Level 3 Overview

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General Information[edit]

Cost: As the exam approaches, there will be either an Early ($700) or Standard ($1,000) Registration Fee.

Level 3 can be scheduled twice per year from 2021 onwards, that is in May (25 - 27) and November (23 - 25).

The Early Registration period for the May 2021 exams ends on November 3, 2020 and the Standard Registration period will end on February 23, 2021.

The Scheduling Deadline is March 10, 2021 and Rescheduling Deadline is April 16, 2021. Rescheduling can be done after payment of a USD 250 rescheduling fee.

Exam Format[edit]

Duration: 6 hour exam time, one three hour AM session followed by another three hour PM session.

Question Format: 8-15 essay questions followed by 10-15 item set questions.

Topics Covered: There are 7 topics covered in the exam, below are the topic areas and their corresponding weights:

Topic Area Weight
Ethical and Professional Standards 10-15%
Economics 5-10%
Equity Investments 10-15%
Fixed Income 15-20%
Derivatives 5-10%
Alternative Investments 5-10%
Portfolio Management and Wealth Planning 35-40%

The most prominent change from the Level 2 curriculum in the Level 3 curriculum is the increase in Portfolio Management's weight from 10-15% to 35-40% in addition to the removal of Quantitative Methods, Financial Reporting and Analysis, and Corporate Finance.

Topic Changes: Each year, select readings from the curriculum are removed and replaced. This allows for the subject matter to stay up to date with the current practice of finance and has altered these topic area weightings over time. As the readings and content are refreshed annually, after several years there will be a material amount of new concepts introduced. Typically, the change year over year may be manageable for those hoping to save on prep cost, though after several years some information may be stale and ones time may be better spent reviewing the CFA Institute material that is provided with the registration cost. The CFA Institute details these annual changes for candidates, this information can be found by following this link(login required).

2020 Level 3 Curriculum changes:

  • Fourteen new readings (871 pages) were added from 2019 to 2020
    • "Application of the Code and Standards: Level III" (Ethics)
    • "Capital Market Expectations, Part I: Framework and Macro Considerations" by Christopher D. Piros, PhD, CFA (Capital Market Expectations)
    • "Capital Market Expectations, Part II: Forecasting Asset Class Returns" by Christopher D. Piros, PhD, CFA (Capital Market Expectations)
    • "Option Strategies" by Adam Schwartz, PhD, CFA, and Barbara Valbuzzi, CFA (Derivatives)
    • "Swaps, Forwards, and Futures Strategies" by Barbara Valbuzzi, CFA (Derivatives)
    • "Hedge Fund Strategies" by Barclay T. Leib, CFE, CAIA, Kathryn M. Kaminski, PhD, CAIA, and Mila Getmansky Sherman, PhD (Alternative Investments)
    • "Asset Allocation to Alternative Investments" by Adam Kobor, PhD, CFA, and Mark D. Guinney, CFA (Alternative Investments)
    • "Overview of Private Wealth Management" by Christopher J. Sidoni, CFP, CFA, and Vineet Vohra, CFA (Private Wealth Management)
    • "Portfolio Management for Institutional Investors" by Arjan Berkelaar, PhD, CFA, Kate Misic, CFA, and Peter Stimes, CFA (Portfolio Management)
    • "Trade Strategy and Execution " by Bernd Hanke, PhD, CFA, Robert Kissell, PhD, Connie Li, and Roberto Malamut (Trading)
    • "Portfolio Performance Evaluation" edited by Marc A. Wright, CFA (Trading)
    • "Investment Manager Selection" by Jeffrey C. Heisler, PhD, CFA, and Donald W. Lindsey, CFA (Trading)
    • "Case Study in Portfolio Management: Institutional " by Gabriel Petre, CFA (Portfolio Management)
    • "Case Study in Risk Management: Private Wealth" by Giuseppe Ballocchi, PhD, CFA (Private Wealth Management)
  • Twelve readings (820 pages) were removed in 2020
    • Overview of the Asset Management Industry and Portfolio Management
    • Capital Market Expectations
    • Equity Market Valuations
    • Alternative Investments Portfolio Management
    • Managing Individual Investor Portfolios
    • Managing Institutional Investor Portfolios
    • Risk Management
    • Risk Management Applications of Forward and Futures Strategies
    • Risk Management Applications of Option Strategies
    • Risk Management Applications of Swap Strategies
    • Execution of Portfolio Decisions
    • Evaluating Portfolio Performance
  • Two Behavioral Finance readings had data, exhibits, and examples revised
  • Three readings had either "Learning Outcome Statement (LOS)" changes, or significant content changes
    • 2 Portfolio Management readings
    • 1 Derivatives reading
  • 50 pages of End-of-Reading Practice Problems were added
    • 2 Behavioral Finance readings
    • 2 Capital Market Expectations readings
    • 2 Portfolio Management readings
    • 2 Derivatives readings
    • 2 Fixed Income readings
    • 1 Equity Investments reading
    • 2 Alternative Investments readings
    • 1 Private Wealth Management reading
    • 3 Trading readings


Materials become available once the previous years exams results have been released. With the registration fee, an eBook along with an online study resource including study resources, a large question bank, and mock exams. The eBook may be purchased in print for an additional $50. For the 6 topics covered there are 16 study sessions across 38 readings containing 2,564 pages of study content. 300 hours is the recommended study duration, but ultimately it will depend on each individuals own pace.

Approved Prep Providers

Follow this link to browse the list of approved prep providers. There are 54 commercial and 8 society sponsored prep programs. 32 offer an online format and 55 offer an in-person format. Some providers are equipped with both while others may only offer one or the other.

More detail on exam preparation can be found in the "Exam Prep" tab

Section headings[edit]

Headings organize your writing into sections. The Wiki software can automatically generate a table of contents from them.

AM Exam[edit]

Command Words[edit]

This is page content.[1]

Analyze To examine in detail <Analyze a company’s liquidity, profitability, financial stability, solvency, and asset utilization>
Calculate To find (the value of something) by using mathematics <Calculate cost of sales and ending inventory by using different inventory valuation methods>, <Calculate the value of a common stock using the Gordon growth model>
Classify To assign to categories or groups <Classify cash flow items as relating to operating, investing, or financing activities>
Compare to note the similarities and differences of two or more things <Compare the free cash flow to the firm and free cash flow to equity approaches to valuation>
Construct to build by putting together constituent parts <Construct a portfolio by using a core-satellite approach>
Contrast to state the differences between <Contrast cash-basis and accrual-basis accounting>
Convert To change from one form or purpose to another <Convert among holding period yields, money market yields, effective annual yields, and bond equivalent yields>
Critique to evaluate in a detailed and critical way <Critique models of relative equity market valuation based on earnings and assets>
Define To state exactly the meaning of <Define a parameter, a sample statistic, and a frequency distribution>
Demonstrate to show competence in <Demonstrate the use of enterprise value multiples to estimate equity value>, to give examples of <Explain the delta of an option and demonstrate how it is used in dynamic hedging>, to provide evidence of <Demonstrate a thorough knowledge of the Code of Ethics and Standards of Professional Conduct by applying the Code and Standards to specific situations>
Describe to portray in words <Describe the various forms of event risk>
Determine to decide <Determine whether the nominal spread, zero-volatility spread, or option-adjusted spread should be used to evaluate a specific fixed-income security>, to ascertain <Determine the statistical significance of each independent variable>
Discuss to examine critically and in detail <Discuss the impact that ability and willingness to take risk have on risk tolerance>
Distinguish To Point out differences between <Distinguish among empirical, subjective, and a priori probabilities>
Estimate To determine and approximate value for <Estimate a company’s intrinsic value based on discounted cash flow analysis>; to reach an informed but possibly imprecise evaluation of <Estimate the impact of a change in accounting principle on a company’s reported financial statement>
Evaluate To reach a conclusion or make a judgment about something through careful study <Evaluate the quality of a company’s financial data>, <Evaluate the appropriateness of using a particular rate of return as a discount rate>, <Evaluate a merger bid>
Explain To make clear the meaning of <Explain interest rate parity>
Forecast To estimate the future value of something <Forecast a company’s net income given sales projections by using a percentage-of-revenue approach>, <Forecast a company’s market share in different growth scenarios>
Formulate To state in clear or definite form <Formulate a test of the hypothesis that the population correlation coefficient equals zero>; to devise <Formulate an appropriate response to actions that violate the Code of Ethics and Standards of Professional Conduct>
Identify To recognize and correctly name <Identify and describe the desirable properties of an estimator>, <Identify the functions of a central bank>
Interpret To give the meaning of <Interpret the estimated coefficients in a linear regression>, <Interpret the results of an equity style box analysis>
Judge To form an opinion about through careful weighing of evidence <Judge whether and equity market is undervalued, fairly valued, or overvalued based on a relative equity valuation model>
Justify To show to be valid of appropriate in a particular context <Justify the use of absolute performance and cash flow matching objectives to meet the goal of lifestyle protection>
Prepare To put into written form<Prepare the constraints section of an investment policy statement for the Ingrams>, <Prepare an appropriate response for each of the four questions from the committee members>
Recommend To offer as being appropriate or good <Recommend practices and procedures designed to prevent violations of the Code of Ethics and Standards of Professional Conduct>, <Evaluate the choices of short-term funding available to a company and recommend a financing method>
Select To choose as being the best or most suitable <Select an optimal portfolio by using Roy’s safety-first criterion>
Show To communicate in writing <Show your work>; to make evident or clear <Show how positioning a company is a creative strategy for achieving a

competitive advantage>

Solve To find a solution for <Solve time value of money problems when compounding periods are other than annual>
State To express in words <State the probability of an event in terms of odds for or against the event>; to provide <State the formula for the international capital asset pricing model>
Support To provide corroboration for <Support each response with one reason based on Smith’s specific circumstances>


Input some text here to introduce the content/purpose of this page

PM Exam[edit]

Using more "equals" (=) signs creates a subsection.


  1. LibreOffice For Starters, First Edition, Flexible Minds, Manchester, 2002, p. 18
  2. Command Words