CFA Level 3 Exam: What Can You Expect?

Article Summary

The CFA Level 3 exam is the final component of the CFA exam that allows you to become a CFA charterholder. The exam is done in conjunction with 48 months of relevant work experience. Although the exam touches on the same of the same subjects you can find in the other two exams, the CFA Level 3 exam is heavily focused on investment and portfolio management.

In the world of finance and investment, there is probably no better accreditation than being a CFA charterholder. CFA charterholders play a vital role in making sure that the financial markets are analyzed properly and that your own money is invested in a proper manner.

CFA stands for chartered financial analyst. The charter is granted by the CFA Institute (formerly known as an AIMR) and is the global standard for finance and investment. Many finance and investment-related jobs — whether they are for a hedge fund in Hong Kong or an upscale brokerage house in New York — will require a CFA Charter.

The CFA exam has three levels, with the last level (Level III) being the final hurdle to receiving a full charter membership. If you’re thinking about delving into the world of investment and finance, then receiving a CFA is probably the smartest path to take. This article will give you a brief rundown of what to expect on your CFA Level III exam.

CFA eligibility

For those who like the sound of being a CFA charterholder or want to get involved in finance or financial planning, they must first be eligible to enroll in the CFA Program. Luckily, it does not require a mountain of degrees and different pre-cursor requirements. To be eligible, you need the following.

  • Bachelor’s degree. A bachelor’s degree in any subject or discipline will make you eligible to become a CFA charterholder. A complementary degree such as accounting and finance will make it easier for you to take the exam but is not necessary for your eligibility.
  • Work experience. If you never got that degree, do not worry. 4,000 hours of work experience over a minimum of three years also qualifies you to take the CFA exam. However, it’s important to note here that the work experience must be “relevant.” According to the CFA Institute, relevant work experience “must be directly related to the investment decision-making process or producing a work product that informs or adds value to that process.”
  • Undergraduate student. If you are an undergraduate student, you can enroll in the CFA Level 1 exam as long as you are within 11 months of graduating. However, you can’t enroll in the CFA Level 2 exam until the requirements above are met.

CFA exam Levels 1 and 2

CFA Levels 1 and 2 are very similar. Both levels consist of multiple-choice questions. In the CFA Level 1 Exam, the questions are typically shorter and more compact. Exam takers of Level 1 only have 1.5 minutes per question.

In CFA Level 2, the questions are similar in their structure to Level 1 but are more detailed. The exams also use vignettes, which are passages describing certain events, situations, and scenarios. The vignettes are followed by four to six questions about each aforementioned scenario.

You also receive double the time per question in CFA Level 2 as you do in the first exam, about three minutes per question. However, different vignettes will have different difficulty levels as well as their corresponding questions. Three minutes is the average per question but is not set in stone. You might spend six minutes on one and two minutes on some others.

CFA Level 3 exam structure

Most consider the CFA Level 3 exam (sometimes seen as the CFA Level III exam or the Level III CFA exam) to be most difficult of the three exams. This is because the Level 3 exam incorporates essay elements along with the multiple-choice structure that is prevalent in the Level 1 and Level 2 exams.

The exams are all computer-based and graded on a scale of 360 points. Typically the exam will work as follows:

Morning session

The morning session will be the session that focuses more heavily on the essay element. In most cases, the CFA level 3 morning portion will have 10-15 essay questions. These questions are divided into several parts to help the aspiring charter member structure their response.

Afternoon session

The afternoon session will focus more on the multiple-choice structure of CFA exam Levels 1 and 2. Each item set begins with a case rundown or a vignette followed by four to six multiple-choice questions related to each statement.

For those adept at Level 1 and Level 2, the afternoon session of the exam may seem easier than the morning session. The essay element in the morning session is really what makes CFA level 3 markedly different.

CFA Level 3 exam subjects and weight

The CFA Level 3 exam has several subjects that are covered to make sure that the aspirant charter member has a comprehensive understanding of all elements. A student taking the exam will be questioned on the following subjects:

  • Ethical and professional standards
  • Economics
  • Equity investments
  • Fixed income
  • Derivatives
  • Alternative investments
  • Portfolio management

Each of these subjects, however, is weighted differently. For 2023, the weights of the CFA Level 3 exam topics are as follows:

Equity investment10-15%
Fixed income15-20%
Alternative investments5-10%
Portfolio management and wealth planning35-40%

As you can see by the breakdown, the Level 3 exam is heavily weighted towards portfolio and investment management. Most of these portfolio and investment management questions will be found in the morning essay section of the exam.

Therefore, it’s important not only to understand this subject thoroughly but to also know how to write a “structured response” about the subject in essay format.

Pro Tip

If you’re most interested in alternative investments, it’s possible to get a chartered alternative investment analyst certification. The CAIA is a certification offered by the CAIA Institute.

For those looking at advising in alternative investments such as cryptocurrencies, they will offer a different exam format and exam date but will assist you in achieving this certification.

Standards in the CFA Level 3 exam

CFA Level 3 exam standards focus on the Code of Ethics and Global Investment Performance Standards (GIPS).

  • The Code of Ethics focuses on the advisor or analyst being able to perform their duties with ethical standards.
  • The Global Investment Performance Standards is about understanding investment performance reporting standards in a global context.

Best way to study for the Level 3 exam

It is recommended to study for at least 300 hours for each level of the CFA exam. This will help ensure that you have enough time to learn and understand the material, answer practice questions, and take several mock exams.

However, the CFA Level 3 exam is a different beast. The average candidate for this level studied over 350 hours over a four- to six-month period. It’s also recommended to focus on practice questions and mock exams the month before your actual exam to get you used to the time constraints and pressure.

Understand the weights of the exam and use them to guide your study plan. Since portfolio management is weighted heavily, your studying should reflect that. However, with exception of fixed income, the other sections (ethics, equities, derivatives, alternative investments, and economics) are weighted fairly evenly. This is to prevent candidates from ignoring or skipping a section.

Pro Tip

There are plenty of tools to help guide your studying. Use the approved exam prep providers and the Learning Ecosystem provided by the CFA Institute as an additional resource to help you on your path to becoming a CFA charterholder.


How hard is it to pass CFA Level III exam?

The CFA Level 3 exam is difficult to pass. The pass rate for the November 2021 exam was 43%. However, if you study the right things, and the right way, you have the chance of passing it.

How many times a year is the CFA Level III exam?

The CFA Level 3 exam is offered twice per year, once in the summer and once in the winter months.

Why is CFA Level 3 exam so hard?

All levels of the CFA exam are incredibly difficult. This is because it covers such a wide range of topics in the financial world in a very detailed fashion.

A CFA charterholder needs high competency in each section — economics, quantitative analysis, equity, fixed income, alternative investments, derivatives, ethics and professional standards, finance statement analysis, corporate finance, and portfolio management. The CFA Level 3 exam is considered the hardest of the three exams because it is the only exam that incorporates an essay element.

When can I take the CFA Level 3 exam?

You can take the Level 3 exam during one of the exam windows after you pass the CFA Level 1 and Level 2 exam.

Key Takeaways

  • The CFA level 3 exam is the final component needed to become a CFA charterholder after completing CFA Level 1 and CFA Level 2 exams.
  • Both CFA Level 1 and Level 2 exams focus only on multiple-choice, whereas the Level 3 exam has an essay element and multiple choice.
  • The Level 3 exam also focuses on portfolio management concepts such as asset allocation and risk management applications. It makes up 35% to 40% of the total exam.
  • On average, most test takers study over 300 hours to prepare for the exam. You should also take at least one mock exam to get a better idea of how you can perform under actual exam pressures.
View Article Sources
  1. Application Resources — CFA Institute
  2. Financial Analysts — U.S. Bureau of Labor Statistics