How CFA Level 2 item sets work
A CFA item set pairs a vignette with related multiple-choice questions. At Level II, each set has four questions. Read the question, locate the relevant case facts, select the method, and check units.
A repeatable item-set workflow*
01
Read the ask
Identify the calculation or conclusion the question needs.
02
Locate the evidence
Find dates, assumptions, and inputs in the vignette.
03
Choose the method
Select the valuation or accounting model before calculating.
04
Check the answer
Verify units, signs, and consistency with the case.
Official sources checked 8 October 2026: Level II exam
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CFA Level II: 20 practice MCQs
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Ten learning exercises
One original vignette, ten written learning tasks. Case facts stay beside each prompt. Tutorial, not a mock.
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MCQ correct
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Self-reviewed
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Completion is not an exam score. Written responses are self-reviewed, not automatically graded.
- Question 1 of 10Identify the taskWritten response
Case facts
Harbor Analysis values Cedar Ltd. Next-year FCFF is 12 million, WACC is 8% and sustainable perpetual growth is 3%. Market debt is 40 million, excess cash is 5 million and shares outstanding are 10 million. The case also reports a historical advertising spend of 2 million, already reflected in operating forecasts. All figures are in one currency; ignore non-controlling interests and other claims.
Before calculating, state the valuation output needed to reach a per-share equity value.
Model answer and self-review rubric
Find enterprise value from FCFF, bridge to equity value with debt and excess cash, then divide by shares. Common error: reporting enterprise value as the per-share answer.
Teaching checklist only. No official points or automated grade.
- Question 2 of 10Extract evidenceWritten response
Case facts
Harbor Analysis values Cedar Ltd. Next-year FCFF is 12 million, WACC is 8% and sustainable perpetual growth is 3%. Market debt is 40 million, excess cash is 5 million and shares outstanding are 10 million. The case also reports a historical advertising spend of 2 million, already reflected in operating forecasts. All figures are in one currency; ignore non-controlling interests and other claims.
List the three case inputs needed for a constant-growth FCFF enterprise value.
Model answer and self-review rubric
Use next-year FCFF 12 million, WACC 8% and perpetual growth 3%. Common error: using debt or advertising spend inside the perpetuity denominator.
Teaching checklist only. No official points or automated grade.
- Question 3 of 10Select the modelWritten response
Case facts
Harbor Analysis values Cedar Ltd. Next-year FCFF is 12 million, WACC is 8% and sustainable perpetual growth is 3%. Market debt is 40 million, excess cash is 5 million and shares outstanding are 10 million. The case also reports a historical advertising spend of 2 million, already reflected in operating forecasts. All figures are in one currency; ignore non-controlling interests and other claims.
Explain why WACC, rather than cost of equity alone, belongs in the discount rate.
Model answer and self-review rubric
FCFF is available before distributions to both debt and equity capital providers, so it pairs with WACC. Common error: selecting an equity rate because the final requested output is equity value.
Teaching checklist only. No official points or automated grade.
- Question 4 of 10Check admissibilityWritten response
Case facts
Harbor Analysis values Cedar Ltd. Next-year FCFF is 12 million, WACC is 8% and sustainable perpetual growth is 3%. Market debt is 40 million, excess cash is 5 million and shares outstanding are 10 million. The case also reports a historical advertising spend of 2 million, already reflected in operating forecasts. All figures are in one currency; ignore non-controlling interests and other claims.
State the inequality required for the constant-growth model and check it here.
Model answer and self-review rubric
The required return must exceed perpetual growth: 8% > 3%. This also requires credible sustainable growth and stable operating/financing assumptions. Common error: checking only whether the denominator is nonzero.
Teaching checklist only. No official points or automated grade.
- Question 5 of 10Calculate enterprise valueWritten response
Case facts
Harbor Analysis values Cedar Ltd. Next-year FCFF is 12 million, WACC is 8% and sustainable perpetual growth is 3%. Market debt is 40 million, excess cash is 5 million and shares outstanding are 10 million. The case also reports a historical advertising spend of 2 million, already reflected in operating forecasts. All figures are in one currency; ignore non-controlling interests and other claims.
Calculate Cedar's enterprise value under the model.
Model answer and self-review rubric
12 / (0.08 - 0.03) = 240 million. The 12 million is already next year's cash flow. Common error: growing it to 12.36 before valuation.
Teaching checklist only. No official points or automated grade.
- Question 6 of 10Bridge claimsWritten response
Case facts
Harbor Analysis values Cedar Ltd. Next-year FCFF is 12 million, WACC is 8% and sustainable perpetual growth is 3%. Market debt is 40 million, excess cash is 5 million and shares outstanding are 10 million. The case also reports a historical advertising spend of 2 million, already reflected in operating forecasts. All figures are in one currency; ignore non-controlling interests and other claims.
Using enterprise value of 240 million, calculate equity value.
Model answer and self-review rubric
Equity value = 240 - 40 + 5 = 205 million. Subtract debt claims and add the specified excess cash. Common error: adding debt to an enterprise-to-equity bridge.
Teaching checklist only. No official points or automated grade.
- Question 7 of 10Normalize unitsWritten response
Case facts
Harbor Analysis values Cedar Ltd. Next-year FCFF is 12 million, WACC is 8% and sustainable perpetual growth is 3%. Market debt is 40 million, excess cash is 5 million and shares outstanding are 10 million. The case also reports a historical advertising spend of 2 million, already reflected in operating forecasts. All figures are in one currency; ignore non-controlling interests and other claims.
Using equity value of 205 million, calculate value per share.
Model answer and self-review rubric
205 million / 10 million shares = 20.50 per share. The millions cancel. Common error: dividing an amount expressed in millions by the unscaled raw share count.
Teaching checklist only. No official points or automated grade.
- Question 8 of 10Reject irrelevant dataWritten response
Case facts
Harbor Analysis values Cedar Ltd. Next-year FCFF is 12 million, WACC is 8% and sustainable perpetual growth is 3%. Market debt is 40 million, excess cash is 5 million and shares outstanding are 10 million. The case also reports a historical advertising spend of 2 million, already reflected in operating forecasts. All figures are in one currency; ignore non-controlling interests and other claims.
Explain why the historical advertising figure is not subtracted again from enterprise value.
Model answer and self-review rubric
The operating forecast already reflects the relevant expense. Subtracting the historical amount again would double-count it and mix a historical expense with a forward valuation. Common error: assuming every number in a vignette must enter the calculation.
Teaching checklist only. No official points or automated grade.
- Question 9 of 10SensitivityWritten response
Case facts
Harbor Analysis values Cedar Ltd. Next-year FCFF is 12 million, WACC is 8% and sustainable perpetual growth is 3%. Market debt is 40 million, excess cash is 5 million and shares outstanding are 10 million. The case also reports a historical advertising spend of 2 million, already reflected in operating forecasts. All figures are in one currency; ignore non-controlling interests and other claims.
Holding FCFF and growth fixed, explain the effect of WACC rising to 9%.
Model answer and self-review rubric
Enterprise value falls to 12 / (0.09 - 0.03) = 200 million. A higher discount rate increases the denominator. Common error: saying value rises because investors demand more return.
Teaching checklist only. No official points or automated grade.
- Question 10 of 10Answer independentlyWritten response
Case facts
Harbor Analysis values Cedar Ltd. Next-year FCFF is 12 million, WACC is 8% and sustainable perpetual growth is 3%. Market debt is 40 million, excess cash is 5 million and shares outstanding are 10 million. The case also reports a historical advertising spend of 2 million, already reflected in operating forecasts. All figures are in one currency; ignore non-controlling interests and other claims.
A later question supplies enterprise value as 220 million even if your earlier calculation differed. Which figure should you use for that question, and why?
Model answer and self-review rubric
Use its stated 220 million assumption for that question and the same debt/cash bridge: equity value is 185 million. Respect question-specific assumptions instead of propagating an earlier answer. Common error: overriding a supplied value with your own prior calculation.
Teaching checklist only. No official points or automated grade.
Apply the topic to a focused case
CFA Level 2 vignette fact isolation drill
Read the question’s requested output and qualifiers before collecting numbers. An equity price, operating enterprise value, forecast EPS and credit loss are different tasks even when they appear in the same case. Mark the entity, date and unit the output requires. This creates a short evidence checklist and reduces the temptation to use every prominent number in the vignette.
- Case facts
- A case gives operating enterprise value of 500 million, excess cash of 20 million, debt of 150 million, revenue of 900 million and 10 million shares. It asks for equity value per share; there are no other claims.
- Apply the method
- Equity value = 500 + 20 - 150 = 370 million. Divide by 10 million shares.
- Interpretation
- Equity value is 37 per share. Revenue is not a direct input to this stated enterprise-to-equity bridge.
Independent teaching cases under the stated assumptions, rather than official questions or scoring keys.
Keep this checklist handy
What to do, at a glance
01Extract only what matters
- Write down the output, date and units.
- Locate the supporting case facts.
- Keep operating cash flows separate from financing adjustments.
02Check the valuation bridge
- FCFF 12m / (8% - 3%) = enterprise value 240m.
- Subtract debt 40m; add excess cash 5m: equity value 205m.
- Divide by 10m shares: 20.50 per share.
03Use the right practice format
- These 10 written prompts teach case-reading technique.
- They are not an official-format item set or mock.
- Use Level II practice for three-choice vignette questions.
Put one idea into practice.
Try it first. Check the reasoning. Pick your next task.
Quick answers
Does this replace the official curriculum?
No. This is selected independent practice, not a complete syllabus or official exam. Check your exam-year outline.
Can I sign up from this preview?
Yes. Sign up to create your account and practice in the app. Public exercises remain available without an account; answers from this preview are not transferred.
Sources
Selected 2026 teaching content. Official sources do not endorse or verify these examples.
MiloPrep is an independent study resource, not affiliated with or endorsed by CFA Institute. CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.
Notes
- * A repeatable item-set workflow: Level II has 22 item sets and 88 MCQs across two 132-minute sessions. The workflow is study advice. ↩ Return to content