The Chartered Financial Analyst (CFA) exams are happening on June 1.
Consisting of three levels, they are considered to be the most difficult exams taken by Wall Streeters with fewer than 20 percent of candidates passing all three tests on the first try.
What's more is the average test-taker spends a solid five to six months preparing, so you can imagine those taking the June exam are in crunch mode.
We talked to a CFA charterholder, who spoke only on the condition of anonymity, about things he didn't think he needed to know for the exams. We've included the concepts he totally blew off.
Disclaimer: We don't claim to be an expert in offering exam advice.
Anonymous CFA: 'I didn't need to know the whole section on convertible bonds.'
Explainer: When it comes to the section on convertible bonds, there's a "decent amount of jargon," according to our anonymous CFA source. What's more is there are about 10 formulas that are "extremely straight-forward and simple," but a "total pain in the ass" to remember," the CFA said.
Takeaway: Basically, the CFA charterholder we spoke to said the convertible bonds section is "an isolated topic" that has almost no connection to other parts of the exam. If it takes more than an hour to master, don't waste your time.
Anonymous CFA: 'I didn't need to know how to price a swap.'
Explainer: The anonymous CFA told us when he encountered the section on swaps, it wasn't about knowing the whole thing, but knowing a few key concepts: the basic dynamics of swap structures and payout profiles. He added that the test-takers could be asked "if interest rates move, who is in the money and who is out?".
He explained that calculating how much a party is in the money or out is super complicated and just not worth the effort.
Takeaway: "All I'm saying is to ignore the whole process of pricing how much is made or lost by one party," the CFA told Business Insider.
Anonymous CFA: 'I didn't need to know anything about detecting violations of regression assumptions.'
Explainer: According to our anonymous CFA source, in the quantitative methods part of the exam there are all kinds of statistical tests in formulas that a test-taker must memorize and master.
"There's not way to get around that."
The CFA said there are tests to measure statistical weaknesses of certain regression formulas.
"They have crazy names like Breusch-Pagan test, Durbin-Watson statistic, Hansen Method, etc, and it's not straight-forward how to use them," the CFA said. "It's not worth the time."
Takeaway: You pretty much guaranteed to get a question about this on Level, our source said. Don't be fazed if you're forced to guess.
See the rest of the story at Business Insider
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