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CFA Tutorial: Importance of the Ethics Curriculum

October 10, 2013
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importance of ethics

Ethics is the first topic in CFA curriculum, and it stays with you throughout your journey for the CFA charter, starting from Level 1 and right up to Level 3. Ethics accounts for 15% of the exam score, and has the second highest weightage after Financial Reporting Analysis. What makes it more important is that Ethics also serves as a tie-breaker section, which means that if you score around passing marks in the rest of the sections, then the institute refers to your score in the Ethics section to decide whether you are going to pass the exam.

Typically, students are more comfortable with the quant based / objective topics in the curriculum such as Equity, Financial Reporting, and Fixed Income etc. Ethics, however, is unique because it is more of a ‘soft’ area, and a topic where ambiguity in questions is much higher. While taking your mock exams, you will find that the Ethics section has the highest number of questions where two or more answers seem almost right!

In this blog, we present a brief overview of the Ethics section, and a strategy to tackle this portion of the CFA curriculum


The Level 1 Ethics syllabus has 15% weight-age in the overall exam, and it can be broken down into four parts or sections. We have outlined each of these parts below, and have included tips for handling each section.

1. Code of Ethics and Standards of Professional Conduct: In this section, the syllabus lays down the Code of Ethics and Standards from the CFA Institute Code of Ethics. In this section, your focus should be on knowing the Code of Ethics. You should not stress about memorizing everything verbatim, but make sure that you grasp the essence of the component. For example, you must know the six components of codes of ethics, but there is no need to remember the code word by word. You will do equally well to just remember the key word associated with, and the intent behind the component. It is recommended that you cover this section from material from your prep-provider.

2. Guidance for Standards: The largest chunk of questions will come from this part of the syllabus. Here, you have to look at the guidance for each standard, as provided by the CFA Institute. This is one of the rare sections, where you have to go through the entire original curriculum. There is no skipping the original material. You must focus on understanding the intent behind each of the Standards, as well as their practical application. I am asking you to go through the original material because it is replete with enough examples to make the concept crystal clear. Remember when I said before, there is no other section as confusing as this one. Almost all questions will have two answers which will both seem right, hence a comprehensive understanding of the application of Standards is necessary.

3. Introduction to Global Investment Performance Standards

4. Global Investment Performance Standards: Section 3 & 4 are relatively short, and it is advisable to cover these through the Prep-material that you have subscribed to.

Other Tips

  • Don’t wait for the last day – you cannot mug it up at the last hour. Ethics prep will take about 3-4 days, if done properly. Budget for this period, and study along with other sections
  • Understand the intent behind every Code and Standard. Verbatim memorization is not necessary
  • Ethics questions are case type questions, so it will take some time to go through them during the exam. Practicing these cases will help quite a lot at the time of exam
  • Remember that, more the number of questions you do (and understand), the better are your chances of cracking the Ethics material. Make sure you go through all the examples, and questions in the CFA Material.
  • Also make sure that you have checked the questions in the two mock tests provided by the Institute. Chances are that you will see similar questions on the day of your test if you have gone through both the curriculum and mock tests thoroughly.


Ethics has 15% weightage (second highest) in the L1 exam, it is one of the most ambiguous areas, and it cannot be prepared for at the last hour. Do make it a point that you get exposed to as many ethics questions as possible, before you take the actual exam. All the best!


About the Author

Siddhartha has worked in JP Morgan London as an Equity Research Analyst for 3 years. He is an engineer from IIT Kharagpur and is pursuing his MBA from IIM Calcutta. After MBA, he will work with Citibank India in the M&A team.


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