Category: Student Corner

PGP ’11 student, Pulkit Taluja,  recently cleared the CFA Level 2 Exam. He shared his insight on need of CFA and approach that is required to clear it.

What is CFA Program and what is its scope in today’s context?

CFA Program is a globally recognized program which equips one with comprehensive knowledge in the field of investment analysis and portfolio management. CFA Program consists of 3 levels (exams) and passing all three would close you to the CFA Charter which additionally requires 4 years of investment related work experience.

While CFA Level 1 focuses on building the basics in all areas related to finance, Level 2 focuses on valuation and Level 3 on portfolio management. In today’s context CFA is a very good course from the perspective of learning and building your credibility in the eyes of prospective recruiters.

Who should pursue this programme? How does CFA add value to a regular MBA?

If you look at CFA Charter, it is specifically designed for people who want to enter portfolio management/ investment analysis. It is not delve deep into other fields of finance like investment banking, commercial banking etc. However, for someone who doesn’t have any prior knowledge in finance and wants to enter the field, CFA Level 1 is a very good course to start with. Level 1 curriculum covers basics of a wide variety of areas like quant, economics, fixed income, equity, derivatives, corporate finance, portfolio management etc. It provides an organized way of learning the basics which otherwise if we try to learn in a haphazard manner takes a lot of time.

In Indian context, for a person entering MBA wanting to specialize in finance, pursuing CFA becomes even more important especially if one is from a non-commerce background. It is because of two reasons. One is that an MBA courses cover topics in a very broad way. Till the students complete their first year, they are taught only about 3-4 course in finance. They are not exposed to the world of complex financial instruments, derivatives, their valuation etc. There is a wide gap between what’s covered and what one is required to know. The CFA curriculum fits into that gap very well. Therefore for those who wish to pursue finance in MBA, they apply for Level 1 exams as early as possible. It clearly gives an added advantage over someone who is only exposed to courses that are a part of curriculum. The advantage of an MBA is that the learning is case-based unlike CFA which is predominantly theory based especially Level 1 and Level 2. Thus both the courses complement each other very well.

Do you think the popularity of the CFA is growing? If yes, what advantage do students have in placements if there are already many people having cleared CFA exams?

The popularity of CFA is growing very fast in India especially amongst MBA students. Since most of the MBAs come from a non- finance background, it provides them an easy way to enhance their resume and express their interest to prospective recruiters. In good B-Schools, where competition is tough for both summer and final placements, taking CFA Level 1 exam has become a necessity for someone looking to specialize in finance. In the process, there are a lot of students who have cleared CFA L1 exam when the applications are sent to recruiter which doesn’t make it a differentiating factor. CFA L2 to some extent may be a differentiating factor.

As per my conversation with some recruiters and industry experts, what they look for is the application of what you have learned in the program. You could regularly publish equity research reports, start your own investment fund, provide financial consulting or engage in a live project with some corporate. That would be much more valuable even if you don’t pursue CFA but for getting to that level you need the understanding of concepts which are provided by the CFA curriculum.

How should candidates prepare for CFA considering academic rigor in MBA?

There is only one answer to this question- regular hard work and practice. Given the academic rigor and fast paced life in MBA, my suggestion is to start early and study a little every day. Also, many people recommend studying from reference books other than those provided by CFA as they contain much less content and can be finished fast. But according to me, they won’t provide you with as much learning and should be referred to if you have very little time for preparation. Apart from that, keep some leeway for your project submissions, mid-term and end-term exams and plan accordingly. Finally, the idea must be to learn and not just pass the exam as during a recruitment interview you would be expected to know what was there in the curriculum.

Name                    :           Akshay Aggarwal

Graduation          :           B.Tech Comp. Sc. (2011)

College                  :           JIIT, Noida

 

1. Why and when did you decide to do MBA? What is your plan after you complete your MBA?

It was the end of my second year in graduation when I first asked myself, “What do I want to do in life?”, and that’s when I started dreaming of having a business of my own. But not having a business background and considering the risks involved, I put my plans of entrepreneurship on hold.

After completing my graduation, I decided to gain some work experience and plan my entrepreneurial voyage alongside. But a mere six month’s tenure with a MNC was enough for me to confirm that I don’t fit the 9 to 5 culture. My discontent with the job added to the temptation of diving headfirst into entrepreneurship. But the previous apprehensions stopping me from starting a business still prevailed. I needed more time and guidance to come up with a business plan. After much deliberation, I resigned from my job and decided to study management. An MBA offered me two years of planning, highly competitive environment, guidance of faculty and invaluable management skills.

I plan to be ready with an actionable business plan at the end of these 2 years and launch the plan after passing out.

2. How did you start the preparation and what was your overall strategy?

Overall Strategy: Instead of going through the list of topics and preparing each of them separately, I based the preparation primarily on the analysis of my performance in mock tests. After the analysis I targeted only the weak areas.

Verbal Ability: If you are a habitual reader, you can read, analyse and assimilate any text faster than others. I used to (still do) read a lot and continuously evaluated my approach towards VA problems by comparing my thought process with the mock test solutions given by coaching institutes.

*My opinion on vocabulary preparation: Either add 1000 or more words to your vocabulary or none. There is not much benefit in going half way.

QA and DI:  (I am an Engineer): Rather than spending my time on understanding the shortcuts given by coaching institutes, I used to put in efforts to solve as much questions as possible on my own. This way I discovered my own shortcuts, which I could never forget during exams.

LR: No strategy in particular, I practiced as much as possible.

3. Please share your WAT/PI experience in detail.

WAT Topic: Capitalism is dead and Socialism is here to stay.

General reading and awareness helped me give a well informed answer.

PI: I was asked about my future plans and subsequently about entrepreneurship. Some questions on IPR laws and trademarks as I had a subject on Social and Legal issues in graduation. Some questions on graphs and quadratic equations were also asked.

 4. Which institutes offered you final admission? Why did you choose IIM Kashipur?

IIM Raipur and IMT, Ghaziabad

Preferred Kashipur over IMT due to the prestige associated with IIMs.

Chosen Kashipur over Raipur considering the small batch size of 40. I firmly believe that a large batch size dilutes the quality of education. A batch size of 120 at Raipur was a turn off for me.

5. Do you think it is possible to crack CAT without taking formal coaching? What would you suggest the CAT 2012 aspirants who would like to prepare by themselves?

Yes, I do believe that one can ace CAT even without any formal coaching, but appearing for mocks is compulsory to gauge your preparation. See the answer to question number 2 for more details.

6. CAT saw a major change in the format & pattern in 2011. How did you prepare for it? Did this new pattern cause any hindrance in your preparation or exam taking strategy?

I found the new pattern easier as I had to worry about clearing only two cut-offs instead of three. Also, I felt that the probability of giving a better performance increased as the probability of good performance of a prepared candidate increases with the number of questions. In 2010 and earlier formats, we had to find solvable questions among 20 questions and repeat the process three times. In 2011, it was easier to find solvable questions among a larger bank of 30 questions and repeat the process only two times.

7. What was your strategy for time management?

The new pattern made the time management easier as we were now forced to spend equal time on the two sections. For solving the individual sections, I followed the traditional advice. Quickly skip over difficult questions and solve the easier questions first.

8. What is your message for the MBA aspirants who will take CAT 2012 and other exams of the season?

Solve and more importantly analyse as many mock tests as possible. I found the reverse flow of preparation i.e. first giving mock tests and then preparing the weak topics to be much more time efficient than first preparing all the topics individually and then giving the mock tests.
And most importantly, keep your calm on the D-day.