200+ Free CAIA Level II Practice Questions
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Key Facts: CAIA Level II Exam
~70%
Passing Score Required
Combined MCQ + Essay
100
MCQ + 3 Essay Sets
70% MCQ, 30% Essay
56-64%
Historical Pass Rate
CAIA Association
$995-$1,395
Exam Fee
Plus $400 enrollment
200+
Study Hours
Recommended prep time
3 years
Time Limit
To complete after Level I
CAIA Level II exam consists of 100 multiple-choice questions (70%) and 3 essay sets (30%) administered in two 2-hour sessions at Pearson VUE centers. The pass rate historically ranges from 56-64%. Candidates need approximately 200 hours of study time. The 2026 curriculum emphasizes portfolio management applications, quantitative methods, and includes emerging topics like AI, climate risk, and DeFi.
About the CAIA Level II Exam
CAIA Level II is the second and final level of the Chartered Alternative Investment Analyst program. The exam focuses on the application of alternative investment knowledge in portfolio management contexts. It covers institutional asset owners, asset allocation strategies, risk and risk management, quantitative methods and models, accessing alternative investments through fund structures, due diligence and manager selection, volatility and complex strategies, and emerging topics including sustainable investing and digital assets. The exam format includes 100 multiple-choice questions (70% of score) and 3 sets of constructed-response (essay) questions (30% of score).
Questions
100 scored questions
Time Limit
4 hours (2 × 2-hour sessions)
Passing Score
~70%
Exam Fee
$995-$1,395 (CAIA Association / Pearson VUE)
CAIA Level II Exam Content Outline
Institutional Asset Owners
Pension funds, endowments, foundations, family offices, sovereign wealth funds, insurance companies, investment policy statements, liability-driven investing, spending rules, intergenerational wealth transfer
Asset Allocation
Alternative risk premia, factor investing, portfolio construction techniques, rebalancing strategies, liability-driven investing, goals-based investing, risk parity, optimal asset allocation including alternatives
Risk and Risk Management
Risk measures (VaR, CVaR), stress testing, scenario analysis, liquidity risk, operational risk, counterparty risk, model risk, Cash Flow at Risk, tail risk hedging, risk budgeting
Methods and Models
Statistical methods, regression analysis, time series modeling, machine learning applications, Monte Carlo simulation, valuation models, cash flow modeling, optimization techniques, backtesting
Accessing Alternative Investments
Fund structures, GP/LP economics, carried interest, catch-up provisions, waterfall structures, European vs American waterfalls, co-investment rights, secondary transactions, funds of funds
Due Diligence and Selecting Managers
Due diligence process, manager evaluation, track record analysis, reference checks, on-site visits, document review, operational due diligence, investment team assessment, fee analysis
Volatility and Complex Strategies
Volatility trading, options strategies, convertible arbitrage, risk parity implementation, tactical trading, global macro strategies, complex derivatives structures, cross-asset strategies
Universal Investment Considerations
CAIA Ethical Principles, sustainable investing, ESG integration, impact investing, regulatory considerations, tax implications of alternatives, reporting and transparency
Emerging Topics
Cryptocurrency and digital assets, blockchain applications, tokenization, DeFi protocols, AI and machine learning in investing, climate risk and alternative investments, evolving regulatory landscape
How to Pass the CAIA Level II Exam
What You Need to Know
- Passing score: ~70%
- Exam length: 100 questions
- Time limit: 4 hours (2 × 2-hour sessions)
- Exam fee: $995-$1,395
Keys to Passing
- Complete 500+ practice questions
- Score 80%+ consistently before scheduling
- Focus on highest-weighted sections
- Use our AI tutor for tough concepts
CAIA Level II Study Tips from Top Performers
Frequently Asked Questions
What is the CAIA Level II exam format?
CAIA Level II consists of 100 multiple-choice questions (Section 1, 2 hours) and 3 sets of constructed-response (essay) questions (Section 2, 2 hours). The multiple-choice section counts for 70% of the score and essays for 30%. The exam is administered at Pearson VUE testing centers during March and September exam windows.
What is the CAIA Level II pass rate?
The CAIA Level II pass rate historically ranges from 56-64%, slightly higher than Level I. The pass rate reflects the more experienced candidate pool (those who have already passed Level I) and the exam's focus on application rather than foundational knowledge. Pass rates vary by exam window based on candidate preparation and curriculum changes.
How difficult are the CAIA Level II essay questions?
The constructed-response (essay) questions require candidates to apply knowledge to real-world scenarios, explain reasoning, and perform calculations. They account for 30% of the exam score. Success requires practice writing concise, well-structured responses that directly address the question asked. Time management is critical - candidates have approximately 40 minutes per essay set.
How long should I study for CAIA Level II?
CAIA Association recommends 200+ hours of study time over 3-6 months. Level II requires more depth than Level I, with emphasis on application and portfolio management concepts. Many candidates report needing slightly more time than Level I due to the essay format and quantitative methods content. Create a study plan that allocates time for practicing essay responses.
What is the hardest section on CAIA Level II?
Many candidates find Methods and Models (12-15%) challenging due to the quantitative content including regression analysis, time series, and machine learning. Volatility and Complex Strategies can also be difficult for those without derivatives experience. The essay questions on Emerging Topics require staying current with industry developments. Institutional Asset Owners requires understanding diverse investor types and their constraints.
What are the key 2026 CAIA Level II curriculum changes?
Key 2026 changes include: (1) New AI and machine learning content in Methods and Models, (2) Expanded coverage of DeFi and tokenization in Emerging Topics, (3) Updated risk management content reflecting post-2020 market events, (4) Enhanced ESG and climate risk integration across multiple sections, and (5) New readings on cryptocurrency allocation in portfolios.