Well, I’m not sure changing up the material is a good idea… Isn’t the idea that CFA charterholders have a standard ‘body of knowledge’ of all things investment analysis / managment related? But things do get updated (e.g. GIPS) so it makes sense to issue new volumes each year to ensure all candidates are given the same opportunity to aswer a question like “from 2011, GIPS requires…”.
On the subjects chosen to be tested and the way questions are worded, a) i think it is fair that the exam ask a hand full of obscure questions because this allows those candidates who put in ~500+ hrs to improve their chance of passing at the expense of those that took the ~100hr Schweser short cut, and b) i think the cryptic way questions are asked is frustrating but necessary in order to weed out candidates that have ‘rote learned’ the material…
^ the material changes because the field of finance changes. The rise and partial fall of credit default swaps is a perfect example. There was no need to have candidates learn about CDS’s in the early 90’s because the market for them was practically nonexistent, fast forward to 2007 and the market was more than $60 trillion.
They have consistently ratcheted up the difficulty of the exam to keep people out. They have reached a critical mass where the exam is coveted by enough people so they get ample funds in the door and don’t have to make a more reasonable exam. If you have the opportunity talk to someone who took the exam back in the 80’s and 90’s. It was basically an open door policy. If you could memorize your formulas to get past Levels I and II they basically gave away the charter by making Level III comparatively quite easy. As late as 2001 the Level III pass rate was still quite high at 82%. It’s been falling ever since. So, I believe they made a concsious decision a decade ago to ratchet up the difficulty. Now what other reasons would they have other than increasing revenue?
My understanding is that it is no more difficult today than in the 90s to pass the exam. One of my friends who has actually graded exams for a long time (and got his charter in the mid-90s) confirmed as such. Clearly, the study material is broader and more complex – but the exam is not.
Was the morning exam all that mind blowingly difficult?
If you make the material broader and more complex, you make passing the exam harder by default. While the individual questions on a specific topic might not be harder, having to prepare for more topics is harder.
The morning exam was not mind blowingly difficult (the afternoon was another story, for me), however with the vast amount of material they throw at us it seems particularly odd what the CFAI chooses to focus on, therefore making it quite difficult in my estimation. Items that were highly emphasized in the texts were not well represented on the actual exam (without getting into specifics). This is the main source of difficulty for most candidates, IMHO. So, with the smaller set of materials to study in the 90’s the exam would likely pose less of a hurdle.
More importantly, from an objective standpoint I don’t think there’s any way one could argue against the exam getting harder at Level III. The last 5 years the pass rate has not cracked 53% and in the 90’s it never dropped below 59%. That’s a big difference even though we are working with small samples.
I just don’t believe it. I know I’ve already told the story about my boss (received charter in 1980’s) and I know of several charterholders who say the addition of more complex material makes the exam harder and, believe it or not, would deter them from pursuing it now.
I understand why your “friend,” who got “his/her” charter back in the 90s would want to act like the exam hasn’t gotten harder, but EVERYBODY in the industry knows that the exam is harder. I mean, are you freaking kidding me? My manager got his charter back in the 90s and back then level 3 was practically a formality. Besides, what your saying doesn’t even make sense about the study material being broader and more complex, but the exam is the same in difficulty? That just sounds stupid. So if they added rocket science to the curriculum, it’d still the same test, right?
Dean99, you and I can only speculate as to whether the Level III exam is harder than it used to be. Remember, no matter how hard it appears to us, CFAI can adjust the MPS levers to compensate. So even if this year’s test is twice as hard as 10 years ago, without knowing the relataive MPS, we don’t really know if passing is any more difficult.
I would point out that according to the CFAI’s standards setting policy, Modified Angoff, their stated goal is to create a consistent benchmark over the years. I have to take it on faith that we’re being treated fairly in relation to current charterholders.
I don’t understand how you can say it is pure speculation that it is harder when we have all of the pass rates going back to 1963? We have the data and it certainly tells the story that it is harder.
With Level III, it doesn’t make sense to me either. But to conclude that passing is harder simply because passing rates are lower also ignores possible changes to the makeup of the candidate pool.
This puzzles me, particularly the year to year fluctuations.
Obviously you and your “friend” have not seen the historical pass rates so here it is for your edification
It sure must have been tough for your “friend” to endure the grueling average 75% pass rate between 1990-1995. That must’ve been SOOO rough. Despite that, however, I think normal people would agree that a lower pass rate + harder curriculum + more people taking the test = harder exam. You can argue all you want but those are the facts.
It puzzles me too, but I’m skeptical of the general concensus out there. Look, a lot of folks still think the exam is graded on a curve, but have never read up on Modified Angoff to understand how CFAI sets the MPS. Is it possible that declining pass rates are due to changes in the makeup of the candidate pool?
I think we can conclude that the candidate pools are relatively homogenous at Level III in that they have all passed Level I and Level II, so you are likely to have shaken out anyone that got “lucky” or does not know how to prepare. Given that, I just don’t know that one could say it isn’t harder these days after looking at the data.
The swings are likely to be caused by what they test. If it is emphasized in the text and they test it, people do well.
Except looking at the data it is clear that it is more than just “swings” over time. There is a clear downward trend.
Plus. And I know this is painting everyone with a broad stroke, but there’s a guy in my office that got his charter over 10 years ago. You know what he said to me the other day? That he though private equities were publically traded. Really, now. No offense to you people who passed a long time ago, but I think there are more idiots that can slip through the cracks with a high pass rate.
Just thinking about it logically and not disparaging any of those that went before us, if you are good at accounting and memorizing formulas you could have gotten through without having a great grasp of traditional finance if the level III pass rates are high. Bang out formulas on Level I, hammer out some more sophisticated accounting techniques and learn some econ on two and then they ask you some basic questions on level III (which can be inferred from the high pass rates) and BINGO, you get questions like this about PE.
I don’t know, but I agree with your comments about Level III being a relatively homogenous candidate pool. At the moment I can only trust that there is a fundamental fairness to the whole process and that what CFAI tells us is in fact true.
Big ML said:
>>I think we can conclude that the candidate pools are relatively homogenous at Level III in that they have all passed Level I and Level II, so you are likely to have shaken out anyone that got “lucky” or does not know how to prepare. Given that, I just don’t know that one could say it isn’t harder these days after looking at the data.
The swings are likely to be caused by what they test. If it is emphasized in the text and they test it, people do well.<<
It is kind of a stroke to our egos, but I think it is very possible that charterholders (even new ones) may say stupid things or ask stupid questions about things that are in the curriculum
curriculum keeps changing
we only need about 70% to pass (it’s not advisable, but it’s possible to pass neglecting some areas)
as the years go by, we may forget a lot of stuff that we don’t work with/review/study in some other form.
there are many charterholders. If you don’t screw up, some other guy might
That said, I also get a little annoyed when older charterholders say stuff like “you passed L2 - you’re already in then”. From their attitude, it seems likely that L3 got way tougher through time (maybe L2 got easier, bt that seems hard to believe as well).