Monday, June 2, 2008

Another Few CFA Test Taking Tips

It's a time for a break from studying. So, here area few more CFA test-taking tips:
  1. Accept the facts as a given - In other words, you might think the scenario given in the question is far-fetched or even incorrect. No matter - assume it's true, and work from there.
  2. Read Carefully! - in particular, watch for negatives and double-negatives. Make sure you pick up words like "least", "most", etc... In fact, you might want to underline them.
  3. If you work out of order, make sure you fill in the correct bubbles. If you mess up (even if you catch it later), it could cost you a lot of time to fix.
  4. Read ALL the answer choices - in particular for questions that ask for the "most" or "least" correct. Don't stop at the first seemingly correct one.
  5. Rephrase the question - sometimes there can be complicated phrasing (see #2 above).
  6. Underline the relevant facts
  7. Try to answer the question in your own mind before reading the answer choices.
As far as what's the best order in which to answer questions, there are a couple of schools of thought. In my opinion, it's best to start with a section you're most comfortable with. That way, you'll build your confidence and "bank" some points." But if you take this approach, keep these points in mind:
  1. Try not to start with ethics - the questions can be lengthy, and can suck up a lot of time.
  2. If you do start out of order, make sure you enter your answers in the correct parts of the answer sheet (see # 3 above). Doing your "most comfortable" section first makes sense. But I'd recommend against doing the whole exam in this way -- if you do, it's all too easy to get confused. So, it might make more sense to do only one or (at most) two "strong" areas and then just work the rest of the exam in order.
  3. Some questions can be real time-wasters (like multistage stock valuation ones). If you're pressed for time, mark these and go back later. A real "time waster" can suck up the same amount of time that it would take to tackle 2-3 easier ones.
  4. Check your answers when you're done.
  5. Don't change an answer unless you have a good reason.
  6. Don't panic if you hit a string of hard questions. There are a total of 240 questions on the Level 1 exam and 120 on Level 2. Although CFA Institute is not very clear about the level needed to pass, a 70% should be plenty (and as low as a 65 or so might do it, but that's just a guess on my part with no empirical support). So, keep moving, and don't panic.
  7. Finally, plan on checking yourself at the 90 minute mark to see how your progress is and check once again with a half-hour left to make sure you haven't left things blank, put answers in the wrong spaces, etc...
Good luck, and keep studying.