How CFA Level II Differs from CFA Level I: Depth, Vignettes, and Practice Strategy

Dimitri Dangeros, CFA, CAIA
13 hours ago
5 min read

The jump from CFA Level I to Level II is one of the most challenging transitions candidates face in the CFA Program. While both levels share a common foundation in finance, the second level demands a deeper level of analysis, an ability to integrate concepts across topics, and the skill to navigate a completely different exam structure. With the most up-to-date information for the 2025–2026 cycles, this guide will break down exactly how Level II differs from Level I—and how to adjust your preparation for success.

1. Format & Structure: From Standalone Questions to Case-Based Item Sets How CFA Level II Differs from CFA Level I

Level I uses a straightforward structure:

180 multiple-choice questions split evenly across two 135-minute sessions.
Each question is independent, with three answer choices (A, B, C).
The emphasis is on quick recall of concepts, definitions, and formulas.

Level II shifts to a vignette-driven approach:

22 item sets in total, each with 4–6 multiple-choice questions linked to a shared scenario.
Of these, 20 item sets are scored, and 2 are unscored pilot sets.
Two sessions, each lasting 2 hours and 12 minutes (4 hours 24 minutes total).
Each item set contains a narrative, data tables, and exhibits that candidates must interpret to answer multiple questions. How CFA Level II Differs from CFA Level I

What this means for you: In Level I, each question is a fresh start. In Level II, one vignette feeds multiple questions—misinterpreting one key fact could cost several points. It demands careful reading, efficient data extraction, and sustained concentration.

2. Cognitive Demand: From Describing to Evaluating

Level I tests whether you can “learn and describe” concepts. The focus is on demonstrating knowledge of definitions, simple calculations, and straightforward applications.

Level II raises the bar to “analyze and evaluate”:

You’re expected to apply concepts in real-world-like scenarios.
The questions often require multiple steps—calculating inputs first, then using them to draw conclusions.
There’s a stronger emphasis on interpreting data, assessing implications, and integrating information from different parts of the vignette.

In short, Level II is less about memorizing facts and more about applying them to solve complex problems.

3. Content Depth & Curriculum Developments

Both levels cover the same ten core topic areas:

Ethical and Professional Standards
Quantitative Methods
Economics
Financial Statement Analysis
Corporate Issuers
Equity Investments
Fixed Income
Derivatives
Alternative Investments
Portfolio Management

The difference lies in the depth. At Level I, you learn the foundations; at Level II, you dive into the nuances.

Examples of the deeper dive at Level II:

Financial Statement Analysis: Greater focus on intercorporate investments, pension accounting, multinational operations, and detecting earnings manipulation.
Equity Investments: Advanced valuation techniques, adjustments for private companies, and scenario-based valuation.
Fixed Income: Detailed term structure modeling, credit risk analysis, and valuation of structured products.
Derivatives: Full pricing models for options, swaps, and forwards, including risk management applications.

For 2025, the curriculum also saw targeted updates—such as a refreshed reading on real estate investments—ensuring content reflects current market practice.

4. Pass Rates & the New Scoring Scale

Historically, Level II has had a higher pass rate than Level I, but that’s not because it’s easier—it’s because the candidate pool is smaller and generally more prepared. In recent cycles, Level I’s pass rate has hovered in the mid-40% range, while Level II’s has been in the low-to-mid 50% range.

Starting in 2025, CFA Institute introduced scale scores:

Level I scores fall in the 1000–1900 range.
Level II scores fall in the 2000–2900 range.
Level III scores fall in the 3000–3900 range.

The scaled format helps candidates see exactly how close they were to the Minimum Passing Score and track improvement over time.

5. Practical Skills Modules (PSMs)

PSMs are now mandatory across all levels to receive your result. They’re designed to build practical, job-ready skills alongside the theoretical knowledge tested in the exam.

For Level II in 2025–2026, available PSMs include:

Analyst Skills
Financial Modeling
Python, Data Science & AI
Portfolio Development & Construction

These modules typically take 10–20 hours to complete and must be done in addition to your topic study. They reflect CFA Institute’s emphasis on blending technical knowledge with practical application.

6. Adapting Your Study Strategy for Level II

Start with Integration in Mind

At Level I, you could study topics in isolation. At Level II, the vignette format means you need to connect concepts—Equity valuation may draw on FSA adjustments, which in turn require knowledge from Economics or Quantitative Methods.

Practice Item Sets from Day One

Don’t wait until the last month to tackle item sets. Use them from the start so you can:

Learn to navigate the longer stems efficiently.
Identify and extract relevant details from exhibits and tables.
Build stamina for solving several linked questions in sequence.

Focus on Analysis and Interpretation

Memorization alone won’t carry you. Practice interpreting outputs, diagnosing what the numbers mean, and making recommendations or judgments based on them.

Time Management

Each item set will take longer to read than a standalone question. Aim to spend about 12–15 minutes per set, balancing comprehension with pace.

Plan for the PSM Early

Treat the PSM as part of your core study plan, not an afterthought. Completing it early avoids last-minute stress and frees time for final review.

7. Comparison Snapshot

Aspect	Level I	Level II
Format	180 standalone MCQs (2 × 135 min)	22 item sets (2 × 2h12m), 4–6 MCQs per vignette
Question Scope	Single-question context	Multi-question context from a single scenario
Cognitive Focus	Learn & describe	Analyze & evaluate
Depth	Foundational knowledge	Advanced application, integrated analysis
Curriculum Updates	Broad coverage	Targeted depth (e.g., advanced valuation, updated RE)
Pass Rate	Mid-40%	Low-to-mid 50%
Scale Score Range	1000–1900	2000–2900
PSM	Required, standard modules	Required, advanced skills (modeling, AI, portfolio)
Study Strategy	Breadth, memorization, formula drill	Depth, integration, item-set practice

8. Key Takeaways

Understand the Structural ShiftMoving from standalone MCQs to vignette-based item sets changes everything—from how you read to how you pace yourself.
Aim for Depth Over BreadthLevel II is about mastery of fewer, more complex problems, not racing through many unrelated questions.
Integrate Your LearningPractice pulling together concepts from different topics in a single case, just as you’ll face in the exam.
Use the Scale Score WiselyIf you don’t pass, the scale score gives you a clear picture of how close you were and where you need to improve.
Don’t Neglect the PSMComplete your module early, especially if it’s in a skill area you want to develop for your career.

The CFA Level II exam demands a strategic shift in preparation. It’s not just “Level I with harder questions”—it’s a fundamentally different assessment format, testing applied judgment, integrated reasoning, and the ability to work within the constraints of complex, data-rich cases. By understanding these differences and tailoring your study approach accordingly, you’ll position yourself to move through the program with confidence and precision.

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