined with the specificity of the questions asked in L2. You will read 1500+ pages in total in order to answer 120 questions that represent 20% of what you read. Knowing how to retain all that information on a granular level at least for FRA, Equity and other big weighted areas even if it’s not asked is key.

To give you an example:

In Level 1 Quant you may be asked to calculate the standard deviation of a certain sample or calculate the variance given the std deviation.

L2 will go into some detail about actually using formulae to model financial data and the specifics on when you should use each model and conditions that must be present in order for the model to be valid and have predictive power.

The thing is alot of people try to memorize everything they read when all they need to do is remember some formulas lol. The rest of the bullshit in the curriculum will come back to you from doing practice and mocks.

Level 2 is about getting a deeper understanding of the topics. Level 1 is more “diffuse” as there are a ton of questions spread around, whereas in Level 2, they will pick a topic, say swaps, and ask you 6 detailed questions on it, and if you don’t know a topic well, you are exposed.

I think the main challenge is changing the studying style from Level 1, I would say you should read the chapters in extreme detail and understand the core concept every time.

Then again, I know people who barely studied for L2 and passed…

someone link the big L1 vs L2 thread

In Level 2 you will have to understand chapters in their integrality. Understanding only 90% of a chapter can be dangerous as you could get stuck on one question and not be able to answer the following question, or the question could require 3-4 concepts and you can only answer if you know all of them.

This is the biggest difference between L1 and L2, the other is the size of the curriculum …

The analogy that I keep hearing which I find to reflect the change in difficulty is “Level 1 is a mile wide and a foot deep. Level 2 is a mile wide and a mile deep.”

Essentially in level 2 you have to fully understand the concepts and their inner workings to have a fair shot at the majority of the quesitons. Level 1 you can get away with a basic understanding in an isolated case.

Giving you an example to try and illustrate the difference between a level 1 and a level 2 question, consider a question in the FR&A section that is trying to test your knowledge on inventory accounting choices.

A level 1 question may appear as:

In a rising cost environment, a company that reports its inventory using the LIFO method compared to the FIFO method will most likely report inventory that is:

a) Higher.

b) Lower.

c) The Same.

This is a pretty straight forward question that tests your knowledge of different inventory accounting methods. Now a level 2 question may appear as:

XYZ’s change in choice of inventory accounting method will result in a reported net income that is:

a) $41 million higher.

b) $41 million lower.

c) $37 million lower.

As you can see, not only do you have to understand the differences in accounting methods, you need to also understand their effects on different parts of the financial statements, as well as be able to do the calculations. So in this case, you will need to understand how cost of goods sold changes with accounting methods, and calculate the changes in COGS. But, you also have to understand that the higher/lower COGS will result in higher/lower taxable income, so you have to include the tax effect.

So you really do need to master the material for level 2 because there are many things you have to take into account and understand how they work together. An inventory question is still pretty simple, but this gets exponentially more difficult when they ask you to, for example, calculate the value of a forward rate agreement 30 days into the contract based on interest rate movements. There is just no way you can do this in a proper time frame unless you know the material inside and out.

But don’t let this scare you, you simply just need to respect the amount of material you’re going to learn, and leave enough time to fully cover and master everything.

I hope this helps. Feel free to ask any questions.

Level 2 has more new stuff

Hello,

I just passed my Level 1 and browsing through the replies in this topic, I think I should start studying for Level 2 ASAP. I barely passed Level 1 as it is (didn’t even expect to pass as I studied for 4 days only) and I doubt I’ll have the same luck again.

God luck to us all!

I really liked the schwesser quizes online that were timed… these definitly helped my chances of passing

Level-I is like trying to drink from a water fountain.

Level-II is like trying to drink from a fire hose.

The math is similar (basic stuff), theory is not terribly advanced, it’s just the sheer amount of information you have to fully understand in order to pass. Problem I had was keeping my understanding of prior concepts while working towards understanding my weak areas. It is not impossible but you must take the amount of effort you put into level-I and multiple it by 3 or 4. If you take it seriously and put in the quality hours you will pass.

Everyone has their own opinion on this but I would completely ditch schweser if I were you. I started studying with schweser and was not learning adequately. I threw my schweser books away halfway through my studying and went straight CFAI and passed. I did use the schweser secret sauce though and found that helpful.

^ +1

L2 goes much deeper than L1.