CFA® Level 2 Exam Topic and Weights

Gaining Ground

The CFA® Level 2 exam delves further into investment management and portfolio theory, thus putting your knowledge to the test in various real-world situations. It's more vital than ever to master the subtleties of the themes tested in Level 2, given that it is closer to the CFA charter. Ethical and Professional Standards; Investment Tools; Asset Classes; Portfolio Management; and Wealth Planning comprise the four major sections (divided into ten topics) of the Level 2 exam.

CFA Level 2 Exam Topics

The CFA Level 2 exam tests your knowledge on 10 different topics, including

  1. Ethical and Professional Standards (ET)
  2. Quantitative Methods (QM)
  3. Economics (EC)
  4. Financial Statement Analysis (FSA)
  5. Corporate Issuers (CI)
  6. Fixed Income (FI)
  7. Portfolio Management (PM)
  8. Equity Valuation (EV)
  9. Derivative Investments (DI)
  10. Alternative Investments (AI)
CFA Level 2 topics overview
Topics Exam Weight No. of readings No. of Questions Session Details
Ethical and Professional Standards 10-15% 3 17-24 SESSION 1
2 hours 12 minutes
44 questions
Quantitative Methods 5-10% 6 8-13
Economics 5-10% 3 8-13
Financial Statement Analysis 10-15% 6 17-24
Corporate Issuers 5-10% 5 8-13 SESSION 2
2 hours 12 minutes
44 questions
Fixed Income 10-15% 5 17-24
Portfolio Management 10-15% 4 17-24
Equity Valuation 10-15% 8 17-24
Derivative Investments 5-10% 2 8-13
Alternative Investments 5-10% 4 8-13

Source: CFAI

Ethical and Professional Standards (ET) [3 readings | None]

For the Level 2 exam, Ethics weighs 10-15%. Most Level 2 Ethics coursework remains the same as in Level 1, with a few added subjects in the soft dollar standard, the research standard, and investment guidelines. The questions are more challenging because they are presented in item sets with different contexts. Read more on this topic at the Ethical and Professional Standards page.


Quantitative Methods (QM) [6 readings | 50 formulas]

Unlike Level 1, QM makes up around 5-10% of the total weight of the Level 2 exam. This course covers analytical tools and discounted cash flow analysis, which serve as the foundation for security and asset valuation, probability theory, and application to quantifying risk in investment decision making. For a much more detailed read, visit the Quantitative Methods page.


Economics (EC) [3 readings | 50 formulas]

This section (covering 10-15% of the exam weight) examines the fundamental concepts of supply and demand for individual consumers and firms. Knowledge of various market structures in which firms operate and macroeconomic concepts and principles are essential. The section concludes with a discussion of the business cycle and its impact on economic activity. If you do well enough in Level 1, this shouldn't be a problem area in Level 2. Our Economics page contains a thorough discussion of each reading included in the topic.


Financial Statement Analysis (FSA) [6 readings | 40 formulas]

Financial Statement Analysis (FSA) accounts for approximately 10–15% of the Level 2 exam. FSA examines primary financial statements, focusing on basic financial statements and how alternative accounting methods affect those statements and their analysis. Visit our page on Financial Statement Analysis for a much more in-depth understanding of the subject.


Corporate Issuers (CI) [5 readings | 40 formulas]

The topic introduces corporate governance and investment and financing decisions. You must also have a solid understanding of stakeholder management and corporate governance. Corporate finance accounts for 5-10% of the topic weight in the level 2 exam. For much more detailed information, visit the Corporate Issuers page.


Fixed Income (FI)
[5 readings | 60 formulas]

This topic describes fixed income securities and their markets, yield measures, risk factors, and valuation measurements and drivers. It also covers calculating yields, fixed-income securities' values, the securitization of assets, the fundamentals of bond returns and risks, and basic principles of credit analysis. Fixed Income accounts for 10-15% of the Level 2 exam. For more insights into the topic, visit the Fixed Income page.


Portfolio Management (PM) [6 readings | 70 formulas]

The weighting of this topic for Level 2 is at 10-15%, which is a significant increase from that of Level 1. The subject explores the fundamentals of portfolio and risk management, including return and risk measurement and portfolio planning and construction, individual and institutional investors' needs, and the range of available investment solutions. Detailed information is available on the Portfolio Management page.


Equity Valuations (EV) [8 readings | 100 formulas]

Equity Investments delves into the characteristics of equity investments, security markets, and indexes and how to analyze industries, companies, and equity securities and use basic equity valuation models. This topic area accounts for 10-15% of the Level 2 exam. Please visit the page on equity valuations for much more in-depth information.


Derivative Investments (DI) [2 readings | 40 formulas]

This section builds the conceptual framework for understanding the basic derivatives and derivative markets. In Derivatives, the candidates are also introduced to essential features and valuation concepts such as forwards, futures, swaps, and contingent claims. Derivatives account for about 5–10% of the exam weight (for Level 2). Visit the Derivative Investments page for more information.


Alternative Investments (AI) [4 readings | 20 formulas]

The section explores alternative investments, including hedge funds, private equity, real estate, commodities, and infrastructure. It also covers the use of alternative investments for diversification and higher returns. Similar to derivatives, the section on alternative investments is slightly larger, covering 5–10% of the CFA level 2 curriculum. Want to know more about the topic ? Visit the Alternative Investments page.

NOTE: You might notice a difference in the names of some topics. Since the change is very recent, it might be helpful for you to get briefed on the recent CFA curriculum changes.

Analyzing CFA Level 2 Topics: Important, Hardest, and Easiest

While exam topics and their difficulty can be subjective at times, the deciding factor for which topic is the most complex or simple is based primarily on historical candidate performance data. The intensity changes with each passing year due to the CFAI's addition and removal of specific areas within a topic.

Level 2 Important Topics

There are no set rules on what is important or unimportant, but some topics weigh more when it comes to making the cut. With a massive portion of about 15-20% and 15-25%, Financial Statement Analysis and Equity Valuation are the two most important topics in the Level 2 curriculum. Ethical and Professional Standards, with about 10-15% weight, is also a topic that you can’t miss out on.

  • Ethical and Professional Standards: One of the main reasons why ethics is so important is because the CFAI puts a large emphasis on it. According to the CFAI, the topic is also a deciding factor for candidates on the borderline of the MPS. The fact that the questions are subjective only adds to the difficulty.
  • Financial Statement Analysis: There is no doubt that the FSA portion can be intimidating to many candidates due to its size. The questions on the topic will require the candidate to be completely familiar with a variety of processes and principles, likely making the topic more important.
  • Equity Valuation: Formulas play an important role in the equity section of the Level 2 readings, and candidates will be asked to perform formula-based calculations and interpretations. This prominence of formulas may prove difficult for a large number of candidates.

Level 2 Hardest Topics

Simply put, Level 2 is more difficult than Level 1 since it is more in-depth. Because Level 2 is more application-focused, more depth and detail are covered (and tested). More crucially, candidates must become accustomed to responding to the new Level 2 vignette-style multiple-choice questions. Financial Statement Analysis, Ethics, and Portfolio Management have long been regarded as some of the most challenging topics on the Level 1 exam. This is because these topics necessitate extensive reading and calculation, apart from having to memorize all the qualitative theories and concepts.

  • Financial Statement Analysis: There is no getting around the fact that a significant portion of the CFA level 2 curriculum is devoted to Financial Statement Analysis, and you will need to become knowledgeable about a lot of material. You should be familiar with the FSA formula sheet. One of the biggest portions of the exam asks you to calculate a certain value using information from a financial statement. To do well in this exam, you'll need to be aware of the data points that go into various formulas.
  • Ethical and Professional Standards: Even though some readings might virtually seem similar to those in Level 1, the questions in Level 2 are going to be very subtle. The topic is also challenging because of the extensive reading involved.
  • Portfolio Management: It comes as no surprise that the most sought-after professional path for aspiring CFA candidates is portfolio management. The core of the CFA program is portfolio management, which is introduced in Level 1 in broad strokes before progressively getting harder and covering more material by the time you reach Level 2 and 3.

CFA Level 2 Easiest Topics

Again, determining what topic is the easiest is very subjective. A lot depends on your educational background as well. However, based on the topic weight, the number of readings, and the number of formulas involved, here’s a topic you might find a bit easier to master:

  • Corporate Issuers: Even though the topic of corporate issuers is important, it is relatively easy to study. The concepts in the topic are intertwined with the sections on financial reporting and equity. As a result, the questions can be combined with information from other sections.
  • Equity Valuation: For financial analysts, the subject of equity is crucial, and you can anticipate four to five item-set questions in this section. The literature on stock analysis and valuation techniques is extensive. You can be requested to do calculations and interpretations based on formulas because the equity section contains a lot of formulas.

Historical Changes and Revisions to the CFA Level 2 Topics

Similar to the Level 1 exam, the CFA Level 2 exam curriculum has not changed much since 2021. The addition of Backtesting and Simulation and the removal of Publicly Traded and Real Estate Securities highlight a few minor changes.

Level 2 Curriculum Changes (2022)
Removed Added Major Updates
Excerpt from "Probabilistic Approaches: Scenario Analysis, Decision Trees, and Simulations Backtesting and Simulation Environmental, Social, and Governance (ESG) Considerations in Investment Analysis
Publicly Traded Real Estate Securities Mergers and Acquisitions
Capital Budgeting
Real Estate Investments
Pricing and Valuation of Forward Commitments

Some notable changes include:

  1. Machine Learning has been updated to apply to a variety of data cases related to investment problems.
  2. Furthermore, a new Backtesting and Simulation reading provides a simple introduction to how these tools are used to evaluate investment strategies and compare their strengths and weaknesses.
  3. Corporate Finance has been renamed Corporate Issuers, with a focus on understanding the motivations, interactions, and impacts on investors of corporate securities. Corporate Issuers combine fundamental areas such as Economics and Financial Statement Analysis to provide a foundation for Equity Valuation and Fixed Income.
  4. Fixed Income readings were revised across all levels to improve readability and consistency.
  5. The readings for Alternative Investments have been updated to include a single reading on Real Estate as well as revisions to Private Equity.

Here’s a look at the variations in the CFA topic weights for Level 2 since 2018:

Topics/Weight 2018 2019 2020 2021 2022
Quantitative Methods 5-10% 5-10% 5-10% 5-10% 5-10%
Economics 5-10% 5-10% 5-10% 5-10% 5-10%
Financial Statement Analysis 15-20% 10-15% 10-15% 10-15% 10-15%
Corporate Issuers 5-15% 5-10% 5-10% 5-10% 5-10%
Equity Valuations 15-25% 10-15% 10-15% 10-15% 10-15%
Fixed Income 10-20% 10-15% 10-15% 10-15% 10-15%
Derivative Investments 5-15% 5-10% 5-10% 5-10% 5-10%
Alternative Investments 5-10% 5-10% 5-10% 5-10% 5-10%
Portfolio Management 5-10% 5-15% 5-15% 10-15% 10-15%
Ethical and Professional Standards 10-15% 10-15% 10-15% 10-15% 10-15%

CFA Level 2 Topics FAQs

There is no right answer when it comes to prioritizing a particular topic. But on the basis of the topic weight, difficulty, and reading time required, here’s an order we would recommend:

  1. Financial Statement Analysis
  2. Fixed Income
  3. Quantitative Methods
  4. Equity Valuation
  5. Portfolio Management
  6. Derivatives
  7. Alternative Investments
  8. Corporate Finance/Corporate Issuers
  9. Economics
  10. Ethical and Professional Standards

The CFA Institute follows a five-year-cycle for major overhauls of the CFA Curriculum. Even though it is constantly reviewed for annual changes in the readings and LOS—even when the reading remains unchanged—the LOS can be changed by changing the wording, adding, or removing the same.

Here is an estimate of the calculator usage for each topic in the CFA Level 2 exam:
Quantitative Methods 80-90%
Corporate Issuers 60-70%
Equity Valuation 40-50%
Financial Statement Analysis 40-50%
Economics 30-40%
Portfolio Management 20-30%
Fixed Income 20-30%
Alternative Investments 10-20%
Derivatives 5-8%
Ethics 0%

In case you are confused about which calculator to use for the exam, check out our cfa calculator guide.

Read more about the CFA Exam

Searching for the latest information on the CFA scoring and pass rates? Check out the most recent statistics to get a sense of how much study time you’ll need for the exam.
Planning to sit for the CFA exam? Looking for detailed information about the same? Visit this quick guide for detailed info on everything you would need to know before attempting the exam.

Read more about the CFA Exam

Ready to sit for the CFA exam? Here are the eligibility criteria and requirements that will assist you in overcoming any obstacles during the application procedure.

Stressed out by the looming exam dates? For those who find the shifting timetables difficult to comprehend, here is a convenient summary of new dates and frequencies for 2022–2023.

Searching for the latest information on the CFA scoring and pass rates? Check out the most recent statistics to get a sense of how much study time you’ll need for the exam.
Planning to sit for the CFA exam? Looking for detailed information about the same? Visit this quick guide for detailed info on everything you would need to know before attempting the exam.
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