CFA® Level 2 Exam Questions Practice Test part 3

The Chartered Financial Analyst (CFA) Program is a professional credential offered internationally by the American-based CFA Institute (formerly the Association for Investment Management and Research, or AIMR) to investment and financial professionals. The program covers a broad range of topics relating to investment management, financial analysis, stocks, bonds, and derivatives, and provides a generalist knowledge of other areas of finance.

Overall, the CFA exams are challenging, but candidates can increase their chances of passing by studying for over 300 hours, utilizing alternative prep materials, answering as many practice questions as possible, and creating a structured study plan.

A candidate who successfully completes the program and meets other professional requirements is awarded the "CFA charter" and becomes a "CFA charter-holder". As of June 2016, there are approximately 132,000 charter-holders around the world. Successful candidates take an average of four years to earn their CFA charter. According to the CFA Institute, fewer than 20% of candidates who begin the program receive the CFA Charter.

Some years test takers will receive a 65% overall score and fail, while in other years candidates have received a 62% score and passed. How the scoring is weighted plays heavily on how your overall score will turn out. Generally speaking, any score of 70% or higher should be a passing score.

Topics of CFA® Level 2 Exam:

• Introduction to CFA Level 2 Exam Topic Area 'Equity Investments'

• Preferred Stock Valuation using the perpetuity formula

• Common Stock Valuation using the Gordon Growth Model (GGM)

• Learn the formulas for Justified/Intrincsic/Theoretical P/E, P/B, P/S, P/CF, D/P multiples

• Sustainable Growth Rate (SGR) formula and its importance

• ROE Breakdown using Du-Pont Analysis (3-Step and 5-Step)

• CAPM, Fama-French, Pastor-Stambaugh, Carhart Models to calculate Required Rate of Return on Equity

• Beta formula using covariance and correlation

Who is eligible for CFA exam?

You can take the exam as long as you : Have a bachelor's (or equivalent) degree, or be in the final year of your bachelor's degree at the time of registration, or have four years of qualified, professional work experience or a combination of work/college experience that totals four years.