CFA Level II Topic Weights (2025): Prioritization Guide

CFA Level 2 Topic Weights (2025): Prioritization Guide

The CFA Level II exam is widely considered the most challenging of the three CFA Program levels — not because of the sheer volume of content (Level I covers more breadth) but because of the analytical depth and item set format. In 2025, CFA Institute continues to apply the updated exam structure introduced in recent years, with case-based questions (item sets) and topic weight ranges that dictate how exam points are distributed.

If you want to maximize your study efficiency, you need to know exactly how the 2025 weights work, which topics carry the most scoring potential, and how to structure your preparation accordingly.

This guide uses only the latest CFA Institute 2025 materials — specifically the Level II exam page and combined topic outlines PDF — to deliver a current, professional, and highly actionable plan. CFA Level 2 Topic Weights (2025)

1. Understanding CFA Level II’s exam structure (2025)

• Format: 88 multiple-choice questions delivered as case-based item sets — each item set contains a vignette (case) and multiple related questions.

• Two sessions: Morning (AM) and Afternoon (PM), each 132 minutes, with roughly equal weighting.

• Question style: Integrates multiple learning outcomes in a single case — often across topic boundaries.

• Practical Skills Module (PSM): You must complete at least one PSM to receive your result. Level II PSMs may include specialized modules such as Python, Data Science, or Asset Manager Skills.

2. Official CFA Level II Topic Weights (2025)

CFA Institute publishes weight ranges instead of fixed percentages. In 2025, the Level II topic weight structure remains consistent with recent updates:

Topic	Weight Range
Ethical & Professional Standards	10–15%
Quantitative Methods	5–10%
Economics	5–10%
Financial Statement Analysis (FSA)	10–15%
Corporate Issuers	5–10%
Equity Investments	10–15%
Fixed Income	10–15%
Derivatives	5–10%
Alternative Investments	5–10%
Portfolio Management & Wealth Planning	10–15%

Key observation: The highest bands are Ethics, FSA, Equity, Fixed Income, and Portfolio Management — these five areas alone can represent over 60% of your total score.

3. Converting weight ranges into a study allocation

Using the midpoint of each range and assuming the recommended ~300–350 hours of prep, we can create a proportional hour allocation:

Topic	Weight Midpoint	Suggested Hours (based on 325h total)
Ethics	12.5%	41h
Quantitative Methods	7.5%	24h
Economics	7.5%	24h
Financial Statement Analysis	12.5%	41h
Corporate Issuers	7.5%	24h
Equity Investments	12.5%	41h
Fixed Income	12.5%	41h
Derivatives	7.5%	24h
Alternative Investments	7.5%	24h
Portfolio Management	12.5%	41h
Total	100%	325h

Adjust these allocations up or down based on personal strengths. For example, if you have a strong background in accounting, you can trim FSA hours slightly and redistribute to Fixed Income or Derivatives.

4. Prioritization tiers for Level II (2025)

Not all topics are equally complex in application, even with similar weight. Level II questions are integration-heavy, meaning strong command of certain topics boosts performance in others.

Tier 1: High weight + high integration potential

1. Financial Statement Analysis (10–15%)

   • Heavily tested in valuation and credit cases.

   • Core areas: intercorporate investments, pensions, multinational operations, quality of financial reporting, inventory/long-lived assets analysis.

2. Equity Investments (10–15%)

   • Anchored in valuation models and industry/company analysis.

   • Builds on FSA and Economics; often integrated with Portfolio/Corporate Issuers.

3. Fixed Income (10–15%)

   • Focuses on valuation, credit analysis, and term structure modeling.

   • Integration with Derivatives (credit default swaps, interest rate swaps).

4. Portfolio Management & Wealth Planning (10–15%)

   • Covers asset allocation, risk management, investment policy statements (IPS), and performance evaluation.

   • Integrates with Quant, Economics, and Alternatives.

5. Ethics (10–15%)

   • While conceptually similar to Level I, the case-based application in Level II makes it trickier.

   • GIPS also included — easy to neglect but often tested.

     
     

Tier 2: Moderate weight, technical application

6. Quantitative Methods (5–10%)

   • Regression analysis, time-series modeling, and machine learning basics.

   • Heavily integrated in Portfolio, Equity, and Economics cases.

7. Economics (5–10%)

   • Economic growth theories, currency exchange, and market equilibrium models.

   • Often combined with Equity (emerging market valuation) or Portfolio Management.

8. Corporate Issuers (5–10%)

   • Capital structure, cost of capital, dividend policy, and corporate governance.

   • Supports valuation topics in Equity and Fixed Income.

Tier 3: Smaller weight, niche focus

9. Derivatives (5–10%)

   • Pricing and valuation of options, forwards, futures, and swaps.

   • Integrated into risk management cases in Portfolio and Fixed Income.

10. Alternative Investments (5–10%)

    • Private equity, real estate, hedge funds, infrastructure, and commodities.

    • Usually 1–2 item sets, but can be point-heavy due to calculation steps.

5. The case for starting with Tier 1 topics

In Level II, item set questions often combine multiple concepts from different topics. Starting with the heaviest and most integrative topics early gives you a base to handle these mixed-topic cases. For example:

• An Equity valuation case may require:

  • FSA adjustments (translation, pensions)

  • Economic forecasts (growth rates)

  • Corporate finance inputs (WACC)

  • Quantitative tools (regression for beta estimates)

By front-loading Tier 1, you set yourself up for better retention and cross-topic problem-solving.

6. Suggested study sequence (16-week plan)

Weeks 1–4:

• Ethics (first pass)

• Financial Statement Analysis (core modules)

• Fixed Income (term structure, valuation)

Weeks 5–8:

• Equity Investments (valuation models, industry/company analysis)

• Portfolio Management (IPS, risk management)

• Quantitative Methods (regression, time series)

Weeks 9–12:

• Corporate Issuers (capital structure, WACC)

• Economics (currency exchange, growth models)

• Derivatives (options, swaps, risk applications)

Weeks 13–14:

• Alternative Investments (PE, RE, hedge funds)

• Ethics (second pass)

• Integrated practice item sets

Weeks 15–16:

• Full-length mocks (4–6 item sets per session)

• Targeted weak-area review

• PSM completion and Ethics final polish

7. Allocating practice time

In Level II, quantity and realism of practice matter more than in Level I. Aim for:

• End-of-reading questions in the CFA Institute Learning Ecosystem (LE) immediately after each module.

• Full item set practice weekly from week 5 onward.

• At least 6 full-length mock sessions before exam day (3 AM + 3 PM practice blocks).

8. Special note on Ethics at Level II

The Ethics section feels familiar from Level I, but the item set format increases difficulty. Instead of one question per mini-scenario, you now have multiple questions tied to a single, dense case. This increases the chance of cascading errors if you misinterpret early details. Strategy:

• Read the entire vignette before answering any questions.

• Highlight key facts that relate to Code & Standards clauses.

• Revisit Ethics in the final two weeks — the "Ethics adjustment" has been known to influence pass/fail borderline cases.

9. PSM: Don’t leave it to the last week

The Practical Skills Module is mandatory to receive results. For Level II in 2025, popular PSMs include:

• Python Programming Fundamentals

• Data Science & AI Applications

• Asset Manager Skills

These modules take 10–20 hours to complete and are not part of the scored topic weights — but you can’t ignore them.

10. Final 2-week checklist

• Ethics full review

• Weak-area item sets

• 2–3 full mock exams

• Formula sheet memorization (FSA ratios, bond pricing, option pricing, regression formulas)

• PSM completion verification

• Rest and exam-day logistics check

11. Actionable takeaways

• Weights matter: Ethics, FSA, Equity, Fixed Income, and Portfolio are the pillars — over 60% of your score potential.

• Integration is key: Level II rewards candidates who can apply concepts across topics in one case.

• Plan early: Use weight midpoints to allocate hours; adjust for your strengths.

• Practice like the real exam: Item set proficiency is the deciding factor for many candidates.

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