GMATClub's Unofficial Chartered Financial Analyst thread

My bad, ryguy. I knew you were a charterholder but I thought you were providing teaching/mentoring prep help on the side.

Oh gotcha

I do mentor LI candidates (more from the psychological aspects - how to study, how much time needed to prepare, what materials to use, etc.) as opposed to the actual nitty gritty exam materials.

Damnnnn.....congrats on all you guys that passed 2 and 3. What did u guys do to celebrate?

sudden, are you gonna apply for the charter now? you already got the 4 years of experience?

also sudden, you mentioned that CFA is more breadth and MBA is more depth. Isn't it the other way around? I'm sure everyone knows the analogy, "CFA knowledge is a 1 foot wide hole but 1 mile deep, while MBA is a 1 mile wide hole but 1 foot deep."

Something to that extent, ya know? I would think a MBA would be broader in knowledge, giving you a flavor of a little bit of this and a little bit of that. CFA is really preparing one to become an expert in the investment areas right.

I know the saying but honestly the CFA material is pretty broad and generic.... definitely not a mile deep. You might read a couple chapters on derivates, a couple on DCF, etc. But in my opinion the knowledge you gain through the CFA is pretty superficial. For example, they will teach you the various forms of the income approach (DCF, residual income, etc) and the many ways you can calculate a discount rate but there is nothing on how to develop the best possible assumptions, how to determine how long your forecast should be, how to determine the best method to calculate discount rates under various scenarios etc. Similarly, they will tell you about all the different market multiples and what drives those multiples. But there is very little on how to actually analyze companies and decide whether their multiples should be higher or lower than comparables.

In an MBA program, you can take an entire class on a very narrow topic. This allows you to get much more in depth. For example, an MBA derivatives class would probably teach you a lot more about derivates than the CFA.

I disagree on this point. The CFA covers options pricing, futures and forwards contracts, swaps, swaptions, currencies, commodities, forward rate agreements, arbitrage and hedging strategies, etc. This is the exact stuff (if not more than what is) covered in a "general" derivatives course in a top MBA program (or any program for that matter). The fact is, these topics cover a lot of ground and there simply isn't enough time in a semester to cover much more than this (I don't care if you are at Harvard or Stanford or Tuck, these classes will undoubtedly be the same!) Obviously, schools such as Chicago and Columbia have expert professors in these areas and offer additional classes that go into more depth in specific areas (e.g., I think I've seen courses such as "utilizing hedging strategies in portfolio management" or "risk management with derivatives"), but any good old derivatives class won't really go beyond the scope of the CFA curriculum.

I almost missed this.

Major congrats Audio!!!!

I guess maybe I went overboard in saying a general derivatives class teaches you more than the CFA. But, you basically proved my point with the 2nd part of your post. School like Columbia have classes that go way in depth on this stuff, which means that if you chose to then you can get a more in depth finance education from an MBA than from the CFA. Of course, many people will choose to never go beyond the survey type courses. In which case the CFA would be as good or better. But, the CFA does not even give the option for the type of depth that a top MBA can give.

But, it's a moot point anyway. I'm going to bschool for the beer and the recruiting! You won't find me in an advanced derivaties class! I hate derivatives. haha.

Thanks mate!

I have 29/48 months of experience in finance, so I will have to wait for the charter. I don't think it really matters though. Sure, it's nice to flash the letters, but everyone knows the hard part is passing the exams, so you're 95% of the way there after clearing level 3 (provided you have some relevant experience and aren't totally green, which is a different story).

I have heard that description of the CFA vs. MBA. I do think that, generally speaking, you get more depth and breadth in the CFA program than you would as a finance major at most MBA programs (ryguy might disagree with me here with regard to Columbia, and I won't argue with him on that point). I think I may have chosen the wrong word when I said depth. What I meant was, an MBA program is applied whereas the CFA is not. So if you're talking about valuing a business and building earnings and DCF models to do so, you won't get that in the CFA program. Sure, you will learn about valuation and margins and the mechanics behind a DCF, but you won't get the experience of putting that knowledge to practice (answering exam questions does not count). The CFA will tell you what those things are and how to calculate them, but won't give you much on how to think about them or actually use them in practice. Basically, I think you need to run through the exercise of actually doing the work half a dozen or a dozen times before you really "get it," and an MBA requires this.

Anyway, I think both an MBA and a CFA are useful and complement each other nicely.

i know that the cfa institute doesn't determine a passing score for a given test until after the exam is administered, but can someone who's passed ballpark it? i mean, does 70% (like the series 7) seem reasonable? 50%, 80%? a pass rate of 30-35% seems pretty low, so i'd imagine its a pretty high bar...

i've been studying for level I for the past six weeks, but haven't actually signed up for the test (need to make a decision by monday!). i'm trying to determine if i should take a crack at the december test and risk $1395...or put off until june. I'm taking a couple econ/accounting classes this fall, so A) i will be busy but B) the classes will help with my studying.

thoughts?

thanks!

You will never get two identical estimates for the minimum passing score (MPS) but my guess is around 65%. I can tell you one thing for sure - if you score 70% you'll be just fine.

You can get much more in-depth info/discussions on www.analystforum.com

I was one of those guys (like many others) who thought that an MBA was less "useful" in terms of learning than a CFA. Well, I have to admit that I am wrong to a certain extent. To give you 2 examples, I have already covered almost all the statistics material that is covered in the CFA in 5 weeks of classes; also in accounting, I can see that at the end of October I will have covered a lot of the material that the CFA covers. Of course, there are advanced accounting courses who will cover all the CFA material, but the basic course does already a good job.

I am certain that in other domains I will cover a of of ground too.

So all in all, I can say that the learning experience of an MBA is not negligible like I thought it would be - even though thanks to the CFA I am fairly relaxed atm.

Audio - that's probably what I would expect. I think the difficulty of the CFA is putting it all together on one test. I'm guessing the MBA program will cover most everything the CFA covers but I would also expect to have a much more advanced understanding than my classmates. That way I can help others in finance related classes so I can get similar assistance in my areas of weakness.

Pass rates for any of the CFA exams are simply unknown. There are all sorts of theories such as 70% of the top 1% score, but the truth is, nobody knows. If I had to guess, I'd say it is in the 60%-70% range. All I can simply do is guess based on my experience going through 3 exams and having taken 12 full length practice exams(3 Schweser + 1 Boston per level). Only on one of these 12 practice tests did I ever score more than 70% - and quite honestly, I think the Schweser questions were a bit of a joke on that particular test. Furthermore, I would say that I likely lost a couple of percentage points due to the stressful testing environment (not to mention that the LA test center is frickin' COLD!). Also, just so you are aware, the results provided after you take the exam aren't very granular. It's hard to infer how well you did. For your reference, I've attached my results from Level II to give you an idea. Bottom line is my absolute best case scenario for any of the three levels was ~70%. Realistically I scored in the 65%-68% ranges.

What I say to people that are preparing, is that if you are scoring ~60% on practice exams within 2-3 weeks of the exam, you are in striking distance. I can go in to more of a timeline and study strategy at some point if there is interest. You can also take a look at a couple of previous posts for some high level comments I made a few months back:

post461396.html#p461396
post461577.html#p461577

Well put, Ry

Additionally, I have a calendar that tracked my planned and actual (planned is always too ambitious) study schedule. I have a lot of resources for individuals studying for LII or LIII.

hey rguy

i want to know how do you see asset management industry in US . what are its future prospects. and further what do you plan to do after your mba?

Anybody in for Level I next month?

For those that don't know about this, I strongly suggest the Boston Society's Practice Exam (https://www.bsas.org/BSAS_CFA_Exam_Preparation/CFA01.asp). It's the best 6 hours of study time you can possibly get. Also, there are few charterholders on the board here (as well as some LII and LIII candidates) and I wanted to give this thread a bump for anyone that had "last minute" study questions.