CTFA Sample Exam Questions

The following questions are representative of the types of questions you will find on the examination.

a. Tell the advisor he must first obtain the consents of the current beneficiary and presumptive remaindermen.b. Confront the advisor and, if the situation cannot be remedied, seek court guidance.c. Follow the advisor's directions nonetheless.d. Obtain the written consent of all fiduciaries. 

a. Leave everything to his wife in his will.b. Give $14,000 per year to each of his two children.c. Incorporate a credit shelter trust provision in his will.d. Transfer the house ownership completely to his wife.

a. 401(k)b. Money Purchase Pension Planc. Profit Sharing Pland. Rabbi Trust

a. John's deathb. Sam's deathc. The creation of the trustd. The appointment of the executor or administrator of Sam's estate

a. A 10% Treasury bond is more attractive than a 7.2% municipal bond issued by a state of which the client is not a resident.b. A 6.0% bond issued by the client's state of residence is more attractive than a 7.2% municipal bond issued by another state.c. An 18% corporate bond is more attractive than a 12% municipal bond issued by the client's state of residence.d. A 6.75% municipal bond issued by the client's state of residence is more attractive than a 7% municipal bond issued by a U.S. territory.

1. b2. c3. d4. a5. a​

CFA Certifications: Advantages and Disadvantages

It's pretty easy to bump into someone in the financial profession who is really excited about entering the chartered financial analyst (CFA) program. Sometimes they know what they are getting into, sometimes they don't. They may have no idea how much time it takes or exactly how having the charter may help or hurt them.

Make no mistake—earning the CFA designation is a grueling process, so before you commit, consider what it takes to earn it, how it will benefit you and your career, the negatives of going through the process, and whether the pros outweigh the cons.

The CFA Institute requires four steps to become a CFA. They include:

For many people, the most difficult part of earning a charter is fulfilling the educational requirements. The CFA program consists of three exams encompassing a "candidate body of knowledge" (CBOK) that the CFA Institute believes is necessary for those in the investment profession.

The test for level I is given in February, May, August, and November, while the exams for levels II and III are given three times and twice a year, respectively, on alternating months. Candidates must pass each level before moving on to the next.

Pass rates tend to hover around half. In February 2023, pass rates were 38% for the level I exam and 48% for the level III exam. Pass rates were also at 44% for the November 2022 level II exam.

The investment of time is crucial. The CFA Institute estimates the average candidate should expect to spend at least 300 hours preparing for each level. In fact, the average candidate spends an average of 323 hours preparing for each exam (303 hours for level I; 328 hours for level II; 344 hours for level III).

Before entering the chartered financial analyst (CFA) program, be sure you've considered the costs, the time commitment, and whether it's likely to help you to get to where you want to go in your career.

Once you've considered the time required to pass the levels, you must next look at the professional requirements needed. Before a candidate can become a CFA, they must have accrued 36 months of acceptable work experience. Fortunately, the CFA Institute's definition of acceptable experience is fairly broad, encompassing such areas as trading, economics, and corporate finance.

For work experience to qualify, time must be directly involved in the investment decision-making process or producing a product that impacts that process. However, there are a number of candidates who enter the program and are not in fields where anything they do can be construed to be within the realm of acceptable experience. Some of these candidates may find that while they are able to pass the educational requirements, they will not receive the designation because they do not have the required professional experience.

Finally, before candidates can receive their charters, they must join the CFA Institute. If you need help, the CFA Institute's website explains the process in detail.

The so-called "pass rate" of individuals who take the three-level CFA exam (10-year average).

To help you decide whether to pursue the charter, let's take a look at how it might be beneficial to you and your career.

First, there is an educational benefit; you will learn a great deal and add a great credential to your CV. Then, there is a boost to your reputation. People in the business know the time and dedication it takes to earn the charter. When they see you have earned it, they will likely believe you have the ability, dedication, ethical grounding, and analytical skills necessary to do the job in question.

There also may be financial benefits. You may see your salary increase after you've become a CFA or you may surpass other applicants who don't have this designation when competing for a new job. The operative word here is "may." Hard work, skill, luck, dedication, political savvy, and character have just as much to do with one's success in the investment profession as education, so don't view the charter as your golden ticket to financial paradise.

There are a number of financial fields in which having the charter is a substantial plus. The obvious one is investment management. As the investment industry continues to become more competitive and more commoditized, it will become almost imperative for any credible investment manager to earn the charter.

Outside of investment management, there are a number of other professions in which charterholders will benefit considerably:

Beyond this list, there are a number of professions in which having the CFA charter helps, but where it is not a career roadblock if the financial professional does not have it.

The CFA charter is not a guaranteed path to riches and glory. Before taking the plunge, carefully consider several drawbacks to earning one.

Becoming a CFA is a huge investment in time, between studying for and taking the exams and logging the minimum 4,000 hours of experience required over 36 months. You will sacrifice time with family and friends and the pursuit of hobbies you enjoy. And after committing all that time, there is no guarantee that you will earn the charter.

While this factor may not be a major consideration, it is worth pondering. A level I candidate will pay a one-time program enrollment fee plus an exam registration fee. Level II and III candidates will pay a registration fee as well. There is also the cost of the books and study programs you'll have to buy. Altogether, you should expect to spend a few thousand dollars each time you attempt the exams.

The CFA is not a cure-all remedy for an ailing career. If you're enrolling in the program to jump-start a stalling career, you may want to look at other reasons your career is not moving forward first. Perhaps before investing inordinate amounts of time and a substantial amount of money into building your pedigree, you might choose to improve your soft skills, such as work ethic and political suaveness.

According to the CFA Institute, the median total compensation for charterholder portfolio managers is $177,000 and the median base salary is $126,000. The difference between the two numbers is a result of the impact of cash bonuses and long-term incentives.

To become certified, you must pass the three-level CFA exam; build up work experience before, during, or after the program; submit several references; and apply to join the CFA Institute.

By most accounts, the three-level CFA exam is challenging to pass. Each level of the exam typically warrants at least 300 hours of preparation and the pass rate is roughly less than 50% (over a ten-year average).

Both the CFA and the MBA are valuable to financial professionals looking to develop their expertise, bolster their reputation, and advance their careers. Possessing both can give an individual a leg up as well. Financial professionals who work as money managers and registered investment advisors are especially keen to get a CFA.

A variation of the good old-fashioned cost-benefit analysis may be the best way to decide whether or not to undertake the program. On paper, plot out the costs versus the benefits of becoming a CFA. Your decision may change as your career changes. A lost promotion in five years may make earning the designation more worthwhile.