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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 1201
The total sum of squares (SST) represents:
Select an option first.
Correct answer: C — Total variation in Y around its mean
Explanation: ✔ Why correct: SST = Σ(Yᵢ − Ȳ)² measures total variation in the dependent variable.
Question 1202
The relationship SST = SSR + SSE means:
Select an option first.
Correct answer: A — Total variation equals explained plus unexplained variation
Explanation: ✔ Why correct: This is the fundamental decomposition of variance in regression.
Question 1203
The mean squared error (MSE) in simple regression is:
Select an option first.
Correct answer: B — SSE divided by n − 2
Explanation: ✔ Why correct: In simple regression, degrees of freedom = n − 2, so MSE = SSE / (n − 2).
Question 1204
The mean square regression (MSR) in simple regression equals:
Select an option first.
Correct answer: B — SSR divided by 1
Explanation: ✔ Why correct: With one independent variable, MSR = SSR / 1 = SSR.
Question 1205
An indicator (dummy) variable in regression is:
Select an option first.
Correct answer: B — A variable coded 1 when a condition holds and 0 otherwise
Explanation: ✔ Why correct: Dummy variables encode categorical conditions as 0/1.
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Question 1206
The sum of squares regression (SSR) measures:
Select an option first.
Correct answer: A — Variation in Y explained by X
Explanation: ✔ Why correct: SSR = Σ(Ŷᵢ − Ȳ)² measures explained variation.
Question 1207
The sum of squared errors (SSE) measures:
Select an option first.
Correct answer: B — Unexplained variation
Explanation: ✔ Why correct: SSE = Σ(Yᵢ − Ŷᵢ)² measures residual (unexplained) variation.
Question 1208
Fintech refers to:
Select an option first.
Correct answer: B — Technology-driven innovation in financial services
Explanation: ✔ Why correct: Fintech specifically refers to technological innovation in the design and delivery of financial services and products.
Question 1209
Big Data is characterized by the “3 Vs,” which include:
Select an option first.
Correct answer: B — Volume, velocity, and variety
Explanation: ✔ Why correct: The classic Big Data definition includes volume, velocity, and variety.
Question 1210
Alternative data refers to:
Select an option first.
Correct answer: C — Non-traditional data sources such as social media and sensor networks
Explanation: ✔ Why correct: Alternative data includes non-traditional sources like social media, satellite images, sensors, and company exhaust.
Question 1211
Machine learning differs from traditional statistical methods because ML:
Select an option first.
Correct answer: B — Learns patterns from data without explicit programming
Explanation: ✔ Why correct: ML algorithms “learn” patterns from data and generalize without explicit human-written rules.
Question 1212
Unsupervised learning is most appropriate when:
Select an option first.
Correct answer: C — The goal is to discover structure or groupings in unlabeled data
Explanation: ✔ Why correct: Unsupervised learning identifies patterns, clusters, or structure in unlabeled data.
Question 1213
Deep learning differs from traditional ML because it:
Select an option first.
Correct answer: A — Uses neural networks with multiple hidden layers to learn complex patterns
Explanation: ✔ Why correct: Deep learning uses multi-layer neural networks to capture complex, nonlinear relationships.
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