Carry forward knowledge from L2 Derivatives and PM to L3

CFA Level III
#1

Hi,

I’d like to know whether I need to revisit L2 Derivative and PM section for L3 prep. I kinda skimmed through these two areas during my prep for L2 and was fortunate enough to pass. Appreciate your input.

Cheers,

Haz

#2

I thinK L2 derivative is a necessity carry forward to L3: Swaps, options and futures… Lots and lots of the material assume you know this stuff already.

PM section, not so much.

#3

Thank you 125mph.

Cheers,

Haz

#4

Well from what I have seen in L3, they go through real basics of derivatives (more like L1 level) by explaining put and call options, collars, spreads, etc. I still have not gone through problems but I would not expect considerably different problems from what the exam prep provided us with. Therefore, I would not read L2 material but would focus on L3 material. You will be fine.

#5

So, can I directly start with L3 derivatives?? Because I spent a lot of time on L1 and L2 and ended up understanding nothing…Also, how important is derivatives in answering questions? If it’s only as much as the weights provided by CFA then I’d rather focus on important topics.

#6

I think derivatives are important not just for the exam but also in general. Personally, I do not think you would gain much from reading L2 material; L3 has a lot of repetitions from what has been covered in L1 and L2 but the main difference is that now you have to integrate your knowledge. Also, L3 assumes you know stuff but nevertheless covers the material again. Just think of it this way: Why would they put in Kaplan Schweser the basics about options and similar derivatives if it has been assumed you already know the stuff?

#7

Because lots of people that made it through still don’t know diddly about derivatives. Its a tiny portion of both exams!

#8

Perhaps you are right (hopefully not) but that is not the point I was trying to make. They have put old stuff in the study material so that you do not need to cover material from L1 and L2 in case you forgot certain areas. Therefore, no need to look at old books because there is nothing that would give you an advantage in L3.

#9

The focus on derivatives at Level II is pricing and valuing them.

The focus on derivatives at Level III is using them in investment strategies.

Not a lot of overlap there.

#10

Thank you all for the comments.

Cheers,

Haz