03 Jun 2019

CFA® Level III: how to succeed in the morning paper

One of the things that has caused some degree of bewilderment over the years is the relatively disappointing performance of some CFA Level III candidates, particularly in the morning (“essay” format) paper.

Whilst it is certainly true to say that the style of the morning paper is very different to the multiple choice format of the other CFA examinations and that, like many of us these days, candidates may not be used to handwriting very much more than their signatures, the generally low marks still remain something of an enigma.

Candidates must remember that, using relevant theory, answers need to demonstrate analysis (cf. the ‘A’ in CFA) of the vignettes given. Very often the question asks for a number of reasons to support an answer, e.g. why a particular behavioural type has been selected, which often simply requires identifying the relevant pieces of information in the vignette and (accurately) transcribing into the answer sheet provided.

Our experience from marking mock examinations is that candidates seem to fail to score full marks because of not stating the – it may well appear to them – obvious.

It is essential when writing Level III answers not to write too much, or two little. If a question asks for three reasons for a particular decision (such as with asset allocation) then you need to write three reasons! You should write enough to make it clear you understand what is needed, but full sentences are not necessary: “Sharpe ratio highest of all options” should get the marks; “Sharpe ratio” is too little. Also if the requirement is for “three reasons” then do not write a fourth or fifth: these additional comments are guaranteed to score zero. If you write five reasons, it is not the best three that are scored, it is the first three.

Our recommended approach is to initially read the vignette, have a look at the questions and then re-read the vignette once again in order to pick out relevant information for inclusion in answers.

As ever, candidates will find some questions easier than others and some will take more time. It may therefore be an idea to start by tackling the topics you are most comfortable with when the adrenalin is pumping. Having got some “runs on the board”, questions involving several calculations, e.g. for an Investment Policy Statement, could be tackled in the “middle” of the exam when a little more settled but before time pressure is being felt.

Ideally, questions relating to topic areas that candidates are least confident in (and/or are more descriptive than quantitative) should be attempted last.

In any case, we wish you luck!

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