L2
CFA Level 2

Application — Analysis & Valuation

Complete CFA Level II guide for India 2026. Item set format, topic weights, study plan and strategy. Level II is significantly harder than Level I — the right approach matters.

88 item sets
Format
~45–52%
Pass Rate
3×/yr
Exam windows/yr
330–350 hrs
Study hours

Topic Weights — Level 2 Curriculum

Topic AreaWeightKey focus
Equity Investments10–15%DCF, RI model, P/E, EV/EBITDA, private co valuation
Fixed Income10–15%Arbitrage-free valuation, OAS, credit analysis
Portfolio Management & Wealth10–15%Asset allocation, IPS, active/passive management
Financial Statement Analysis10–15%Intercorporate investments, pension, multinational
Ethical & Professional Standards10–15%Same as L1 but applied via vignettes
Derivatives5–10%Valuation of options, swaps, futures using models
Alternative Investments5–10%PE valuation, REIT analysis, infrastructure
Corporate Issuers5–10%M&A analysis, capital structure optimisation
Quantitative Methods5–10%Regression, time series, ML basics
Economics5–10%Currency valuation models, economic growth

Study Plan — Level 2

  • Month 1: Deep review of FSA — L2 FSA is significantly harder. Cover intercorporate investments, pensions, multinational ops.
  • Month 2: Equity valuation — master DCF (DDM, FCFF, FCFE), RI model, relative valuation. This is where L2 marks are won or lost.
  • Month 3: Fixed Income + Derivatives — arbitrage-free valuation, OAS, binomial trees. Formula-intensive.
  • Month 4: Portfolio Management + Economics — item set practice critical here.
  • Month 5: Ethics revisit + Alternative Investments + Corporate Finance.
  • Final 4 weeks: 4+ full mock exams. Item set practice daily. Time under pressure is the main skill being tested.

Top tips for Level 2

  • ✓ The vignette format is the hardest thing about L2 — you must practice reading vignettes fast. Speed reading + selective info extraction is a skill.
  • ✓ Do NOT read the vignette fully before questions — read each question, then find relevant info. Saves 15–20 minutes.
  • ✓ Equity valuation is ~15% and the most testable topic. Master DDM, FCFF, FCFE, RI model. These appear every sitting.
  • ✓ Ethics L2 is harder than L1 — more ambiguous scenarios. Re-read the Standards of Practice handbook before exam.
  • ✓ The difficulty jump from L1 to L2 is significant — most candidates underestimate it. Budget 330–350 hours minimum.
  • ✓ Use mock exams from multiple providers — CFA Institute + Schweser + Wiley. Different vignette styles build adaptability.

Frequently Asked — Level 2

Why is CFA Level II harder than Level I?

CFA Level II is harder for three reasons: 1) The vignette format requires reading 300–400 words then answering 4–6 questions from one case — testing application, not recall. 2) Topic difficulty increases significantly — especially FSA (intercorporate investments), Equity (full valuation models), and Fixed Income (arbitrage-free valuation). 3) Less margin for error — 88 item sets with less room to skip/guess vs 180 MCQs. Despite this, L2 pass rates (45–52%) are actually slightly higher than L1 — because candidates are now experienced CFA test-takers.

How many months to study for CFA Level II?

Most successful L2 candidates study for 5–7 months: 330–350 hours total. Do not attempt L2 within 3–4 months of L1 — take a break, then start fresh with 5+ months prep time. The material is significantly more complex than L1.

Next step
CFA Level III
Go to CFA Level III →