Level 1 results

The level 1 results are out today. Of course being level 2 this doesn't affect me much, but it's still another milestone in this interminable wait. The level 1 results are out early because if you fail, you need enough time to prepare for the next exam which is now four and a half months away. With level 2 and 3 the next exam pass or fail isn't until June 09. It's a good thing that they are giving the people who failed time to prepare because according to the website two of every three test takers at level 1 failed. The total pass rate was 35% which is the lowest ever in any year for any level. I'm not too surprised about that.

There are two factors I believe lead to that pass rate (or is it failure rate when it's that high?). First, the popularity of the designation has greatly expanded over the years. Employers want people with the designation and that leads more people to make the attempt. However, employers want the designation because it is hard to get and too many candidates don't respect that. Take it from me, someone who has failed level 1 before, it takes over 6 months of hard studying for at least 200 hours. People constantly ask for shortcuts or ways to not have to study. It doesn't matter how much you know, or how smart you are. The main factor is how hard you work.

The second factor is that the universe of finance is constantly growing and the knowledge that they test is also expanding. 20 years ago derivatives was a very small part of the financial universe so one didn't have to know much about them to earn the charter. Today derivatives are much more popular in the real world so candidates are tested more now than before. There are something on the order of 20 times as many hedge funds today was there were 15 years ago, so now a candidate must learn about those as well.

Learning Outcome Statements

A week ago today the 2009 L.O.S. were released. I don’t know if I ever mentioned it before, but the los stands for learning outcome statement and they are the key to passing the exam. Long story short, the LOS tell you what you need to do to pass. I’ll give an example. The institute tells you to read chapter 4 in a particular book. That chapter has a section that goes over 3 different ways of computing an average (this actually happened to me). One might assume that means you have to be able to compute an average using all 3 methods. However, the LOS might only say that you need to compare the 3 methods. That means you have to know how they relate to each other and some other aspects, but you won’t have to compute or calculate unless they say so. In the long term, if definitely focuses studying in various areas. There are entire reading where you can get bogged down in memorizing when they want you to understand concepts, and times when you can focus so much on the concepts that you forget you are just supposed to memorize a list.

However, this list isn’t really for me yet. I haven’t gotten back the 2008 results, so I don’t know which test I’ll be taking. The list is released early because there are some people who may not have taken the 08 exam but who already know what exam they’ll be taking in 09. The LOS however are totally useless without the list of the readings. If the LOS says know formula X, they mean the formula listed in the readings. If you get it from some other source there are enough small differences over time that you would find it impossible to pass. I’m not in any rush to get into the material, but I did read through the level 3 LOS. I have heard some people say the level 2 is harder, and it might be true for me based on the LOS. The hard part for me was the calculations and number of formulas, but there are very few level 3 LOS that say compute or calculate. There is still plenty of reading to go over though. I don’t plan on getting fully into the studying until September or October, so I won’t be reading any more LOS at least until the results come out. We are down to 1 month remaining.