CFA Level 2 Formula Sheet 2026 — With Pick-the-Model Guidance for Every Framework
CFA Level 2 gives you 88 vignettes. Each one hides a model-selection question inside a wall of context. The exam doesn't tell you which valuation approach to use, which spread to quote, or which translation method applies. It expects you to know.Most L2 prep covers the formulas. This sheet covers the CHOICE. Every entry tells you when to pick this model over the alternatives — DDM vs FCFE, callable vs putable, Z-spread vs OAS, current rate vs temporal. The formula is the easy part. Knowing which one to reach for under time pressure is what L2 actually tests.What's inside:✓ All 10 topics · 70+ frameworks · 90 modules — the full 2026 curriculum, not a partial sheet✓ Every entry: framework name, formula, one-line use case, and a memory hack✓ Pick-the-method guidance on every multi-model topic✓ Colour-coded by topic and exam weight✓ Same format as the L1 sheet — if you used that, the logic here is identicalSample entries:Two-Stage DDM vs FCFE — when vignettes flag unstable dividends or buyback activity, FCFE is the right model. DDM is a special case of FCFE (when payout = 100%). Use FCFE when dividend policy doesn't reflect cash generation.Callable vs Putable — V_callable = V_straight - V_call. V_putable = V_straight + V_put. Issuer holds the call (bond trades cheap, yields higher). Holder owns the put (bond trades rich, yields lower). Convexity flips negative on the callable once the call is near in-the-money.Current Rate vs Temporal — current rate applies when the sub's functional currency = its local currency. Temporal when functional = parent's. Inventory is at HISTORICAL under temporal, CURRENT under current rate. That's the most tested FSA trap on L2.All 10 topics covered:Quantitative Methods (5–10%) · Economics (5–10%) · Financial Statement Analysis (10–15%) · Corporate Issuers (5–10%) · Equity Investments (10–15%) · Fixed Income (10–15%) · Derivatives (5–10%) · Alternative Investments (5–10%) · Portfolio Management (10–15%) · Ethical & Professional Standards (10–15%)Who made this:Drumil Shah, CFA. Product Controller at a bulge-bracket bank covering a Flow desk — equity swaps, cash equities, and futures. Cleared all three CFA levels. The second L2 attempt taught me what the first one missed: L2 doesn't reward formula recall, it rewards model selection. This sheet is built around that.Your download:First_Principles_CFA_L2_Formula_Sheet_2026.pdf — 18 pages, designed, colour-coded by topic. Instant download.Updated for the 2026 curriculum.FAQDoes this cover the full L2 curriculum?Yes. All 10 topics, 70+ frameworks, 90 modules. Not an FSA-only sheet — the full exam scope.Is there an L1 version?Yes, and it's free: drumil17.gumroad.com/l/free-l1What format is the download?PDF. Printable, designed, colour-coded.What about L3?In progress.
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