If you took the CFA Level I exam in December, you will just have received your results. Chances are that you failed. – The CFA exams are notoriously hard and this December’s pass rate was only 43%.
What score do you need to achieve to make it through Level I? The CFA Institute, which masterminds the entire process, is notoriously coy when it comes to explaining what constitutes a pass and what doesn’t.
To pass, candidates need to meet the minimum ‘net passing score.’ However, the minimum net passing score is never given and varies year-on-year according to how hard the paper was and how well everyone does.
The CFA Institute uses something known as the ‘Angoff Standard Setting Method’ (explained here) to determine the pass rate. This has something to do with a set of CFA Charterholders sitting down and working out how difficult the questions really are and how easy it ought to be to pass.
To confuse matters further, because the marks allocated to different topics vary (click here to see the allocation for June 2016), strong performance in one topic won’t necessarily compensate for weak performance in another. If you’ve just failed the CFA I exam, you might therefore be confused as to why.
Based on results posted in various online forums, we’ve identified the candidates who passed the Level I exam in December with the weakest scores. This is, seemingly, the minimum you’ll need to pass:
1. You can pass with less than 50% in four subjects (Derivatives, Economics, Portfolio Management, and Quantitative Methods), with 51% to 70% in Alternative Investments, and with more than 70% in Corporate Finance, Equity Instruments, Ethical and Professional Standards, Financial Reporting and Analysis, and Fixed Income.
2. You can pass with Financial Reporting and Analysis under 50%, Economics and Portfolio Management over 70%, and everything else (seven other subjects) between 51% and 70%.
3. You can pass with less than 50% in Derivatives and more than 70% in Corporate Finance and Equity Investments, and between 51% and 70% in the other seven subjects.
4. You can pass with less than 50% in Quantitative Methods, Derivatives, Financial Reporting and Analysis, as long as you have more than 70% in Economics, Quantitative Methods, and Equity Instruments, and 51% to 70% in Corporate Finance, Ethical and Professional Standards, Fixed Income, and Portfolio Management.
In other words, you don’t have to get more than 70% in everything to pass. You don’t even need to get more than 51% in everything to pass. You can get less than 50% in up to four topics, but you will probably need to counterbalance this with more than 70% in at least three subjects and with 51% to 70% in the rest.
Good luck.
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Photo credit: Limbo Dancer by Iain A Wanless is licensed under CC BY 2.0.