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Free Questions › CFA › Quantitative Methods
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.
100% free · No login to startQuestion 1171
A sampling plan refers to:
Select an option first.
Correct answer: B — The rules used to select a sample
Explanation: ✔ Why correct: A sampling plan defines how the sample will be selected.
Question 1172
Non-probability sampling methods share the drawback that they:
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Correct answer: B — May produce non-representative samples
Explanation: ✔ Why correct: Because selection is not based on known probabilities, non-probability samples can easily be biased.
Question 1173
Convenience sampling is often used because it:
Select an option first.
Correct answer: B — Is fast and inexpensive
Explanation: ✔ Why correct: Convenience sampling is attractive when time and cost are constraints.
Question 1174
Judgmental sampling may be preferred when:
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Correct answer: A — Expert knowledge improves sample relevance
Explanation: ✔ Why correct: Judgmental sampling leverages expert insight to target the most informative observations.
Question 1175
A hypothesis in statistics is best described as:
Select an option first.
Correct answer: B — A statement about a population parameter
Explanation: ✔ Why correct: Hypotheses are always stated about population parameters (e.g., μ, p).
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Question 1176
The null hypothesis (H₀) is best described as:
Select an option first.
Correct answer: B — The statement assumed true unless evidence suggests otherwise
Explanation: ✔ Why correct: H₀ is assumed true until evidence indicates it should be rejected.
Question 1177
The alternative hypothesis (Hₐ) is:
Select an option first.
Correct answer: B — The hypothesis supported if evidence contradicts the null
Explanation: ✔ Why correct: If evidence contradicts H₀, we accept Hₐ as the better explanation.
Question 1178
A test statistic is:
Select an option first.
Correct answer: B — A value computed from sample data used to decide whether to reject H₀
Explanation: ✔ Why correct: The test statistic is the computed value used in the decision rule.
Question 1179
A Type I error occurs when:
Select an option first.
Correct answer: C — We reject a true null hypothesis
Explanation: ✔ Why correct: Type I error = false positive = rejecting H₀ when it is true.
Question 1180
A Type II error occurs when:
Select an option first.
Correct answer: B — We fail to reject a false null hypothesis
Explanation: ✔ Why correct: Type II error = false negative = failing to reject H₀ when it is false.
Question 1181
The significance level (α) of a test represents:
Select an option first.
Correct answer: B — The probability of rejecting a true null hypothesis
Explanation: ✔ Why correct: α = P(Type I error) = rejecting a true H₀.
Question 1182
The power of a test is defined as:
Select an option first.
Correct answer: B — The probability of rejecting a false null hypothesis
Explanation: ✔ Why correct: Power = P(reject H₀ | H₀ is false).
Question 1183
A parametric test requires:
Select an option first.
Correct answer: B — Assumptions about population parameters and distribution
Explanation: ✔ Why correct: Parametric tests assume specific distributional forms (e.g., normality).
Question 1184
A nonparametric test is most appropriate when:
Select an option first.
Correct answer: B — Data violate distributional assumptions
Explanation: ✔ Why correct: Nonparametric tests are used when assumptions (e.g., normality) are violated.
Question 1185
Nonparametric tests are especially useful when:
Select an option first.
Correct answer: A — Data contain outliers
Explanation: ✔ Why correct: Outliers can distort parametric tests; nonparametric tests are more robust.
Question 1186
Paired comparisons tests are used when:
Select an option first.
Correct answer: B — Two samples are dependent
Explanation: ✔ Why correct: Paired tests analyze differences when observations are linked (e.g., before/after).
Question 1187
In a paired comparisons test, the hypothesis is typically about:
Select an option first.
Correct answer: B — The mean of the differences between paired observations
Explanation: ✔ Why correct: Paired tests analyze the mean of the differences between paired values.
Question 1188
The null and alternative hypotheses must be:
Select an option first.
Correct answer: B — Mutually exclusive and collectively exhaustive
Explanation: ✔ Why correct: H₀ and Hₐ must cover all possibilities without overlap.
Question 1189
The Pearson correlation coefficient is considered a parametric test because it:
Select an option first.
Correct answer: B — Assumes a linear relationship and specific distributional properties
Explanation: ✔ Why correct: Pearson correlation assumes linearity and typically requires interval data and approximate normality — all hallmarks of parametric tests.
Question 1190
The Spearman rank correlation coefficient is best described as:
Select an option first.
Correct answer: B — A nonparametric test based on ranked data
Explanation: ✔ Why correct: Spearman correlation is a nonparametric measure that uses the ranks of the data rather than the raw values.
Question 1191
Spearman rank correlation is most appropriate when:
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Correct answer: A — The relationship between variables is nonlinear but monotonic
Explanation: ✔ Why correct: Spearman correlation captures monotonic relationships, even if they are not linear.
Question 1192
A key difference between Pearson and Spearman correlation is that:
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Correct answer: B — Spearman uses ranks, while Pearson uses raw data
Explanation: ✔ Why correct: Spearman correlation converts data to ranks; Pearson uses the actual numerical values.
Question 1193
Spearman rank correlation is preferred over Pearson correlation when:
Select an option first.
Correct answer: B — The relationship is monotonic but not linear
Explanation: ✔ Why correct: Spearman is ideal for monotonic relationships that are not strictly linear.
Question 1194
The coefficient of determination (R²) measures:
Select an option first.
Correct answer: B — The percentage of variation in the dependent variable explained by the independent variable
Explanation: ✔ Why correct: R² = SSR / SST, which tells us what proportion of total variation in Y is explained by X.
Question 1195
In simple linear regression, the dependent variable is also called the:
Select an option first.
Correct answer: C — Explained or endogenous variable
Explanation: ✔ Why correct: The dependent variable is the one being explained, also called the explained or endogenous variable.
Question 1196
The regression line in ordinary least squares (OLS) is the line that:
Select an option first.
Correct answer: B — Minimizes the sum of squared errors
Explanation: ✔ Why correct: OLS chooses the line that minimizes SSE — the sum of squared residuals.
Question 1197
The slope coefficient in a simple linear regression represents:
Select an option first.
Correct answer: B — The change in Y for a one-unit change in X
Explanation: ✔ Why correct: The slope tells us how much Y changes when X increases by one unit.
Question 1198
Homoskedasticity means that:
Select an option first.
Correct answer: A — Errors have constant variance
Explanation: ✔ Why correct: Homoskedasticity = constant variance of residuals across all levels of X.
Question 1199
Heteroskedasticity is problematic because it:
Select an option first.
Correct answer: C — Makes OLS standard errors unreliable
Explanation: ✔ Why correct: Heteroskedasticity does not bias coefficients but makes standard errors incorrect, affecting hypothesis tests.
Question 1200
Outliers in regression are problematic because they:
Select an option first.
Correct answer: B — Can heavily influence the slope and intercept
Explanation: ✔ Why correct: OLS is sensitive to extreme values, which can distort parameter estimates.
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