Should be close to 30%. Understand, too many charter holders are reducing the brand value. Also makes perfect economic sense for CFAI to flunk more Lev IIIs than IIs or Is, opportunity costs for candidates is too high to give up at III… think guys… think! Da** these quants!!!
No chance… Last year was an historic low. 30% on LIII is just too big a hurdle (these are people who have passed LI and LII so clearly aren’t dilettantes or idiots). If you were thinking about taking CFA exams, that 30% on LIII would look daunting to most and (I believe) cut down overall revenue.
But if every Tom, Di** and Joey is getting into that 70% passing group, would I want to to have a CFA at the first place??? Guys, guys… first rule of increasing value of a good is make it scarce! OK, not related to this, did you guys actually clear your economics 101 courses???
70% still is hard - if you give a test in college in which 70% of the people pass you are killed. It’s not clear that CFA wants to increase the value of the charter; they seem to want to increase their own revenue (I think I learned that in Econ 101). Increasing the value of the charter would be only one part of that equation. In the end, I can make a test that nobody - 1 person can pass. Would that make it very valuable? Probably not as it just makes it more academic. In any event, CFAI’s revenue is something like proportional to the value of the charter * # people taking the exam. You can bet that they have studied how failure rates impact # people taking the exams and satisfaction with the program. Already we have people like former trader saying “I spent 700 hrs studying for LIII and I might fail” That’s really bad for getting new people to sign up for the charter (CFAI calls this “penetration” which seems wildly Freudian to me, but it is their explicit goal to increase “penetration” of the CFA charter).
JoeyDVivre Wrote: ------------------------------------------------------- That’s really bad for getting > new people to sign up for the charter (CFAI calls > this “penetration” which seems wildly Freudian to > me, but it is their explicit goal to increase > “penetration” of the CFA charter). Oh man, does that mean we’ve all been penetrated? Just when I thought it couldn’t get any worse…
Yep.
JoeyDVivre Wrote: ------------------------------------------------------- > 70% still is hard - if you give a test in college > in which 70% of the people pass you are killed. > It’s not clear that CFA wants to increase the > value of the charter; they seem to want to > increase their own revenue (I think I learned that > in Econ 101). Increasing the value of the charter > would be only one part of that equation. In the > end, I can make a test that nobody - 1 person can > pass. Would that make it very valuable? Probably > not as it just makes it more academic. > > In any event, CFAI’s revenue is something like > proportional to the value of the charter * # > people taking the exam. You can bet that they > have studied how failure rates impact # people > taking the exams and satisfaction with the > program. Already we have people like former > trader saying “I spent 700 hrs studying for LIII > and I might fail” That’s really bad for getting > new people to sign up for the charter (CFAI calls > this “penetration” which seems wildly Freudian to > me, but it is their explicit goal to increase > “penetration” of the CFA charter). Joey, what you say makes sense that CFA doesn’t want to make the tests so difficult that only a select few make it through, but do you have any good explanation for why the pass rates on Level 3 swing so wildly? I mean from 55% to 76% to 50% looks to me like CFA Institute has a major flaw in their quality control process. The explanation can’t be that the pass rate in 2006 jumped because repeat test takers score higher (e.g. 80% pass rate) if you run a few calculations. I agree with you that 70% would be a tough bar for pass/fail in nearly every academic institution, so 50% looks downright brutal to me. Do you have any theories about what is going on over there?