CFA® Exam Curriculum
Many CFA exam candidates have concerns about the time required to analyze the recent changes in the CFA exam curriculum. It is important to note that being aware of the curriculum changes in advance can be highly advantageous in certain situations. For instance, individuals who plan to begin studying early for the 2023 exam should confirm that the materials they are studying will be covered in the updated curriculum. Additionally, candidates who intend to purchase used study materials from previous years for the upcoming exam will benefit from being informed of any curriculum changes. Moreover, those who have failed the current exam and plan to retake it in 6-12 months can reuse existing third-party study materials, taking into account the minor curriculum changes.
CFA Exam Curriculum and Topics/Syllabus
The CFA exam curriculum is a comprehensive and rigorous program that covers a wide range of topics related to investment management and analysis. The syllabus for the CFA exam is divided into three levels, each of which builds upon the knowledge and skills gained in the previous level. Candidates who successfully complete the CFA exam program demonstrate a high level of knowledge and expertise in these areas, which is highly valued in the investment industry.
Here’s a list of the topics for CFA exam L1, L2, and L3:
|
CFA Exam Level 1 & 2 Topics |
CFA Exam Level 3 Topics |
|---|---|
|
Economics |
Economics |
|
Alternative Investments |
Alternative Investments |
|
Derivative Investments |
Derivative Investments |
|
Equity Investments |
Equity Investments |
|
Ethical and Professional Standards |
Ethical and Professional Standards |
|
Fixed Income Investments |
Fixed Income Investments |
|
Portfolio Management and Wealth Planning |
Portfolio Management and Wealth Planning |
|
Quantitative Methods |
N/A |
|
Financial Statement and Analysis |
N/A |
|
Corporate Finance |
N/A |
The CFA Institute (CFAI®) updates the exam material annually to keep up with the constantly evolving landscape of investment management and the market. As a result, when selecting study resources, it is crucial to be aware of what has changed and whether the topic weights have been updated. This is particularly important if you failed the CFA exam in the past year and are unsure of your next steps. By staying current on curriculum changes, you can focus your preparation efforts and increase your chances of success in the CFA exam.
Recent Changes to the CFA Exam Curriculum
By thoroughly reviewing existing practices and developing a new curriculum, Level 1 and Level 2 of the CFA program have undergone significant updates. These changes, in addition to those implemented in 2022, aim to equip candidates with a more up-to-date comprehension of investment practices. The updates include the division of Multiple Regression into smaller, more easily digestible segments, an enhancement of Corporate Restructuring with greater emphasis on spreadsheet modeling, and the simplification of Real Estate into three separate components.
Starting in 2024, all Level 1 and 2 candidates will be required to take a Practical Skill Module (PSM). The PSM is a video-based training program, designed to help them bridge the gap between theoretical knowledge and practical applications. In addition, Level 3 candidates will also be required to complete a PSM starting in 2025. The PSM is an important step towards ensuring that candidates are fully prepared to handle the challenges of their job roles.
CFA Exam Level 1 curriculum changes
CFAI has revamped Level 1 curriculum to avoid repetition and save time. Even though topics like time-value of money, statistics, microeconomics, and company accounts are moved to pre-read materials, they are still important for the 2024 exams. Candidates can access pre-reads for free to evaluate their readiness and identify knowledge gaps.Some of the other notable changes include:
- The program structure of CFA exam Level 1 is now transitioning to a Learning Module format instead of the traditional Reading format. These Learning Modules are designed to be more easily digestible and meant to be studied in a single evening, catering to the typical study habits of CFA exam candidates. Additionally, they include more visual aids, spreadsheets, and practical content that is relevant to finance careers.
- The Alternative Investments and Derivatives sections are the first to be structured in this new format. Because of this, the number of readings or chapters may be different from previous years, but it still gives an idea of the extent of the update.
- Three new readings have been added this year, which are primarily focused on Corporate Issuers and Economics.
- The Portfolio Management topic has also received minor updates to its content, for example, the “Fintech in Investment Management” reading now includes new information on DeFi and blockchain technology.
| Topic | Readings |
|---|---|
| Economics | Added: Introduction to Geopolitics |
| Corporate Issuers |
Revised: Introduction to Corporate Governance and Other ESG Considerations, and Capital Structure
Added: Corporate Structures and Ownership, and Business Models
Updated: Capital Investments, and Working Capital
|
| Alternative Investments | Revised: Introduction to Alternative Investments |
| Portfolio Management and Wealth Planning | Updated: Portfolio Risk and Return: Part I, Portfolio Risk and Return: Part II, Introduction to Risk Management, and Fintech in Investment Management |
| Derivatives | Revised: Derivative Markets and Instruments and Basics of Derivative Pricing and Valuation |
CFA Exam Level 2 curriculum changes
To summarize, the CFA exam Level 2 curriculum has undergone a relatively small update this year, with some notable changes being:
- Similar to CFA exam Level 1, CFA exam Level 2’s program structure is also shifting from Readings to a Learning Module format, which are bite-sized lessons meant to be studied in a single evening, catering to the typical study habits of CFA exam candidates. Additionally, they include more visual aids, spreadsheets, and practical content that is relevant to finance careers.
- In particular, one Quantitative Method and Alternative Investment reading have been broken down into smaller Learning Modules.
- In the Corporate Issuers section, “Corporate Restructuring” has replaced the “Mergers and Acquisitions” reading and focuses on all types of corporate restructuring and how to model them using spreadsheets.
- In Financial Statement Analysis, “Financial Statement Modeling” has replaced “Industry and Company Analysis” and introduces spreadsheet modeling and additional content on behavioral biases in forecasting.
- The only new reading introduced is “Cost of Capital: Advanced Topics” which focuses on how to estimate required rates of return for equities and fixed income, as well as how to estimate the weighted average cost of capital (WACC).
Some revisions, additions, and major updates include:
| Topic | Readings |
|---|---|
| Quantitative Methods | Revised: Multiple Regression
Dropped: Introduction to Linear Regression |
| Economics |
Revised: Economic Growth
Updated: Currency Exchange Rates: Understanding Equilibrium Value
|
| Financial Statement Analysis | Revised: Financial Statement Modeling |
| Corporate Issuers |
Revised: Corporate Restructuring
Added: Cost of Capital: Advanced Topics
Updated: Environmental, Social, and Governance (ESG) Considerations in Investment Analysis
Dropped: Capital Structure, Capital Budgeting
|
| Equity Valuation |
Revised: Industry and Company Analysis
Dropped: Return Concepts
|
| Alternative Investments | Revised: Real Estate Investments |
| Ethics | Revised: Application of the Code and Standards: Level II |
CFA Exam Level 3 curriculum changes
To summarize, CFA exam Level 3 curriculum has undergone a minor update this year, with the following notable changes:
- The Fixed Income readings were revised across all levels to improve readability and consistency, for example, by simplifying notation and eliminating duplicative content, updating concepts such as LIBOR to Market Reference Rates.
- Yield Curve Strategies and Credit Strategies readings at Level 3 were completely revised for clarity and relevance.
- The readings for Private Wealth Management, Institutional Investors, and Performance Evaluation were updated to align with the new 2020 GIPS standards.
Why Is Knowing the Curriculum Changes Important?
Knowing the curriculum changes ahead of time can provide several benefits. Firstly, it helps candidates understand the significance of each topic covered in the exams, aiding in better preparation. Additionally, students who want to start their studies early for the 2023 exam can get a head start by familiarizing themselves with the upcoming changes in the curriculum.
However, in certain circumstances, knowing the changes in advance can be even more critical. This is particularly true if you are:
A Deferring Candidate: Candidates who have been deferred from the CFA exams will be tested on the new curriculum which will be implemented in 2023. Being aware of the changes in the new curriculum can help these candidates focus their study efforts on what is required, and avoid spending time and money on studying material that will no longer be included. By doing so, they can save a significant amount of money and time, and make their study schedule more efficient. This will also provide them with an advantage over other candidates who may not be aware of the changes in the curriculum.
A Returning Candidate: If a candidate has previously failed a CFA exam, they will be required to retake the exam based on the new curriculum. It is important for candidates to be aware of any changes in the curriculum so that they can focus their study efforts on the new learning objectives and disregard any topics that are no longer relevant. Having a clear understanding of the current curriculum will ultimately aid in achieving a better score on the CFA exam.
