CFA Level 3: Constructed Response Master Reference

核心 (Core) Philosophy: “Think like a Grader”

Graders look for specific keywords and logical links. They do not grade on prose, grammar, or introductory sentences. If it doesn’t earn a point, don’t write it.

1. The “Golden Formula” for Justification

Most points are lost because candidates provide a fact without a link, or a link without a fact. Use this two-part structure for every justification bullet:

[Vignette Fact] + [Curriculum Concept/Impact] = Point Earned

  • Weak: “The client is 35 years old.” (Fact only)
  • Strong: “The client is 35 years old (Fact), which implies a long time horizon and a higher ability to take risk (Curriculum Link).”

2. Sentence Frameworks by Command Word

Command Word Logic Structure Example Template
Justify Because… Therefore… “Because the client has [Fact], therefore [Portfolio Action] is appropriate.”
Distinguish X vs. Y “X relies on [Feature], whereas Y relies on [Different Feature].”
Explain Cause → Effect “Increasing the allocation to X reduces Y because of [Specific Correlation].”
Recommend State + Support “I recommend [Action]. It is superior because [Reason 1] and [Reason 2].”

3. High-Efficiency Tips

  • The Power of “Because”: Starting a bullet point with “Because…” forces you to cite the vignette immediately.
  • No “Fluff” Rule: Never restate the question. If the question asks “Recommend an index strategy,” do not start with “After reviewing the client’s needs, I recommend…” Just start with “Recommend: Enhanced Indexing.”
  • Bullet Points Only: Avoid paragraphs. If you have three reasons, use three bullets. It makes it easier for the grader to check off your points.
  • Show Calculations: If you use a calculator, write down the inputs (e.g., \(N=20, PV=1,000,000\)). If you make a math error but the process is clear, you get partial credit.

4. Answer Structure Templates

Template for “Determine and Justify”

  • Determination: [Direct Answer - e.g., “Immunization Strategy”]
  • Justification:
    • Bullet 1: [Vignette Fact] + [Curriculum Link]
    • Bullet 2: [Vignette Fact] + [Curriculum Link]

Template for “Compare/Contrast”

  • [Subject A] is characterized by [Feature], whereas [Subject B] is characterized by [Feature].
  • [Subject A] is more suitable for [Market Condition], while [Subject B] excels in [Market Condition].

5. Avoiding Common Pitfalls

  • Do not provide multiple answers: If the question asks for one reason and you provide three, the grader only looks at the first one—even if the second and third are better.
  • Hedging: Don’t say “It could be A or B.” Pick one and justify it.
  • Time Management: If a question is worth 4 points, aim for 2-4 minutes of writing. If you find yourself writing a “story,” stop and convert it to bullets.

CFA Level 3: Command Word Template Reference

1. Action-Oriented Commands (Short & Direct)

CALCULATE

  • Template: 1. Formula: (State the formula used)
    1. Inputs: (List the variables from the vignette)
    2. Result: (Final numerical answer)
  • Example:
    • \(Return = (End Value - Begin Value + Income) / Begin Value\)
    • \(Return = (110 - 100 + 2) / 100\)
    • \(Return = 12\%\)

DETERMINE / IDENTIFY / STATE

  • Template: [Direct Answer Only]
  • Note: Do not provide reasoning unless the prompt also says “Justify.”
  • Example: * “The strategy is a Carry Trade.”

2. Descriptive Commands (Defining Concepts)

DESCRIBE / DEFINE

  • Template: [Characteristic 1] + [Characteristic 2]
  • Note: Focus on the technical features of the subject.
  • Example: * “A total return swap involves one party paying the total return of an asset, while the other party pays a fixed or floating rate.”

CONTRAST / DISTINGUISH

  • Template: [Subject A] does [Feature X], whereas [Subject B] does [Feature Y].
  • Note: You must mention both subjects to receive full credit.
  • Example: * “Soft commissions are used to pay for research services, whereas hard commissions are paid in cash for execution.”

3. Evaluative Commands (The “Point Earners”)

JUSTIFY

  • Template: Because [Vignette Fact], therefore [Curriculum Concept/Conclusion].
  • Note: This is the most common Level 3 command. Always link the case study to the textbook.
  • Example: * “Because the client has a 30-year time horizon, therefore they have a higher ability to take risk and can tolerate short-term volatility.”

EXPLAIN

  • Template: [Action/Event] leads to [Result] because [Reasoning].
  • Note: Focus on the “Mechanics” or the “Why.”
  • Example: * “Increasing the duration of the portfolio will increase interest rate risk because the price sensitivity to yield changes is higher.”

DISCUSS

  • Template: * Point 1: [Advantage/Viewpoint A]
    • Point 2: [Disadvantage/Viewpoint B]
  • Note: Usually requires looking at multiple sides or factors of a strategy.

4. Selection Commands

RECOMMEND

  • Template: 1. Recommendation: [Selection]
    1. Reason 1: [Fact + Link]
    2. Reason 2: [Fact + Link]
  • Note: Only provide the number of reasons requested (e.g., “Provide two reasons”).

SUPPORT

  • Template: [Evidence from Vignette] + [Effect on Portfolio/Client]
  • Note: Similar to “Justify,” but focuses specifically on proving a pre-stated claim.