Level III preparation in three weeks

Hello everybody,

I’m a 2015 level III candidate and my bank has offered to pay the exam fee + books to all level II and level III candidates and best level I candidates. The thing is that we will have a “CFA style” exam on the 27th of October to determine which level I candidates will recive the scholarship and How prepared are level II and level III candidates. I haven’t studied since I wrote level II in June and I would like to prepare for this exam in order to not leave it blank…

I think the best way is to read 2014 secret sauce and EOC concept checkers from the 2015 curriculum (which I already have). What do you guys think? any suggestions?

Thanks in advance

They will test you from Level 3 Curriculum or just basics from L1 and L2???

Are you writing the exam next June… So whats the purpose then? a Refresher?

Take three weeks off if they want to give you a test in october

Just remember that it’ll be a relative performance evaluation. You don’t have to get a pass necessarily, you just have to beat your peers.

I’m writing the exam in June 2015 and they will tesst me from L3 curriculum. The main purpose is to determine what is our current level in order to better prepare the classes we are going to have to prepare the exam.

A M4tt30 said, I know is a relative performance thing, since I’m copeting against my colleagues. I already know that they will pay for my fee so I guesss the thing is that it will really embarrase my if know almost nothing in 3 weeks time…

you’ll be fine

I think it depends on which topics you feel more comfortable on. If you are good with memorising and applying rules, I would focus at least a week of the remaining time to hit Ethics and maybe GIPS. If you are more comfortable with key concepts, I would briefly run through the key concepts of the asset classes (four of them, I think) and maybe behavioral finance.

Myself, I would go for some of the low hanging fruits: -

  1. Brush up ethics (maybe a day or two spent here). Ethics here is a rough repetition of level 1 and 2 with a small addition of the asset manager’s code. Given your time constraint, I will just go for revision rather than worrying too much about the AMC.
  2. Understand the biases for behavioral finance with emphasis on identifying the different behavioral bias (both cognitive and emotional)
  3. Focus on the Institutional Portfolio (If time is short, focus on the IPS for pensions (defined benefits only), foundations and endowments; glance through the IPS for the two types of insurance and their distinguishing features). Remember that the IPS components for Institutional Investors are usually already stated in the question. It is basically up to you to pick it up (unlike individual IPS where you actually need to calculate quite a few stuff or judge whether one point is more relevant than the other).
  4. Some of the calculations required for Capital Market Expectations and Asset Allocation are actually pretty basic and can be worth a decent chunk of marks in the AM portion.
  5. Speaking of Capital Market Expectations and Asset Allocation, I would get a general idea of some of the basic concepts (the different ways of evaluating overvaluation of the market, corner portfolio, etc.)
  6. Just the key concepts for the four asset classes (fixed income, equity, alternative investments and derivatives). The different types of option curves are good to know – if you had a solid understanding of options in L1 and L2, you could probably get this within an hour or so.
  7. VAR, in particular, appears to be a fan favourite. Do understand the different types of replication for equities and fixed income.
  8. Understand the concepts in portfolio execution, monitoring and rebalancing. There are a few simple calculations that you might want to get (mostly on calculating variants of weighted average). Some of these are even repeats of L1.
  9. There are some simple calculations available in Evaluation and Attribution. The text book was a little vague on the macro and micro attribution concept but I managed to get a good understanding of them by creating a table of attribution analysis on Microsoft Excel and changing the various numbers repeatedly.

If I was in your position and followed the advice above, I will probably still fail but I think I can put up a halfway decent fight. I skipped individual portfolio and GIPS above because personally I was not very good at individuals (return calculation are a pain and personally, I feel that there is some subjectivity there but fortunately, some of the questions are usually tagged along with behavioral finance so identifying biases certainly help push up your individual portfolio scores) and I only managed to get GIPS a few weeks before the real exams.

I didn’t actually use the Secret Sauce but when I glanced through a copy of the Secret Sauce, I felt that it is an excellent book for revision but probably less awesome when it comes to picking up the concepts initially. Note that I never actually used the Secret Sauce so take that with a grain of salt.

It’s great to see the employers valuing the program so much. My boss has been trying to memorize the three letters and the sequence in which they come for the last four years and still coming short. AFC, CFO… he has tried many combinations.

Agree with him. 3 week is just a very short time. You should review the knowledge of level I and level II exams, and only look at a summary of level III.

Disagree with that. While the time is probably just enough to look just at a summary of Level 3, I am not sure how helpful the Level 1 and 2 exams will be given that the focus of the syllabus is very different. Assuming that the OP’s bank is planning to have a “CFA style” exam, OP should focus on just Level 3.

Such a waste… Why are they testing you Level III in October " Mini CFA test" ? so the employer can pay or just a competition fluff!!! Level III concept is different and focus on emphasizing what you have learned in the past two levels… In terms of how prepared you are, i am sure you have crossed the two levels you know where you stand in finance…

I still dont understand why you have to go through this… believe me save their money for now till Mid-August when you get your “Congratulation…” note from CFA and then get your money back

The thing is they want to check our current level in order to organize the classes we are going to have… I guess that if our exam is horrible, we will start with basic things. If the test is pretty OK, classes will be more difficult.

At least it is a reason for me to start studying early…