CAIA Level II
Application of alternatives in portfolios. Section 1: 100 MCQ (130 minutes). Section 2: three constructed-response sets (130 minutes). Handbook allocates roughly 70% MCQ / 30% constructed response.
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MiloPrep will cover Level II with adaptive practice mapped to the published content areas.
Who should prioritise Level II
Fits you if
- Professionals in private markets, hedge funds, or alternatives allocation who want a charter specialised in alternatives.
Skip if
- Candidates whose roles are pure public-markets equity research or household financial planning - CFA or CFP may fit better as the primary exam path.
Format at a glance
Application of alternatives in portfolios. Section 1: 100 MCQ (130 minutes). Application of alternatives in portfolios. Section 1: 100 MCQ (130 minutes). Section 2: three constructed-response sets (130 minutes). Handbook allocates roughly 70% MCQ / 30% constructed response.
Question format
100 MCQ + 3 constructed-response sets
Duration
260 min
2 sessions
Questions
100
Simulations / cases
3
CAIA Level II topic weights
Published weight ranges or scored-question allocations from the awarding body. Use them to budget study time - larger areas deserve calendar priority.
Level II
| Topic | Weight |
|---|---|
| CAIA Ethical Principles | MCQ 0%; constructed response 10% |
| Institutional Asset Owners | MCQ 8–12%; constructed response 0–10% |
| Asset Allocation | MCQ 8–12%; constructed response 0–10% |
| Risk and Risk Management | MCQ 8–12%; constructed response 0–10% |
| Methods and Models | MCQ 12–15%; constructed response 0–10% |
| Accessing Alternative Investments | MCQ 8–12%; constructed response 0–10% |
| Due Diligence and Selecting Managers | MCQ 8–12%; constructed response 0–10% |
| Volatility and Complex Strategies | MCQ 8–12%; constructed response 0–10% |
| Universal Investment Considerations | MCQ 6–11%; constructed response 0–10% |
| Emerging Topics | MCQ 0%; constructed response 10% |
Sample Level II study sequence
Select a stage to see its purpose. This is not an official timetable. Repeat or shorten stages according to your baseline, work calendar, and timed practice results.
CAIA Ethical Principles
Weight MCQ 0%; constructed response 10%. Passing Level I on recognition questions, then underpreparing constructed-response structure and institutional due-diligence frameworks.
Keep your primary course aligned with the current syllabus, then use practice evidence to decide whether this stage needs more repetition.
Where CAIA practice should focus
Three high-leverage drills. If practice time is short, start here.
Fee and liquidity mechanics
Many Level I misses come from waterfall, lock-up, or redemption details rather than strategy labels.
Institutional constraint questions (Level II)
Practise how asset-owner constraints change the acceptable alternative allocation.
Due diligence checklists in writing
For constructed response, list the diligence steps the question asks for - no more, no fewer.
Navigate this exam
Level II learn articles(15)
Full CAIA learn index →- CAIA Ethical PrinciplesCAIA Ethical Principles has a published allocation of MCQ 0%; constructed response 10% in Level II: treat it as a decision rule plus timed practice, not vocabulary alone. Application of alternatives in portfolios. Section 1: 100 MCQ (130 minutes). Section 2: three constructed-response sets (130 minutes). Handbook allocates roughly 70% MCQ / 30% constructed response.
- Institutional Asset OwnersInstitutional Asset Owners has a published allocation of MCQ 8–12%; constructed response 0–10% in Level II: treat it as a decision rule plus timed practice, not vocabulary alone. Application of alternatives in portfolios. Section 1: 100 MCQ (130 minutes). Section 2: three constructed-response sets (130 minutes). Handbook allocates roughly 70% MCQ / 30% constructed response.
- Asset AllocationAsset Allocation has a published allocation of MCQ 8–12%; constructed response 0–10% in Level II: treat it as a decision rule plus timed practice, not vocabulary alone. Application of alternatives in portfolios. Section 1: 100 MCQ (130 minutes). Section 2: three constructed-response sets (130 minutes). Handbook allocates roughly 70% MCQ / 30% constructed response.
- Risk and Risk ManagementRisk and Risk Management has a published allocation of MCQ 8–12%; constructed response 0–10% in Level II: treat it as a decision rule plus timed practice, not vocabulary alone. Application of alternatives in portfolios. Section 1: 100 MCQ (130 minutes). Section 2: three constructed-response sets (130 minutes). Handbook allocates roughly 70% MCQ / 30% constructed response.
- Methods and ModelsMethods and Models has a published allocation of MCQ 12–15%; constructed response 0–10% in Level II: treat it as a decision rule plus timed practice, not vocabulary alone. Application of alternatives in portfolios. Section 1: 100 MCQ (130 minutes). Section 2: three constructed-response sets (130 minutes). Handbook allocates roughly 70% MCQ / 30% constructed response.
- Accessing Alternative InvestmentsAccessing Alternative Investments has a published allocation of MCQ 8–12%; constructed response 0–10% in Level II: treat it as a decision rule plus timed practice, not vocabulary alone. Application of alternatives in portfolios. Section 1: 100 MCQ (130 minutes). Section 2: three constructed-response sets (130 minutes). Handbook allocates roughly 70% MCQ / 30% constructed response.
- Due Diligence and Selecting ManagersDue Diligence and Selecting Managers has a published allocation of MCQ 8–12%; constructed response 0–10% in Level II: treat it as a decision rule plus timed practice, not vocabulary alone. Application of alternatives in portfolios. Section 1: 100 MCQ (130 minutes). Section 2: three constructed-response sets (130 minutes). Handbook allocates roughly 70% MCQ / 30% constructed response.
- Volatility and Complex StrategiesVolatility and Complex Strategies has a published allocation of MCQ 8–12%; constructed response 0–10% in Level II: treat it as a decision rule plus timed practice, not vocabulary alone. Application of alternatives in portfolios. Section 1: 100 MCQ (130 minutes). Section 2: three constructed-response sets (130 minutes). Handbook allocates roughly 70% MCQ / 30% constructed response.
- Universal Investment ConsiderationsUniversal Investment Considerations has a published allocation of MCQ 6–11%; constructed response 0–10% in Level II: treat it as a decision rule plus timed practice, not vocabulary alone. Application of alternatives in portfolios. Section 1: 100 MCQ (130 minutes). Section 2: three constructed-response sets (130 minutes). Handbook allocates roughly 70% MCQ / 30% constructed response.
- Emerging TopicsEmerging Topics has a published allocation of MCQ 0%; constructed response 10% in Level II: treat it as a decision rule plus timed practice, not vocabulary alone. Application of alternatives in portfolios. Section 1: 100 MCQ (130 minutes). Section 2: three constructed-response sets (130 minutes). Handbook allocates roughly 70% MCQ / 30% constructed response.
- Institutional Investor Constraint MappingLevel II skill: map asset-owner constraints before recommending alternatives access methods.
- Manager Due Diligence WorkpapersOperational and investment due-diligence checklists that Level II MCQ and CR sets both reward.
- Risk Budgeting for AlternativesHow Level II risk topics allocate risk across illiquid and liquid sleeves.
- Complex Strategy Payoff MappingVolatility and complex-strategy stems — draw the payoff before selecting the multiple-choice option.
- Constructed Response Structure DrillUniversal Investment Considerations and Emerging Topics — answer with headings that match the ask.
How to read a CAIA hedge-fund risk stem
Setup
A Level I question describes a relative-value fund with monthly redemptions, a gate, and rising prime-broker margin. Choices ask which risk rose most.
How to read it
Ignore the strategy brand. Map liquidity terms and leverage first. The keyed answer usually follows from the constraint that changed, not from the strategy textbook paragraph.
Takeaway
Alternatives questions reward constraint reading. Strategy names are often decoration.
Troubleshooting common CAIA study problems
If your mocks are stuck, match the symptom and change the next week. do not just do more of the same questions.
Level I strategy flashcards are not lifting scores
Likely cause
Memorising names without fee, risk, and liquidity application.
Next step
Rewrite each strategy card with one risk, one liquidity feature, and one fee feature.
Level II constructed responses feel unstructured
Likely cause
Writing narrative instead of checklist answers.
Next step
Practice command-word templates: recommend, justify, list three risks.
Digital assets and FoF always miss
Likely cause
Skipping “small” topics that still appear every window.
Next step
Schedule two short weekly blocks just for those handbook chapters.
Level II study-week checklist
- List published weights for Level II
- Drill 100 MCQ + 3 constructed-response sets under partial timing
- Attack failure mode: Passing Level I on recognition questions, then underpreparing constructed-response structure and ins
- Run one block near 260 minutes
- Log misses and retest within 72 hours
If level i strategy flashcards are not lifting scores, Rewrite each strategy card with one risk, one liquidity feature, and one fee feature.
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Level II FAQs
- How many levels is CAIA?
- Two: Level I and Level II.
- What is the Level I format?
- 200 multiple-choice questions across two sections of 130 minutes each, per the CAIA Exam Candidate Handbook.
- Does Level II include constructed responses?
- Yes. Level II includes 100 multiple-choice questions plus three constructed-response sets. Some topics are constructed-response only.
Next steps
Level II practice
Blueprint explorer and sample questions for Level II.
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