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Free CFA Quantitative Methods Practice Questions & Answers

1,200 exam-style Quantitative Methods questions. Pick your answer, hit Check answer, and see the worked solution — free to start, no signup.

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Question 1

A dummy variable is typically used to represent:

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Question 2

If residuals show a clear pattern over time, this suggests:

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Question 3

A common remedy for heteroskedasticity is to:

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Question 4

A residual plot that shows a funnel shape (variance increasing with fitted values) suggests:

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Question 5

If a model has a very high (R^2) but nonsensical coefficients, this may indicate:

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Question 6

When comparing two models with the same dependent variable, a common approach is to:

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Question 7

A p-value for a coefficient represents:

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Question 8

Adjusted (R^2) is used instead of (R^2) because:

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Question 9

A key limitation of K means is that it:

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Question 10

A centroid in K means represents:

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Question 11

What is the main purpose of multiple linear regression in an investment context?

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Question 12

In a multiple regression model, the dependent variable is:

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Question 13

The intercept in a multiple regression model represents:

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Question 14

A “partial regression coefficient” refers to:

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Question 15

Which of the following is a typical use of multiple regression in finance?

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Question 16

In multiple regression, the error term captures:

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Question 17

Which of the following is a key decision when specifying a multiple regression model?

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Question 18

If the dependent variable is a continuous return, a common model type is:

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Question 19

If the dependent variable is a 0/1 indicator (e.g., default vs no default), a more appropriate model is:

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Question 20

In multiple regression, adding a relevant independent variable typically:

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Question 21

The number of observations in a regression should be:

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Question 22

A regression model is called “linear” because it is linear in:

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Question 23

In multiple regression, “holding other variables constant” means:

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Question 24

A common goal of multiple regression in portfolio analysis is to:

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Question 25

The error term in a regression model is assumed to have:

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Question 26

In a regression context, “prediction” refers to:

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Question 27

A regression model with one dependent variable and three independent variables is called:

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Question 28

In multiple regression, the term “residual” refers to:

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Question 29

The coefficient of determination ((R^2)) measures:

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Question 30

A higher (R^2) generally indicates:

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Free CFA Quantitative Methods Practice Questions & Answers

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Before you go, can we ask you one thing?

Thank you