CII R02 exam: The Five Myths

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CII R02 exam: The Five Myths

Like any exam, it helps if you understand the type of exam it is. Over time, myths can develop and so the purpose of this blog is to explore five common myths of the CII’s R02 exam. If you want to pass R02 exam first time, read on and go into the exam with your eyes open.

Myth 1. It’s about investments – that’s what I do for my ‘day job’.

There will be an element of truth in this. Some areas such as ISA’s, life assurance products and OEICS will be well known to all but the most recent recruits into the profession. Unfortunately, the breadth of the R02 syllabus means that other areas aren’t likely to be well known such as the time value of money, efficient market hypothesis and modern portfolio theory. The R02 syllabus also looks at direct investments into equities and fixed interest stocks. The inescapable truth, for most people sitting the exam, is that significant study will be required even for people who have been in the profession for some time.

Tip: From a revision point of view, focus on those areas you are least familiar with. The CII recommend 60 hours of study for R02; most people will need this and more.

Myth 2. R02 is harder than the other R0 subjects.

The latest CII statistics show that the pass rate for R02 was 59.99% in 2018.  In other words, 40% of people fail this CII exam.  Compared to the other CII R0 exams, this pass rate is ‘middle of the road’ but it won’t feel like that when you are studying for it. People tend to find the R02 exam difficult because of:
1. the unfamiliarity of much of the subject matter to many people who sit the exam; and
2. the fact that around 28 out of the 100 questions are multiple response questions. This means that there will be more than one correct answer to get a mark. These are much more difficult than the standard one from four standard question.  You should work on the basis that if you get 50% of these correct, you are doing well.

Myth 3.  The R02 exam tests each area of the text book with an equal number of questions

This is definitely incorrect. There are 9 elements to the CII’s R02 exam which are reflected in the chapters in the CII study text for the exam. The two most heavily examined areas are:

  • Chapter 1 – which has a total of 28 questions; 17 standard format and 11 multiple response; and
  • Chapter 6 – which as 22 questions; 15 standard format and 7 multiple response.

These two areas account for half the questions in R02 between them. They also account for 18 out of the 28 of the much harder multiple response questions.  You can ignore this if you like, but the examiners’ are giving you a pretty clear steer that they believe these areas are important. It is impossible to pass the R02 exam without scoring well on these chapters.

Tip: If your revision time is short, focus on these key areas. Even if time is not short, still focus on these areas. Chapter 5, for example, is only worth 5 questions. Focus your study where the questions are.

Click here for the link to the R02 exam syllabus

Myth 4. I should be OK without being able to do calculations.

Around 19 of the first 72 questions will need a calculator. This means that some mathematical talent will be required so, at the very least, take a calculator into the exam that you know how to work. If you are lucky, the calculations will be around stamp duty or the maximum a family can collectively invest into an ISA. If you are unlucky, you may have to calculate dividend cover, running yields and the time value of money.

Tip: Practice these types of calculation on the calculator you intend to use before the exam

Myth 5. R02 is all about formulas.

This is similar to Myth 4 – but it is still widely believed. It’s actually easy to get too caught up in the likes of earnings per share, dividend cover, sharpe ratios and running yields.  Yes, all of these might be tested either as a calculation – or an understanding of what they are and how they could be used.  But a typical R02 paper is only going to have perhaps half a dozen questions on these.  Yes, you should try to be able to work these out – but not at the expense of all of the other areas.

Tip: Use practice papers – CII or otherwise – to practice these calculations. If that doesn’t work, move on. There are plenty of other areas the R02 examiners’ can test.


If you like learning on the go, click here for details of our audio material.

Until the next time…

The Diploma Doctor


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