What to Know About the CFA Level 3 Exam in 2024
Understand the key details of the CFA Level 3 exam in 2024, including its structure, evaluation process, and what to expect if you need to retake it.
The CFA Level 3 exam is the final step in earning the Chartered Financial Analyst (CFA) designation, a respected credential in investment management. Unlike the previous levels, this stage emphasizes portfolio management and wealth planning, requiring candidates to apply their knowledge through constructed response (essay) questions alongside traditional item sets.
Passing Level 3 demonstrates technical proficiency and the ability to integrate financial concepts into real-world scenarios. Given its complexity, understanding the exam’s key aspects is essential for effective preparation.
Format and Duration
The CFA Level 3 exam consists of two sessions, each lasting 2 hours and 12 minutes, with an optional break in between. This totals 4 hours and 24 minutes of testing time. Unlike previous levels, which rely heavily on multiple-choice questions, this exam includes both constructed response (essay) and item set questions.
The morning session features constructed response questions that require written answers based on case studies. These test a candidate’s ability to apply financial concepts in practical scenarios, often involving calculations, explanations, and justifications. The afternoon session follows a format similar to Level 2, with item set questions based on vignettes. Each item set consists of a case study followed by multiple-choice questions, requiring candidates to extract relevant information and apply their knowledge efficiently.
Curriculum Content
The CFA Level 3 exam builds on the analytical skills developed in earlier levels by focusing on portfolio management. A significant portion of the curriculum covers asset allocation, requiring candidates to construct and manage portfolios based on an investor’s risk tolerance, return objectives, and constraints. This includes models like the Black-Litterman approach, which incorporates investor views into asset allocation, and mean-variance optimization, a framework for balancing risk and return.
Risk management is another core component, emphasizing techniques to mitigate exposure to market, credit, and liquidity risks. Candidates must be proficient in tools such as value at risk (VaR), stress testing, and scenario analysis to assess potential portfolio losses. Understanding derivatives as hedging instruments is also essential, as options, futures, and swaps are commonly used in institutional and private wealth portfolios.
Ethical considerations remain a key focus, with an emphasis on applying the CFA Institute’s Code of Ethics and Standards of Professional Conduct to real-world scenarios. Unlike earlier levels, where ethics is tested in a more theoretical manner, Level 3 presents case studies that require candidates to navigate ethical dilemmas in portfolio management, trading, and client interactions.
Scoring Process
The CFA Level 3 exam introduces a more subjective evaluation process due to its constructed response section. These essay-style responses are graded by CFA charterholders who assess clarity, accuracy, and the ability to apply financial concepts effectively. Partial credit is awarded for incomplete but relevant answers, making it important to show work and reasoning even when unsure of the final solution.
Each question has a specific point value, and the total raw score is converted into a scaled score to account for variations in exam difficulty. The CFA Institute does not disclose the minimum passing score (MPS), but it is determined after each exam cycle through expert panel input and statistical analysis. Historically, the MPS has ranged between 55% and 65%, though this is not officially confirmed.
Reattempt Policies
Candidates who do not pass the CFA Level 3 exam can retake it without restrictions. The exam is offered twice a year, typically in May and August, allowing candidates to plan their reattempts without long delays. Registration for a retake follows the same process as an initial attempt, requiring payment of the exam fee, which varies based on registration timing. There are no discounts for repeat test-takers, and previous scores do not carry over.
Candidates receive a performance breakdown highlighting areas of strength and weakness relative to other test-takers. While the CFA Institute does not provide individual question-level feedback, understanding which topics fell below the 50th percentile can help refine study strategies. This feedback is particularly useful for those who struggled with specific sections, such as behavioral finance or fixed-income portfolio management.