how difficult should CFAI make the CFA exams?

i was thinking about exam statistics and what the distribution of scores are… im guessing the median is about ~60% making it that alot of people are left on the margin as FAIL because of a few percentage points.

would the CFA charter be more “prestigious” if the passing rate for each exam was in the teens “only 1 in 10 pass”? what percentage of candidates actually Ace >90% the exam? if you want to argue that there is no good reason to lower the approval rate… then why not make the test easier so that a score in 60s is passing… does the difference of answering an extra 10 MCQ really matter?

i recommend getting rid of level 1, so that everyone starts at level 2 and its assumed the material is pre-req.

the test is already logistically a lot easier than it used to be:

you have 2 L1 sittings a year now, it used to be just one

you used to have to get character references from exisiting charterholders just to enroll in the program.

The way the passing score was set was explained in a CFA magazine article a few years back. One of the criteria is they work out the score of the top percentile, and multiply it by something like 70%, so if the 99th percentile of the scores is 90%, you would need 63% to pass.

No, you can’t make these exams too hard. Simply because it is assumed people are working full time while getting their charter.

If you make the exam too difficult or the pass the rate too low, then the only people that will pass are the unemployed, 40 hrs a week people, or people that work in say back office or something where there’s little revenue generating pressure. If the bar becomes too high, people in these jobs will start to disregard the CFA.

take an example: sell side equity research, the hours are rough, news is always happening. So, you’re going to fail everyone currently working full time, and pass a bunch of unemployed people or jobs with low stress and hours. What good does that do? Experience will always >>> passing exams. It helps nobody.

I think the material should be conceptually more difficult but with less verbose reading.

Yes. It is possible to make the exam more difficult without increasing the amount of material. The current exam questions do not require much thinking - they mostly rely on direct recollection of the curriculum.

However, I don’t think that maximum prestige is the purpose of the CFA. Supposedly, it is to promote “uniform standards” and general investment knowledge among finance people. A very exclusive charter would be counterproductive to this goal. It makes sense for CFAI to maintain a standard such that an average finance person has a chance of passing the exams.

^ very logical answer. completely agree!

You do realize this is patently false don’t you? Anyone who took and got the charter before 2000 should honestly have an asterisk by their CFA, because the test back then was a complete joke.

CFA is inching closer and closer towards CCIE territory. Now I don’t think it will ever get there, because eventually once the pass rates get to 25% people will just stop trying and they’ll have to raise it again. That said if you did a simple regression, you should expect pass rates of under 30% in the next 10 years.

“CFA is inching closer and closer towards CCIE territory. Now I don’t think it will ever get there, because eventually once the pass rates get to 25% people will just stop trying and they’ll have to raise it again. That said if you did a simple regression, you should expect pass rates of under 30% in the next 10 years.”

Why are you using a linear regression model! and plus, moving from 60% to 50% is not the same as moving from 40% to 30%.

Put in the same way, if you shoot 120 strokes on average in golf, moving 120 to 110 only require a little bit more skill. But moving from 80 to 70, you pretty much have to play at a Professional level. So using a linear regression is very naive.

I suggest you take a look at for example

http://www.cfainstitute.org/cfaprogram/Documents/the_cfa_program_our_fifth_decade.pdf

and see the end of page 10:

>> Although pass rates may fluctuate, the Board’s objective is to set a consistent standard competency level across years.

this doesn’t mean that the same percentage pass every year, it means that the same level of skill is required to pass every year.

If the objective was to set a standard competency level, why did the exam get considerably longer and more difficult as years go by?

Or was that objective set in just the past few years?

I’m not sure by what you mean by longer:

>> Level I has 240 independent, multiple-choice questions

>>Level II has 120 multiple-choice questions, organized as 20 six-question item sets

>> Level III consists of a session of constructive response, essay-type questions, and a session of 10 six-question item sets as in the Level II exam.

p.7 of the article I linked: L1 has been 100% multiple choice since 1996 (from 1986 through 1995, it was 50% multiple choice)

In 2000, the item set format was first used in Ethics in L2 and 3

In 2001, L2 and L3 became 50% multiple choice

In 2006, L2 became 100% multiple choice.

There were a lot of complaints from existing charterholders about the change for format, because they felt that the changes made the exams a lot easier. The reason for the changes was the massive expansion in the number of people sitting the exam which would have required a massive increase in the number of people grading the exam

Beginning in June 2009, all multiple choice and item set answers contained 3 choices. Before that, they contained 4 answers: that makes it easier for you to guess if you don’t know the answer (33% chance of a correct guess versus 25% chance).

If pass rates have dropped, in large part that is because a very different population is taking the exams from the old days.

There’s been a massive expansion of topics covered, and the depth has been expanded greatly as well. Any candidate would GLADLY trade for what the exam was like pre-2000

And also, people would be more than happy to go back to 4 answer choices, if you killed off derivates and the many other sections which never existed before.

have you seen the first CFA exam. i think it is on their website. in 1963. it was only one exam and 4 questions.

http://www.cfainstitute.org/about/strategy/history/Documents/firstcfaexam.pdf

If only guest had to retake the modern day L2 and L3, that’s the only way he/she would understand.

Guest are you paid by the CFA or something? The scope of the curriculum in the 2000s is ridiculous compared to pre. There is a reason that the pass rates have been taking a swan dive over the past 15 years, it’s because they’ve made the test 3x as difficult.

Again, it’s never going to reach that CCIE level, but I find it funny how older candidates think, oh wow the test is so easy today. There’s a reason pass rates have been creeping towards under 30%, because this stuff is freaking tough.

yea the fresh crop of new candidates are forced to learn and memorize FAR MORE material then what older candidates have ever seen before

Older candidates are complaining?

Newer candidates are the ones that should be complaining…

not if you are taking the log.

CFA should divide Level 2 into 2 parts and Level 3 into 2 Parts and have a total of 5 Levels

no way… that makes it way too easy.