Free CFA Quantitative Methods Practice Questions & Answers
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Question 511
A feature with a highly skewed distribution may benefit from:
Select an option first.
Correct answer: A — Log transformation
Explanation: Why A is right: Log transforms reduce skew and stabilize variance. Why others are wrong: B/C/D: Not appropriate.
Question 512
A feature with many zero values is considered:
Select an option first.
Correct answer: A — Sparse
Explanation: Why A is right: Sparse features contain mostly zeros. Why others are wrong: B: Dense = mostly non‑zero. C/D: Not implied.
Question 513
A feature with extremely high variance may:
Select an option first.
Correct answer: A — Dominate distance‑based models
Explanation: Why A is right: High‑variance features can overshadow others in models like KNN. Why others are wrong: B: Not always removed. C/D: Not implied.
Question 514
A feature that is strongly correlated with many other features may:
Select an option first.
Correct answer: A — Indicate multicollinearity
Explanation: Why A is right: Strong correlations across features signal redundancy. Why others are wrong: B/C/D: Not implied.
Question 515
A feature with many identical values and few unique values is:
Select an option first.
Correct answer: A — Low‑cardinality
Explanation: Why A is right: Few unique values = low cardinality. Why others are wrong: B: Opposite. C: Sparsity refers to zeros. D: Could be categorical.
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A feature with many unique categories (e.g., thousands) is:
Select an option first.
Correct answer: A — High‑cardinality
Explanation: Why A is right: Many unique values = high cardinality. Why others are wrong: B: Opposite. C/D: Not implied.
Question 517
A feature that is highly skewed and contains outliers may benefit from:
Select an option first.
Correct answer: A — Log or square‑root transformation
Explanation: Why A is right: Transformations reduce skew and stabilize variance. Why others are wrong: B/C/D: Not appropriate.
Question 518
A feature that is highly correlated with time (e.g., trending upward) may require:
Select an option first.
Correct answer: A — Detrending
Explanation: Why A is right: Detrending removes time‑based drift. Why others are wrong: B/C/D: Not relevant.
Question 519
A feature that is measured on a very different scale from others may require:
Select an option first.
Correct answer: A — Scaling
Explanation: Why A is right: Scaling ensures features contribute proportionally. Why others are wrong: B/C/D: Not related.
Question 520
A feature that shows a strong nonlinear relationship with the target may benefit from:
Select an option first.
Correct answer: A — Polynomial transformation
Explanation: Why A is right: Polynomial terms help capture nonlinear patterns. Why others are wrong: B: Used for categorical variables. C: Used for text. D: Not relevant.
Question 521
A feature with many identical values and only a few distinct values is:
Select an option first.
Correct answer: A — Low‑cardinality
Explanation: Why A is right: Few unique values = low cardinality. Why others are wrong: B: Opposite. C/D: Not implied.
Question 522
A feature that is highly correlated with the target but also highly correlated with time may require:
Select an option first.
Correct answer: A — Detrending
Explanation: Why A is right: Detrending removes time‑based drift that can mislead models. Why others are wrong: B/C/D: Not appropriate.
Question 523
A feature that contains extreme outliers may be handled by:
Select an option first.
Correct answer: A — Winsorization
Explanation: Why A is right: Winsorization caps extreme values to reduce their influence. Why others are wrong: B/C/D: Not related.
Question 524
A feature that is strongly correlated with the target but also perfectly correlated with another feature is:
Select an option first.
Correct answer: A — Redundant
Explanation: Why A is right: Perfect correlation means one feature adds no new information. Why others are wrong: B: Not always harmful, but redundant. C/D: Correlation doesn’t imply type.
Question 525
A feature that varies widely in scale compared to others may distort:
Select an option first.
Correct answer: A — Distance‑based models
Explanation: Why A is right: Models like KNN and SVM rely on distance; unscaled features dominate. Why others are wrong: B/C/D: Not affected by scale.
Question 526
A feature that is highly skewed and contains many zeros may benefit from:
Select an option first.
Correct answer: A — Log(1 + x) transformation
Explanation: Why A is right: Log(1 + x) handles zeros and reduces skew. Why others are wrong: B/C/D: Not appropriate.
Question 527
A feature that is strongly correlated with the target but also strongly correlated with noise variables may:
Select an option first.
Correct answer: A — Mislead the model
Explanation: Why A is right: Correlation with noise can create false patterns. Why others are wrong: B: It may hurt accuracy. C: Not always removed. D: Not implied.
Question 528
A feature that is extremely sparse (mostly zeros) may be:
Select an option first.
Correct answer: A — Useful if it captures rare but important events
Explanation: Why A is right: Sparse features can be valuable if the rare events they represent matter. Why others are wrong: B/C: Not always true. D: Sparsity doesn’t imply type.
Question 529
K‑means clustering requires the user to specify:
Select an option first.
Correct answer: A — The number of clusters
Explanation: Why A is right: K‑means requires choosing k, the number of clusters. Why others are wrong: B: Distance metric is usually fixed (Euclidean). C/D: Used in hierarchical clustering.
Question 530
A key limitation of K‑means is that it:
Select an option first.
Correct answer: A — Assumes spherical clusters
Explanation: Why A is right: K‑means assumes clusters are roughly spherical and similar in size. Why others are wrong: B: K‑means requires numeric data. C: It scales well. D: It does require initialization.
Question 531
The K‑means algorithm updates clusters by:
Select an option first.
Correct answer: A — Reassigning points to the nearest centroid
Explanation: Why A is right: K‑means iteratively assigns points to the closest centroid. Why others are wrong: B/C/D: Not part of the algorithm.
Question 532
A centroid in K‑means represents:
Select an option first.
Correct answer: A — The mean of all points in a cluster
Explanation: Why A is right: K‑means uses the mean to define cluster centers. Why others are wrong: B/C/D: Not used in K‑means.
Question 533
Hierarchical clustering differs from K‑means because it:
Select an option first.
Correct answer: A — Does not require specifying the number of clusters upfront
Explanation: Why A is right: Hierarchical clustering builds a full tree first; clusters can be chosen later. Why others are wrong: B: No centroids used. C: Can use various distance metrics. D: Dendrograms visualize results.
Question 534
Agglomerative clustering starts with:
Select an option first.
Correct answer: B — Each observation as its own cluster
Explanation: Why B is right: Agglomerative = bottom‑up, starting with individual points. Why others are wrong: A: That’s divisive clustering. C: K‑means uses random centroids. D: Not required.
Question 535
Divisive clustering starts with:
Select an option first.
Correct answer: B — One large cluster
Explanation: Why B is right: Divisive = top‑down, starting with one cluster and splitting. Why others are wrong: A: Agglomerative. C/D: Not required.
Question 536
A dendrogram is used to:
Select an option first.
Correct answer: A — Visualize hierarchical clustering
Explanation: Why A is right: Dendrograms show how clusters merge or split. Why others are wrong: B/C/D: Not dendrogram uses.
Question 537
In a dendrogram, the height at which two branches merge represents:
Select an option first.
Correct answer: A — The distance between clusters
Explanation: Why A is right: Height corresponds to dissimilarity. Why others are wrong: B/C/D: Not represented by height.
Question 538
A shorter branch height in a dendrogram indicates:
Select an option first.
Correct answer: A — More similar clusters
Explanation: Why A is right: Short height = low distance = high similarity. Why others are wrong: B: Opposite. C/D: Not related.
Question 539
A distance matrix in clustering contains:
Select an option first.
Correct answer: A — Pairwise distances between observations
Explanation: Why A is right: Clustering relies on distances between points. Why others are wrong: B/C/D: Not distance matrices.
Question 540
Euclidean distance is most appropriate when:
Select an option first.
Correct answer: A — Features are numeric and scaled
Explanation: Why A is right: Euclidean distance assumes numeric, comparable scales. Why others are wrong: B: Use Hamming or other metrics. C: Requires vectorization. D: Not meaningful.
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