I might be strange but personally I never enjoyed learning things by heart in school. Why? For some reason, I just did not feel that learning these things was useful or a good use of my time. Learning a bunch of names and formulas a few days before an exam only to forget them in the 3-4 hours following it didn’t seem like the best way to get prepared for life after school. If you were like me, thank you, I feel a bit understood. However, that does not help at all. It turns out that learning some things by heart was a significant part of getting good grades and as you can imagine if you don’t already know it, it’s a big part of the CFA exam as well….
What to know by heart
Generally, most of the material must be understood rather than learned by heart. Why? Because much of the material is presented to you in a slightly different way which ensures that candidates that do not understand the material will have major problems getting them done. Many of the formulas do not necessarily have a logic behind them (or the logic would require too much effort to understand) as well, some qualitative facts that have a particular logic behind them. For example, the differences between US GAAP and IFRS accounting standards might follow a few trends but it’s safe to say that you will need to know the differences by heart…
How do you determine what needs to be known by heart? Assume that all formulas presented in the material should be known. If you are not able to understand them, know them by heart. As well, when there are a defined number of qualitative points, it might be a good idea to learn them… For example:
-Differences between two standards, instruments, etc
What you should not necessarily have to learn is the relations bet ween elements of the material. For example, the impact of a company using its cash reserves to pay back some debt on a specific ratio (such as quick ratio). You should understand what the ratios mean and the impact of such movements. If one week from the exam you feel the need to learn this by heart, you may have some comprehension problems.
When to learn it
Since you will only remember the material for a limited time, I think it’s important to wait as long as possible before learning all the formulas and other points. Why? Because remembering everything for one or two months will require much more effort than learning the formulas for one week. I think there are two keys:
-Take notes of everything that you want/need to know by heart
-Study all of this in your “crunch week” (which we will discuss later on)
What to do in the meantime
Since you have a list of everything that you WILL need to know by heart, I would use that list when doing practice exams or questions. Not all the time, but if required. That will save you time and give you a better idea of how close you are. Obviously, if you have 20 pages of notes that you will “know by heart,” you should know that it’s not going to happen. Have realistic expectations regarding what you can learn by heart.