L2 Math

First of all, congrats to everyone who sat for the exam this weekend. Regardless of how it went, I’m sure you’re all pleased for it to be over.

My question is around the level of quant/math skills required in L2. I sat L1 in Dec 17, and passed. Based on my result sheet, it looks like I was pretty much right on the mean score of those who passed. Due to a few personal things, I decided not to attempt L2 this year, and will be sitting for it in June 19. For those who have gone through this process, would you say there is much of a step up in terms of math skills required? I have no education in math beyond high school level, and that was a long time ago now. I didn’t find L1 too tricky, and enjoyed quant way more than I thought, but there were definitely times where I think having a more fundamental knowledge of algebra would have been beneficial to me understanding things on a more intuitive basis. I feel like I passed through brute force, rather than any particular mastery of the content.

As I’m a year out, I was considering doing some kind of fundamental math course this summer, either online of possibly in person, before I start studying around Nov/Dec. Does this seem necessary, or are the math skills required for L1 comparable to L2?

L2 math = addition, subtraction, multiplication, division, and exponents. Math is the least difficult part of L2.

There’s also differential and integral calculus, algebraic number theory, differential geometry, and a soupçon of real and complex analysis . . . in short: nothing that you didn’t see in high school.

There was only one integral calculus on the exam on Saturday… Hope I’m not violating anything by disclosing that.

Not in the least.

And, honestly, you’ll likely enjoy getting to take the Level II exam a second time. That’s a luxury not afforded to all CFA candidates.

In one of Fabozzi’s fixed income readings, he does say you can think of duration as a first derivative, but then qualified it with “but so what!!!”. Le sigh…

And don’t let me catch any of youze trying to calculate the square root of -1 on yer calkamulators!!!

I read ‘Fermat’s Last Theorem’ ,and have seen ‘A Beautiful Mind’ at least 3 times, so it sounds like I should be covered.


If you’re not ready to prove the riemann hypothesis I wouldn’t even consider signing up for the L2 exam.

I kid I kid…

and make a mil in the process. not a bad deal.

The math isn’t hard except for a few tricky formulas that you may not have been exposed to, but like everything else in life, a lot of practice makes it easier. Once you understand it, it is like riding a bike. The difficulty comes in covering so much material where they can test the very subtle details of something. In addition, they can disportionately test questions in your weak areas. Some people may get lucky and get a lot of their strong areas tested. Don’t let less math conclude you to less difficult.


As others have pointed out, it’s not math that makes Level II challenging. It’s the amount of material it covers.

A sound understanding of high school math is sufficient for Level II. Any more math only helps in the sense that you would have more experience solving problems.

The quant method on Level II is primarily about applied statistics. That means that you learn about different types of statistical methods and tests. The exam emphasizes the interpretation of results rather than calculations.

You’ll find this to be true in general during your CFA journey. The exam writers try hard to minimize the number of calculations needed or avoid them altogether.


To the extent you may have to exercise some math skills I’ll give you some real examples from this year’s reading materials that can seem way more challenging then they are. Bootstrapping and calculating forward rates will require a bit of math that can trip people up.

If you are calculating a forward rate remember this formula if you can’t get it conceptually (1+ sj+k)j+k) = (1+s)j * (1 + f(j,k))k). To put this into English you’ll see something like “Calculate the 4 year bond 1 year from now”. In this case it’s just j = 1 k = 4 so the formula would be (1+s5)5 = (1+s) (1+f(1,4)4). Depending on the combination of the problem give you it will just be making sure you have this setup correctly and you’ll be able to find most spot or forward rates from it.

Bootstrapping seems simple (and it is), but quick math here could help. Let’s say you get a bond with a 4% coupon and a few arbitrary interest rates of 1% Y1, 2% Y2, 3% Y3 and they want you to find Y4 interest rate. Setup the problem like the following 100= 4/(1.01) + 4/(1.02)2 + 4/(1.03)3 + 104/(1 +x)4. Sum the Y1 through Y3 numbers and you’ll get $11.4656, subtract this from 100 on the left side to get 88.5343. Take this bring it back over to that big ole ugly right side of the equation by dividing 104/88.5343 to get 1.174685. Do 1.174685.25 (if it was risen to the 5th then it would be .2 which I know is basic but just keeping it contextually fresh) to get 1.041071. Subtract 1 and presto 4.11%.

This may look like a foreign language right now, but you’ll see a ton of practice problems in fixed income/derivs that draw from these concepts. Best of luck!

If you can solve simple linear equations, you’re good.