So I signed up for the CFA because, well, I love finance, mathematics, statistics, and economics. I’ve seen people on this forum state that the CFA material is ‘quite deep’, and no offense, but I just want to laugh. For the most part, formulas are presented and you are expected to memorize them, but hardly ever do they go through a derivation. They present CAPM and Dividend growth forumlas, but nary do they ask you work through the models assumptions or first order conditions to actually arrive at the forumulas presented. Nay, the CFA material is not “depth” but “breadth”. There is a lot to study, but the depth at which you need to know is cake thin. Maybe when I start studying L2 material my mind will change, but so far the CFA doesn’t ask you to critically think about the models you are using (trust me guys, the CAPM is flawed) nor do they ask you investigate how sensitive results are to model assumptions, etc. I can’t wait to see their coverage of deriviatives in L2 when I’m sure they will just present Black Scholes formulas with nary a mention of brownian motion and ask you to memorize it …
Very current thread in L2 forum: http://www.analystforum.com/phorums/read.php?12,687983 I think most people know this. CFA is not designed to make you a PhD in all areas of finance. It simply provides a broad and sufficiently conversant understanding of many areas of finance. dbag
then go get a Phd smarty pants…get back to us in Jan with your pass letter…
i gurantee this guy lives in academia and has never stepped onto a trading floor : ) - most PhD guys I know all sound like this “whahhh. CFA is too easy, wahhhh” let me put you on the floor, 8 am, on the phone with a pissed off PM whose is down 20% in pre market…your brownian motion will not save you, kemosabe
i guarantee this guy lives in academia and has never stepped onto a trading floor : ) - most PhD guys I know all sound like this “whahhh. CFA is too easy, wahhhh” let me put you on the floor, 8 am, on the phone with a pissed off PM whose is down 20% in pre market…your brownian motion will not save you, kemosabe
i guarantee this guy lives in academia and has never stepped onto a trading floor : ) - most PhD guys I know all sound like this “whahhh. CFA is too easy, wahhhh” let me put you on the floor, 8 am, on the phone with a pissed off PM whose biggest position is down 20% in pre market…your brownian motion will not save you, kemosabe
Hi daj; I’m not trying to be pedantic, pompous, or haughty. I’m simply stating that what the CFA is asking of you is rote memorization and little else. So far the designation implies that a member can parrot back and regurgitate a wide array of material. Critical thinking does not seem to be a required component. And also note that I never said rote memorization was easy, it is time consuming after all. And no, I’m not a trader (I’ve done quant work at a hedge fund, economic consulting, and a hefty amount of quantitative analysis and model work) but this doesn’t really have anything to do with the gist of my argument. If I were a trader would that somehow influence whether or not I thought the CFA material was in depth and rigorous? Honestly now …
It’s Level 1, how deep do you want it to be? And yes I think everyone knows that it is the volume of work in Level 1 which is the problem, not the content. Also, I would hazard a guess that it is principally designed with a ‘hands-on’ application in mind - you don’t have to know all the background crap to be able to use the tools.
look, basically shush and wait until you’ve sat l2 before you form arrogant opinions, l1 is just the warm up for the real challenge. I’ve heard of doctorates getting stonewalled by l2 (rare but happens) and the l2 vignettes will make you think. Me personally though, I recommend passing a section or two before you run your mouth, there are alot of smart quant guys here floating about that love the material and alot of accomplished pros that I’ve learned a great deal from personally.
Jesus Christ does anyone actually want to take a whack at my claim rather than hurl insults? Let me make this simple: Claim: L1 material for the CFA is simply rote memorization. Instead of attacking me, my job, my background, my education, would anyone like to actually tackle the claim?
dlescook Wrote: ------------------------------------------------------- > So I signed up for the CFA because, well, I love > finance, mathematics, statistics, and economics. > I’ve seen people on this forum state that the CFA > material is ‘quite deep’, and no offense, but I > just want to laugh. > > For the most part, formulas are presented and you > are expected to memorize them, but hardly ever do > they go through a derivation. They present CAPM > and Dividend growth forumlas, but nary do they ask > you work through the models assumptions or first > order conditions to actually arrive at the > forumulas presented. > > Nay, the CFA material is not “depth” but > “breadth”. There is a lot to study, but the depth > at which you need to know is cake thin. > > Maybe when I start studying L2 material my mind > will change, but so far the CFA doesn’t ask you to > critically think about the models you are using > (trust me guys, the CAPM is flawed) nor do they > ask you investigate how sensitive results are to > model assumptions, etc. > > I can’t wait to see their coverage of deriviatives > in L2 when I’m sure they will just present Black > Scholes formulas with nary a mention of brownian > motion and ask you to memorize it … Hmmm, well as someone who just wrote Level 2, let me tell you that it is considerably different from Level 1. Dude, ( i presume): do you honestly think that everyone on these forums doesn’t have one, or two, or a few areas of expertise? So since you’re a quant, it’s understandable you want to delve deeper into certain aspects of the curriculum-but what if every Tom “The Economics Guy” , Dick " the Accounting dude" and Harry “the Quants Queer” complained that the CFA is so easy relative to their fields of expertise? We’d have an exam of mammoth proportions-that’s what. So, maybe just quit showboating your amazing mathematical ability-at least until you get your charter.
Its easy said than done …
my point was mainly pass then flaunt as someone who also just wrote l2. L1 does favor quanta and even the quant portion of l2 is not unnecessarily difficult, but you will struggle with many of the other aspects in l2 and l3 as other quants have. L1 is just the warmups, it is not easy but builds common understanding among candidates. In my mind, the other two levels set you apart. You originally extended your viewpoints to l2 and possibly the whole charter, hence the appalled responses, doing this without having sat l1 is like a European watching the pregame superbowl warmups then exclaiming, “so this is American football? I can play this!”. Regardless, if you approach l1 as memorization as many do, you will pay in l2 & l3, best practice would be to take an interest in understanding the topics beyond what’s required by for instance reading and digesting the optional segments. L1, moreso than any other level is what you make it, in my mind if you go deep, the cfai materials can provide you a solid foundation.
dlescook Wrote: ------------------------------------------------------- > So I signed up for the CFA because, well, I love > finance, mathematics, statistics, and economics. > I’ve seen people on this forum state that the CFA > material is ‘quite deep’, and no offense, but I > just want to laugh. It all depends on what you are trying to get out of CFA. I guess you are correct that it is possible to pass Level I without deep knowledge. With each consecutive Level depth increases. > For the most part, formulas are presented and you > are expected to memorize them, but hardly ever do > they go through a derivation. Everything depends on your studying style. I am not good at memorizing. I focused on understanding concepts and then derived all formulas myself once. After that I didn’t have to memorize anything. But again, there are different approaches to studying. You can focus on memorizing everything, if that works for you. >They present CAPM > and Dividend growth forumlas, but nary do they ask > you work through the models assumptions or first > order conditions to actually arrive at the > forumulas presented. That’s misrepresentation of material. Formulas are presented along with the assumptions. In case of CAPM several examples of CAPM with relaxed assumptions are introduced. Dividend growth model is extended in Level II material. > Nay, the CFA material is not “depth” but > “breadth”. There is a lot to study, but the depth > at which you need to know is cake thin. There is some truth to that. Since Level I candidates have to get familiar to learn a lot of new tools, they can’t be expected to know them in depth. Level II and Level III will go more in depth. > Maybe when I start studying L2 material my mind > will change, but so far the CFA doesn’t ask you to > critically think about the models you are using > (trust me guys, the CAPM is flawed) nor do they > ask you investigate how sensitive results are to > model assumptions, etc. That’s incorrect. Read the material. > I can’t wait to see their coverage of deriviatives > in L2 when I’m sure they will just present Black > Scholes formulas with nary a mention of brownian > motion and ask you to memorize it … CFA materials are very conceptual. In real life B-S formula is only used as a converter of price and implied volatility. I can give you several different derivations of Black-Scholes formula but nobody will gain anything from that. Good luck on your studies and welcome to AF.
I think maratikus’ post is correct and directly addresses the original post but to add to it: 1) The rote memorization approach to LI is an excellent way to fail the exam and an impossible way to succeed at all the exams. You have to memorize some stuff (e.g., financial ratios) but you shouldn’t memorize anything about CAPM. 2) Pointing out the lack of mathematical rigor on CFA exams as evidence that the exams aren’t deep is a really convincing way of pointing out that you don’t understand the point of mathematical rigor. I do think that it would be reasonable to require a little more mathematical sophistication (a little calculus goes a long way with fixed income and derivatives), but deriving formulas is useless for the purposes of the CFA exam. And, of course, there’s Brownian motion and then the whole stochastic calculus thing which is always held up as the paradigm of sophistication in finance and not covered at all in CFA studies. I’ve pointed out that I think risk-neutral valuation would be a fine topic to include, but beyond that most of this stuff is tools for nearly unimportant problems - how many people do we need in the world able to value exotic options using s.d.e’s? (answer: way fewer than we already have). 3) Someone above pointed out that “we would have a mammoth exam”. Well, we already have a mammoth exam. There really is one CFA exam which is divided into three parts. You get nothing for passing the first two. You don’t even get a congratulations letter in the mail anymore. Way back when, the average charterholder took 4 1/3 exams to get their charter and studied for 300 hours/exam. That was, um, 1300 hrs. Now Li is about the same, LII is harder, and LIII is much harder than it was then. We have better study aids now, but I’ll bet the average amount of time to get a CFA charter is getting near 2000 hrs = 1 working year and that’s if you get it. What do you think total # of hours spent studying for CFA exam/# charterholders is? It’s probably 10,000 hrs/charterholder. How much more productive time should we throw at this process to make it “deeper”?
The CFA exams are like pass/fail final exams on a series of upper level undergrad courses (or possibly MBA courses) in accounting, finance, economics, and statistics where passing is around a B+/A- average. I don’t know where you got the misconception that they were supposed to be like math exams or Ph.D. comprehensive exams. It is silly to suggest that the skills and knowledge necessary to pass the exams is limited to rote memorization. The exam questions are generally word problem format that require a reasonably deep understanding of the subtleties of the information contained in the study materials.
Saying the exam is memorization probably talks more about your learning style more than the validity of the exam. Some people learn chess by thinking of ways to check and do different moves. Others memorize series of moves, aka openings, middle game, and end games. Maybe you learn by memorizing. Any form of aptitude or IQ exam I have taken, I have been able to study and memorize answers, even though those exams were designed to measure how well people think and process information. If your memory is good enough, there is only so much variety a test, test company, or test maker can have.
clearly, the guy who started the post got his ass smoked by all the replies AGAINST his logic. I myself did not mean to insult the poster’s background, but I did think it funny that someone who probably has not sat for level I is making all these claims.
Passing is more like C- or D+