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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 1111

Spurious correlation can arise when:

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Question 1112

Dividing two unrelated variables by a common variable may:

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Question 1113

Correlation of 1 means:

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Question 1114

Correlation of −1 means:

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Question 1115

A correlation of 0.85 between two sectors suggests:

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Question 1116

A correlation of −0.70 suggests:

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Question 1117

A scatter plot showing points tightly clustered around a downward-sloping line indicates:

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Question 1118

A scatter plot showing no visible pattern indicates:

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Question 1119

Investment strategies based solely on high correlations may fail because:

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Question 1120

Variance of a random variable is best described as:

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Question 1121

Standard deviation is defined as:

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Question 1122

Bayes’ formula is primarily used to:

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Question 1123

In a probability tree, conditional probabilities are used to:

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Question 1124

If the variance of returns is expressed in percent squared, the standard deviation of returns will be expressed in:

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Question 1125

Mean–variance analysis holds exactly when:

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Question 1126

Mean–variance analysis treats risk as:

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Question 1127

Shortfall risk refers to:

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Question 1128

Roy’s safety-first criterion selects the portfolio that:

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Question 1129

Value at Risk (VaR) is best described as:

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Question 1130

A lognormal distribution is appropriate for modeling asset prices because:

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Question 1131

A random variable is lognormally distributed if:

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Question 1132

A key property of the lognormal distribution is that it:

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Question 1133

The assumption that returns are independently and identically distributed (i.i.d.) implies:

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Question 1134

Volatility in finance typically refers to:

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Question 1135

Volatility is usually expressed as:

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Question 1136

Bootstrap resampling treats the observed sample as:

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Question 1137

Bootstrap resampling differs from Monte Carlo simulation because bootstrap:

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Question 1138

Monte Carlo simulation requires the analyst to:

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Question 1139

Monte Carlo simulation is best described as:

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Question 1140

Resampling methods are used when:

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Free CFA Quantitative Methods Practice Questions & Answers

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