CFA Level 2 Notes

Written by: Nik Ventouris

Last updated:

Preparing for the CFA Level 2 exam? In a finance world that’s growing more complex by the day, taking the step to prepare for the second level of the CFA qualification can be quite daunting, but we’ve got your back.

This CFA Level 2 Notes article simplifies the core exam subjects into an easy-to-digest guide to help you break down the essentials and focus on what matters most in order to pass and succeed in this challenging exam.

CFA Level 2 Summary

The CFA Level 2 exam is made up of 88 multiple choice questions across ten important topics.

We’ve put together a table below that breaks down all these topics, their related sessions, and the weight each one has in the exam to help you focus your study efforts on the most important areas for you.

TopicSessionExam Weight
Ethical and Professional Standards110-15%
Quantitative Methods15-10%
Financial Statement Analysis110-15%
Corporate Issuers15-10%
Equity Investments210-15%
Fixed Income210-15%
Alternative Investments25-10%
Portfolio Management and Wealth Planning210-15%

To make sure you possess the necessary understanding of this material to pass the CFA Level 2 exam, you’ll need to invest in reliable study materials that are customized to the exam.

Recommended Study Materials

Interested in commencing your CFA Level 2 studies? We recommend having a look at Kaplan’s in-depth study materials.

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Alternatively, you can have a look at our in-depth CFA Level 2 overview.

CFA Level 2 Study Notes

Session 1

Ethical and Professional Standards

This section lays the groundwork for ethical behavior and professional standards that are fundamental in the finance profession. In particular, candidates will need to be familiar with:

  • Professional Standards of Practice: These principles govern a financial professionals’ conduct, helping to ensure integrity and credibility within the industry. Make sure you focus on its application in real-life scenarios and ethical dilemmas.
  • Asset Manager Code of Professional Conduct: Candidates will need to understand how this code outlines the ethical responsibilities for asset managers and ensures client interests are put first.
  • Presentation of Performance Results (GIPS): A framework emphasizing transparent and accurate performance reporting. You should study how these standards facilitate investor confidence through consistent and fair presentation.

These frameworks are fundamental to a finance professional’s conduct.

Quantitative Methods

Quantitative methods provide tools for analyzing and interpreting financial data. They enable investment professionals to make informed decisions.

  • Time Value of Money
  • Probability Distributions and Concepts
  • Regression Analysis

All candidates will need to be comfortable with the real-life applications of these fundamental concepts, such as to predict financial risks, returns, and outcomes.


This section of the CFA’s curriculum covers the main principles that govern markets and economies. In particular, candidates will need to focus on:

  • Market Forces of Supply and Demand: Ensure you grasp how supply and demand interact to determine prices and apply this to real-world scenarios.
  • Business Cycles: Candidates must be aware of the phases of business cycles and how investments can be affected at each stage, using historical examples.
  • International Trade and Capital Flows: Global economics shapes investment landscapes. Candidates require knowledge of trade theories, policies and their impacts on currency exchange and international investments.

This knowledge helps investment professionals evaluate the micro and macroeconomic factors affecting investment decisions in real-life scenarios.

Financial Statement Analysis

Financial statement analysis is essential for evaluating an entity’s financial performance. It requires a detailed examination of financial reports and an understanding of accounting principles, in particular:

  • Analysis of Off-Balance-Sheet Assets and Liabilities
  • ESG Considerations in Financial Statement Analysis

These principles enable candidates to assess a company’s financial health by analyzing income statements, balance sheets, and cash flow statements.

Session 2

Corporate Issuers

Corporate issuers delve into business strategies, risk management, and corporate finance. This demands knowledge of:

  • Corporate Structures and Strategies: Explore different business structures and strategies (such as mergers and acquisitions) to understand how they can affect the financial position and value of a company.
  • Risk Factors: Candidates should be able to analyze various risks, including environmental and social, influence corporate actions, using real-world scenarios to understand their impact on strategic decisions.
  • Corporate Financing Decisions: Understand how corporations raise capital through debt or equity, as well as the implications of different financing choices in real-world examples. 
  • Corporate Actions, Combinations, and Restructuring: These actions can significantly influence a corporation’s value — make sure to study them plus their impact on shareholders and the market.

After studying this topic, candidates should understand how corporations operate and make financial decisions, as well as their potential financial consequences. 

Equity Investments

Equity investments involve understanding stocks and equity markets. To have an working understanding of this topic, each candidate will need to study the following key concepts:

  • Types of Equity Securities and Markets
  • Valuation of Individual Equity Securities
  • Equity Market Valuation
  • Equity Portfolio Management

This topic should enable each candidate to be able to effectively evaluate and manage equity investments.

Fixed Income

Fixed income securities are debt instruments like bonds. 

  • Types of Fixed Income Securities and Markets: Candidates should understand various fixed income securities and their markets and be able to analyze different bonds to comprehend their risk profiles and returns.
  • Analysis of Interest Rate Risk: Candidates should be able to evaluate the impacts of nterest rate changes on bond prices through the effects of yield and pricing calculations.
  • Analysis of Credit Risk: Credit risk analysis focuses on a bond issuer’s ability to fulfill obligations. You’ll need to nderstand credit ratings and risk measures, applying them to various bond categories.

These will help in understanding the characteristics, valuation, and management of fixed income investments.


Derivatives are financial contracts whose value is derived from underlying assets. This section explores the different types, uses, and valuations of derivatives. In particular, candidates will need to study the:

  • Types of Derivative Instruments and Markets
  • Valuation of Option Contracts
  • Uses of Derivatives in Portfolio Management

This should provide candidates will an working understanding of the purposes of derivatives in portfolio management (such as hedging and generating returns) through real-life case studies.

Alternative Investments

This section explores a variety of non-traditional investment options, such as:

  • Real Estate: Candidates should focus on property valuation, investment strategies, and market trends to gain insights into real estate investing.
  • Private Capital: Private equity and venture capital have distinct investment characteristics. Make sure to study valuation techniques, structures, and how to assess potential investments.
  • Hedge Funds: Successful candidates should understand hedge fund strategies, risks, and returns as well as be able to analyze real-world hedge fund structures to comprehend their role in an investment portfolio.

This should enable candidates to understand the role of these various alternatives within a diversified portfolio.

Portfolio Management and Wealth Planning

Portfolio management focuses on constructing and managing investment portfolios to meet specific objectives. Wealth planning is about understanding individual or family financial needs and planning accordingly.

  • Modern Portfolio Management Concepts
  • Behavioral Finance
  • Management of Individual/Family Investor Portfolios
  • Risk Management
  • Performance Attribution and Appraisal

To streamline the preparation for your CFA Level II exam, candidates are recommended to take advantage of quality study notes from CFA charterholders instead of making their own.

Ready to get started? StateRequirement recommends having a look at Kaplan’s study materials and resources.

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CFA Level 2 Notes FAQ

Is CFA Level 2 the hardest?

The CFA Level II and Level III exam are often considered to be quite similar in difficulty out of the three exams. They both dive deeper into complex topics like financial analysis and require a more sophisticated understanding of the investment concepts. To ensure you’re prepared for your Level II exam, make sure to check out our CFA Notes Level 2 article.

Which is the hardest part of CFA Level 2?

Each candidate has their own strengths and weaknesses that will impact which topics they find the most difficult. While some may find the financial statement analysis section particularly challenging due to its complexity, many also struggle with quantitative methods or the ethics portion. Make sure you are prepared to study hard and complete plenty of mock exams.

Is passing CFA Level 2 a big deal?

Passing the CFA Level 2 is a significant milestone and indicates that you have a deep understanding of complex investment concepts, as well as possess the right analytical skills. All in all, employers generally recognize the effort required to pass Level 2 and view it as a credible testament to a candidate’s skills.

Is 6 months enough for CFA Level 2?

Six months can be enough to prepare for CFA Level 2 for some candidates, but it requires a disciplined and well-structured study plan. Most candidates spend between 300 to 350 hours preparing for this level. To get started with your CFA exam preparation, feel free to have a look at our CFA Level 2 article for an in-depth overview.

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