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1.3 300-Hour Study Plan, Calculator Mastery & Practical Skills Modules (PSM)

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CFA Level 2 Chartered Financial Analyst

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1 Introduction & CFA Level II Exam Strategy

1.1 CFA Level II Exam Overview & Item-Set Vignette Strategy 1.2 2026 Curriculum Structure & 10 Topic Weight Bands 1.3 300-Hour Study Plan, Calculator Mastery & Practical Skills Modules (PSM)

2 Ethical and Professional Standards

2.1 Code of Ethics & The Seven Standards of Professional Conduct 2.2 Vignette Analysis: Conflicts of Interest & Disclosure (Standard VI) 2.3 Duties to Clients (Standard III) & Duties to Employers (Standard IV) 2.4 Standard V: Investment Analysis, Recommendations & Actions and Standard VII: Responsibilities as a CFA Member or Candidate 2.5 Application of the Code and Standards: Level II Case Method 2.6 Recommended Procedures: Compliance Programs, Supervisory Systems & Firm Policies

3 Quantitative Methods

3.1 Multiple Linear Regression, ANOVA & Hypothesis Testing 3.2 Regression Diagnostics: Multicollinearity, Heteroskedasticity & Serial Correlation 3.3 Time-Series Analysis: AR Models, Nonstationarity & Cointegration 3.4 Machine Learning, Deep Learning & Big Data Projects 3.5 Extensions of Multiple Regression: Influence Analysis, Qualitative Variables & Logistic Regression 3.6 Big Data Projects: Wrangling, Exploration, Feature Engineering & Model Training

4 Economics for Valuation

4.1 Foreign Exchange Parity Relations & Equilibrium Exchange Rates 4.2 Economic Growth Theories & Production Function Analysis 4.3 Forward Points, the Carry Trade & Policy Effects on Exchange Rates 4.4 Growth Determinants: Natural Resources, Demographics, Convergence & Trade Openness

5 Financial Statement Analysis

5.1 Intercorporate Investments: Equity Method & Business Combinations 5.2 Employee Compensation: Defined Benefit Pension Plans & Share-Based Payments 5.3 Multinational Operations: Current Rate vs Temporal Translation 5.4 Analysis of Financial Institutions & The CAMELS Framework 5.5 Evaluating the Quality of Financial Reports & Accounting Adjustments 5.6 Integration of Financial Statement Analysis Techniques

6 Corporate Issuers

6.1 Analysis of Dividends: Policy Theories, Signaling & Taxation Systems 6.2 Share Repurchases: Methods, EPS and Book Value Effects & Payout Sustainability 6.3 Cost of Capital: Advanced Topics 6.4 Corporate Governance, Board Oversight & ESG Integration 6.5 Corporate Restructuring: Types, Motivations, Evaluation & Valuation 6.6 Restructuring Financial Effects: EPS, Net Debt to EBITDA, WACC & Divestitures

7 Equity Valuation

7.1 Equity Valuation Framework & Required Rate of Return Estimation 7.2 Discounted Dividend Valuation: Gordon Growth, Multistage & The H-Model 7.3 Free Cash Flow Valuation: FCFF and FCFE Modeling 7.4 Market-Based Valuation: Price and Enterprise Value Multiples 7.5 Residual Income Valuation 7.6 Private Company Valuation: Income, Market & Asset-Based Approaches 7.7 Choosing and Combining Models: Definitions of Value, Sum-of-the-Parts & Cross-Border Comparability

8 Fixed Income Analysis

8.1 The Term Structure and Interest Rate Dynamics: Spot, Forward & Swap Curves 8.2 The Arbitrage-Free Valuation Framework & Binomial Interest Rate Trees 8.3 Valuation and Analysis of Bonds with Embedded Options: OAS & Duration 8.4 Credit Analysis Models: Structural vs Reduced-Form Approaches 8.5 Credit Default Swaps (CDS): Mechanics, Pricing & Trading Strategies 8.6 Managing Yield-Curve Risk: Key Rate Durations, One-Sided Durations & Yield Volatility Structure

9 Derivatives & Risk Management

9.1 Pricing and Valuation of Forward Commitments: Equity, Fixed Income & FX 9.2 Swap Pricing and Valuation: Interest Rate, Currency & Equity Swaps 9.3 Contingent Claims: Binomial Option Pricing Model & Arbitrage Replication 9.4 The Black-Scholes-Merton (BSM) Model, Option Greeks & Dynamic Hedging 9.5 Interest Rate Options, Swaptions & the Black Model

10 Alternative Investments

10.1 Commodities and Commodity Derivatives: Sectors, Participants, Futures Returns & Indexes 10.2 Private Real Estate Investments: Direct Capitalization, DCF & Cost Approach 10.3 Public Real Estate Investments: REIT Structures, NAV, FFO & AFFO 10.4 Hedge Fund Strategies: Classification, Implementation & Portfolio Role 10.5 Real Estate Investment Features, Due Diligence & Index Construction Biases

11 Portfolio Management

11.1 Using Multifactor Models: Macroeconomic, Fundamental & Statistical Risk 11.2 Measuring and Managing Market Risk: VaR, CVaR & Stress Testing 11.3 Economics & Investment Markets: Business Cycles, Term Structure & Asset Allocation 11.4 Analysis of Active Portfolio Management & The Fundamental Law 11.5 Exchange-Traded Funds (ETFs): Creation, Arbitrage, Tracking & Applications 11.6 Backtesting and Simulation: Procedures, Metrics, Biases & Scenario Analysis

1.3 300-Hour Study Plan, Calculator Mastery & Practical Skills Modules (PSM)

Key Takeaways Explain This Topic AI

A disciplined 300+ hour preparation plan is divided into four progressive phases: Foundations (100h), Secondary Topics (90h), Vignette Practice (60h), and Full Mock Simulations (50h).

Every Level II candidate must complete one Practical Skills Module of 10 to 20 hours — Python I, Python II, or Analyst Skills — no later than the day before results are released, or the exam result is voided.

Advanced calculator fluency—including uneven cash flow NPV/IRR, linear regression, continuous exponentials, and memory registers—is essential for fast, accurate execution.

Candidates must avoid passive reading traps, formula memorization without economic intuition, and the dangerous temptation to punt low-weight topics.

Last updated: August 2026

1.3 300-Hour Study Plan, Calculator Mastery & Practical Skills Modules (PSM)

Core Insight: Preparing for CFA Level II requires an average of 300 to 350+ study hours structured systematically over 4 to 6 months. Raw study volume alone is insufficient; candidates must combine active vignette problem-solving, advanced financial calculator execution, and timely completion of the mandatory Practical Skills Module (PSM) .

1. The 300+ Hour Four-Phase Study Roadmap

To build durable valuation intuition and prevent cognitive overload, structure preparation across four distinct, sequential phases:

Phase Focus Area Target Hours Core Milestones & Deliverables

Phase 1: Heavyweight Core Ethics, FSA, Equity, Fixed Income, Portfolio Management 100 Hours Read core modules, build custom summary formula sheets, complete 100% of end-of-module practice questions.

Phase 2: Secondary Disciplines Quantitative Methods, Economics, Corporate Issuers, Derivatives, Alternatives 90 Hours Master regression diagnostics, FX parity models, option pricing binomial trees, commodity roll return, and complete module quizzes.

Phase 3: Vignette Immersion Full Item-Set Practice & Weakness Remediation 60 Hours Solve 60+ timed item-set vignettes (12 min/set); log all errors in a dedicated error journal; re-derive failed valuation formulas.

Phase 4: Mock Simulations Full-Scale Timed CBT Mocks & Final Review 50 Hours Complete 4–6 full 88-question mock exams (two 132-min sessions each) under strict exam conditions; review ethics rules thoroughly.

  • Total Study Effort Comprehensive Level II Preparation 300+ Hours Ready for Exam Day
  • 2. Practical Skills Modules (PSM) Requirement

CFA Institute requires every Level II candidate to complete at least one Practical Skills Module (PSM) in order to receive an exam result.

Key PSM Specifications

Duration: each PSM takes 10 to 20 hours of self-paced, hands-on online coursework.

Level II module choices (2026): Python Programming Fundamentals ("Python I"), Python, Data Science, and AI ("Python II"), and Analyst Skills .

No reuse across levels. The same module cannot be completed at more than one level, so a candidate who took Python Programming Fundamentals at Level I must select a different module at Level II.

Timing: a candidate may begin the PSM any time after registration, and may complete it before or after sitting the exam.

Deadline and consequence: the PSM must be submitted no later than the day before results are released . If it is not completed by then, the exam result is voided and no pass or fail result is issued .

Grading: the PSM is assessed on completion of its interactive components rather than by a competitive score.

3. Advanced Calculator Mastery for Level II

Speed and precision on Level II item sets depend heavily on advanced financial calculator fluency. Only two calculator series are authorized by CFA Institute: the Texas Instruments BA II Plus (including BA II Plus Professional) and the Hewlett Packard 12C (including 12C Platinum).

Essential Calculator Functions for Level II 1. Uneven Cash Flows (CF Worksheet) -> Multi-Stage DCF & Capital Budgeting

  • [CF] [2nd] [CLR WORK]
  • Enter initial outlay: CF0 = -1000 [ENTER] [DOWN]
  • Enter Stage 1 cash flows: C01 = 150 [ENTER] [DOWN] F01 = 1 [ENTER] [DOWN]
  • Enter Terminal Value + Cash Flow: C02 = 1200 [ENTER] [DOWN] F02 = 1 [ENTER]
  • Compute NPV: [NPV] I = 10 [ENTER] [DOWN] [CPT] -> NPV = 136.36
  • Compute IRR: [IRR] [CPT] -> IRR = 17.52%
  • 2. Natural Exponentials & Logarithms -> Black-Scholes & Continuous Compounding
  • Continuous Discount Factor: e^(-rT) -> Enter -0.05 * 0.5 = -0.025 -> Press [2nd] [e^x] -> 0.9753
  • Continuously Compounded Return: ln(P1 / P0) -> Enter 105 / 100 = 1.05 -> Press [LN] -> 0.04879 (4.88%)
  • 3. Linear Regression & Statistical Worksheets -> Quantitative Methods & Factor Betas
  • [2nd] [DATA] [2nd] [CLR WORK]

- Enter paired observations (X = Benchmark Return, Y = Stock Return):

  • X01 = 2.5 [ENTER] [DOWN] Y01 = 3.8 [ENTER] [DOWN]
  • X02 = -1.2 [ENTER] [DOWN] Y02 = -1.9 [ENTER]
  • [2nd] [STAT] [2nd] [SET] (Select LIN for linear regression)

- Scroll down to read: n (sample size), x-bar, y-bar, a (intercept b0), b (slope/beta b1), r (correlation).

  • 4. Memory Registers (STO & RCL) -> Avoiding Intermediate Rounding Traps
  • Store intermediate cost of equity: [STO] 1
  • Store stage-1 present value: [STO] 2
  • Recall and sum during multi-stage valuation: [RCL] 1 + [RCL] 2 = Total Intrinsic Value
  • 4. Top Preparation Traps & How to Avoid Them

The Passive Reading Trap: Highlighting pages and rereading chapters creates an illusion of competence. In reality, Level II demands active recall. Always solve questions with books closed before reviewing solutions.

Formula Rote Memorization Without Intuition: Level II tests what happens when economic variables shift (e.g., how an increase in volatility affects an option's vega and delta). Memorizing the Black-Scholes formula without understanding Greek sensitivities leads to missed qualitative questions.

Punting Low-Weight Topics: Abandoning Quantitative Methods or Derivatives because they are "only 5–10%" is catastrophic. Two bad item sets can cost 8 raw points, easily dropping a candidate below the Minimum Passing Score.

Neglecting Time-Conditioned Vignette Practice: Practicing standalone questions does not prepare candidates for the stamina required to read 22 multi-page case vignettes across 4.4 hours of computer testing.