CFA Level 2 Exam – 21 Week Study Plan, Part 2 of 6

Introductory Remarks – see part 1

General Guidelines – see part 1

Week 2 – Quant

I believe that many candidates let themselves get unnecessarily stressed about Quant.  Keep in mind it is a minor part of test.

Topics include: correlation, significance testing, single and multiple variable regression, assumptions and violations in regression analysis, and time series modeling.

If you have worked with an SPSS or other stats software, then think about how CFAI might create an item set using the data report from a regression or time series analysis.  Can you interpret the results?  Can you fill in the blanks on any missing calculations?

Ultimately, do not let all the nuances of what is basically MBA level statistics get you down.  If this isn’t your bag, focus on more heavily tested sections.

Week 3 – Economics

Like Quant, Econ is one of the lower weighted sections, but there’s a catch.  The economics of foreign exchange rates appear elsewhere in Level 2 and on Level 3.  So keep this in mind as you work through Econ.

Topics include: general macroeconomics, national income accounting, principles of international trade, and foreign exchange rates.  You could get an item set incorporating one or all of these concepts.

Week 4 – Financial Statements, Part 1

The next three weeks are Financial Statements and this is mission critical material for the serious Level 2 candidate.  Learn it, live it, love it!

This week’s material includes inter-corporate investments, accounting for acquisitions, variable interest entities (VIEs), and the impact that accounting methods for these actions have on financial ratios.  Watch out for differences in IFRS and US GAAP.  If CFAI mentions both, then they reserve the right to test on both.

You could see an entire item set on one or some combination of all of the topics in the preceding paragraph.  So be prepared.  Use a build up approach in developing proficiency.  Start by working through problems with your notes and flash cards in front of you and keep working through problems until you can do them without assistance.  It will take time.

Week 5 – Financial Statements, Part 2

Now you move into accounting for pensions and employee retirement benefits, stock based compensation, and consolidation of multinational operations with emphasis on currency translation accounting.

You could realistically see one item set on pension accounting and a separate item set on consolidation of multinational subsidiaries.  Again, note the nuances between IFRS and US GAAP.  Same approach as FSA 1, start working problems with your notes and gradually build proficiency.