The CFA is a three part exam that covers the topics of portfolio management, financial analysis, and general financial principles. To qualify to take the exam, the CFA hopeful must be in their final year of a bachelor's degree program, or have at least four years of professional experience in the financial industry. The candidate must pass all three parts of the exam, pay a membership fee, and sign an ethics and professional conduct agreement to earn their CFA Charterholder status.
The exam is divided into three parts, called "Levels." Candidates usually take one level each year, completing the exam in three years, due to the vast amount of studying required to pass. Each level has a specific focus and covers a broad range of information. Level I focuses on portfolio management and asset valuation, Level II focuses on the application of economics, statement analysis, and other quantitative techniques to asset management, and Level III focuses on fixed income, equity management, and derivative investment on the individual and corporate level.
Each Level exam is six hours long, yet is presented differently depending on the Level. Level I is multiple choice, Level II is item set response, and Level III is short answers. Candidates do not receive a score for the exam, merely a notice of pass or fail. A candidate must pass all three parts to pass the overall exam, and a passing grade is a 70% or above. If a candidate fails a Level they may retake it as many times as needed, however the Level II and III exam is only offered once a year, and the Level I exam is only offered twice.
In 1947, the Financial Analysts Federation, called the FAF, was established for investment professionals as an early organization for the industry. The FAF offered the first CFA exam in 1963, though it did not formerly call itself the CFA Institute of the United States of America until 1990 when it merged with the Institute of Chartered Financial Analysts. As of 2006, around 78,000 people from 126 countries have passed the CFA and become a Charterholder.
While being an American based examination, the CFA has gained recent popularity around the world. In 2003, fewer than half of the CFA candidates were international applicants. Today, more than half of the candidates apply from India, China, Canada, Europe, and Australia. The exam has grown in prestige around the world and is considered a must-have for top members in the financial industry.