Kaplan University School of Professional and Continuing Education Kaplan University School of Professional and Continuing Education

CFA® Level II Question of the Day

CFA® Level II Question of the Day

Kaplan Schweser's CFA® Question of the Day begins in October 2016 and runs through Exam Day. Below you will find the answers for our Level II Question of the Day emails.

Would you like additional review, for FREE, delivered straight to your inbox each day? Join the mailing list today! Sign up now »


Filter by Topic: No tags found

Articles RSS Feed

Most Recent Articles


April 25

By Kaplan Schweser | Posted on April 25, 2017


Answer to Level II Question: A

Answer Explanation: Unconditional heteroskedasticity does not pose a serious problem for statistical inference because there is no correlation with an independent variable.

Choice "b" is incorrect.  The variance of the error term correlates with an independent variable in conditional heteroskedasticity.

Choice "c" is incorrect.  The variance of the error term is constant in homoskedasticity, not heteroskedasticity.

Read More


April 24

By Kaplan Schweser | Posted on April 24, 2017


Answer to Level II Question: B

Answer Explanation: Regression coefficients are closer to their true value under conditional heteroskedasticity than when serial correlation occurs.  Conditional heteroskedasticity still creates problems when making statistical inferences.

Choice "a" is incorrect.  Serial correlation of residuals is more, rather than less, serious than conditional heteroskedasticity.

Choice "c" is incorrect.  Conditional heteroskedasticity violates one of the…

Read More


April 23

By Kaplan Schweser | Posted on April 23, 2017


Answer to Level II Question: B

Answer Explanation: Unconditional heteroskedasticity in the error terms of a regression equation presents no problem in drawing statistical inferences from the regression model.  Conditional heteroskedasticity in the error terms of a regression equation produces deceptively high t-scores because of underestimated standard errors.

Choice "a" is incorrect.  Both violate the regression modeling assumptions.

Choice "c" is incorrect.  Conditional…

Read More


April 22

By Kaplan Schweser | Posted on April 22, 2017


Answer to Level II Question: A

Answer Explanation: Sometimes the dependent variable represents a qualitative state of nature that must be stated as a dummy variable and assigned a value of "1" or "0."  Linear regression is not suited to perform this kind of analysis.  Three other kinds of analyses, however, can be used to model qualitative dependent variables: probit, logit, and discriminant analysis.

Choice "b" is incorrect.  Redundant dummy variables decrease the specificity of…

Read More


April 21

By Kaplan Schweser | Posted on April 21, 2017


Answer to Level II Question: B

Answer Explanation: This is the best answer choice, because it is the standard deviation of the regression equation.  Standard deviation is a measure of dispersion or variability around a point of central tendency, or the expected value.  This is essentially true in regression analysis, expect the variability is measured by the error terms.

Choice "a" is incorrect.  This choice describes the mean standard error (MSE) or standard error of the mean,…

Read More


April 20

By Kaplan Schweser | Posted on April 20, 2017


Answer to Level II Question: C

Answer Explanation: Merely adding independent variables, whether they have any incremental explanatory power or not, will systematically increase the value of the R-squared, implying that the regression equation is improving.  Additional independent variables are likely to appear significant, although the addition of independent variables may create a multicollinearity problem of two or more independent variables explaining the same thing.  The…

Read More


April 19

By Kaplan Schweser | Posted on April 19, 2017


Answer to Level II Question: C

Answer Explanation: Linear regression requires a linear relationship between the dependent and independent variables.  The formulas used in the process calculate what line provides the best 'fit' for the data set.  If the relationship is not linear, the analyst will still get an equation; but it will not explain the data properly. 

Choice "a" is incorrect.  Robust standard errors are used to compensate for heterorskedasticity and serial correlation,…

Read More


April 18

By Kaplan Schweser | Posted on April 18, 2017


Answer to Level II Question: A

Answer Explanation: The error terms must be normally distributed to allow testing of the regression parameters because the statistical tests require this to produce meaningful results.  Accurate statistical testing requires that:

1. The expected error term is zero.

2. The variance of the error term is consistent across all observations.

3. The error terms are uncorrelated across all observations.

4. The error terms must be normally…

Read More


April 17

By Kaplan Schweser | Posted on April 17, 2017


Answer to Level II Question: B

Answer Explanation: The regression model assumes a linear relationship between dependent and independent variables.  Therefore, slope coefficient significance is much more important than intercept coefficient significance.  In fact, if the relationship is indeed linear, adjustment for an insignificant intercept term can occur.

Choice "a" is incorrect.  Significant slope coefficients are more important than significant intercept, because intercept…

Read More


Articles RSS Feed

Archived Articles


April 16

By Kaplan Schweser | Posted on April 16, 2017 | Read Article


April 15

By Kaplan Schweser | Posted on April 15, 2017 | Read Article


April 14

By Kaplan Schweser | Posted on April 14, 2017 | Read Article


April 13

By Kaplan Schweser | Posted on April 13, 2017 | Read Article


April 12

By Kaplan Schweser | Posted on April 12, 2017 | Read Article


April 11

By Kaplan Schweser | Posted on April 11, 2017 | Read Article


April 10

By Kaplan Schweser | Posted on April 10, 2017 | Read Article


April 9

By Kaplan Schweser | Posted on April 09, 2017 | Read Article


April 8

By Kaplan Schweser | Posted on April 08, 2017 | Read Article


April 7

By Kaplan Schweser | Posted on April 07, 2017 | Read Article


April 6

By Kaplan Schweser | Posted on April 06, 2017 | Read Article


April 5

By Kaplan Schweser | Posted on April 05, 2017 | Read Article


April 4

By Kaplan Schweser | Posted on April 04, 2017 | Read Article


April 3

By Kaplan Schweser | Posted on April 03, 2017 | Read Article


April 2

By Kaplan Schweser | Posted on April 02, 2017 | Read Article


April 1

By Kaplan Schweser | Posted on April 01, 2017 | Read Article


March 31

By Kaplan Schweser | Posted on March 31, 2017 | Read Article


March 30

By Kaplan Schweser | Posted on March 30, 2017 | Read Article


March 29

By Kaplan Schweser | Posted on March 29, 2017 | Read Article


March 28

By Kaplan Schweser | Posted on March 28, 2017 | Read Article


March 27

By Kaplan Schweser | Posted on March 27, 2017 | Read Article


March 26

By Kaplan Schweser | Posted on March 26, 2017 | Read Article


March 25

By Kaplan Schweser | Posted on March 25, 2017 | Read Article


March 24

By Kaplan Schweser | Posted on March 24, 2017 | Read Article


March 23

By Kaplan Schweser | Posted on March 23, 2017 | Read Article


March 22

By Kaplan Schweser | Posted on March 22, 2017 | Read Article


March 21

By Kaplan Schweser | Posted on March 21, 2017 | Read Article


March 20

By Kaplan Schweser | Posted on March 20, 2017 | Read Article


March 19

By Kaplan Schweser | Posted on March 19, 2017 | Read Article


March 18

By Kaplan Schweser | Posted on March 18, 2017 | Read Article


March 17

By Kaplan Schweser | Posted on March 17, 2017 | Read Article


March 16

By Kaplan Schweser | Posted on March 16, 2017 | Read Article


March 15

By Kaplan Schweser | Posted on March 15, 2017 | Read Article


March 14

By Kaplan Schweser | Posted on March 14, 2017 | Read Article


March 13

By Kaplan Schweser | Posted on March 13, 2017 | Read Article


March 12

By Kaplan Schweser | Posted on March 12, 2017 | Read Article


March 11

By Kaplan Schweser | Posted on March 11, 2017 | Read Article


March 10

By Kaplan Schweser | Posted on March 10, 2017 | Read Article


March 9

By Kaplan Schweser | Posted on March 09, 2017 | Read Article


March 8

By Kaplan Schweser | Posted on March 08, 2017 | Read Article


March 7

By Kaplan Schweser | Posted on March 07, 2017 | Read Article


March 6

By Kaplan Schweser | Posted on March 06, 2017 | Read Article


March 5

By Kaplan Schweser | Posted on March 05, 2017 | Read Article


March 4

By Kaplan Schweser | Posted on March 04, 2017 | Read Article


March 3

By Kaplan Schweser | Posted on March 03, 2017 | Read Article


March 2

By Kaplan Schweser | Posted on March 02, 2017 | Read Article


March 1

By Kaplan Schweser | Posted on March 01, 2017 | Read Article


February 28

By Kaplan Schweser | Posted on February 28, 2017 | Read Article


February 27

By Kaplan Schweser | Posted on February 27, 2017 | Read Article


February 26

By Kaplan Schweser | Posted on February 26, 2017 | Read Article


February 25

By Kaplan Schweser | Posted on February 25, 2017 | Read Article


February 24

By Kaplan Schweser | Posted on February 24, 2017 | Read Article


February 23

By Kaplan Schweser | Posted on February 23, 2017 | Read Article


February 22

By Kaplan Schweser | Posted on February 22, 2017 | Read Article


February 21

By Kaplan Schweser | Posted on February 21, 2017 | Read Article


February 20

By Kaplan Schweser | Posted on February 20, 2017 | Read Article


February 19

By Kaplan Schweser | Posted on February 19, 2017 | Read Article


February 18

By Kaplan Schweser | Posted on February 18, 2017 | Read Article


February 17

By Kaplan Schweser | Posted on February 17, 2017 | Read Article


February 16

By Kaplan Schweser | Posted on February 16, 2017 | Read Article


February 15

By Kaplan Schweser | Posted on February 15, 2017 | Read Article


February 14

By Kaplan Schweser | Posted on February 14, 2017 | Read Article


February 13

By Kaplan Schweser | Posted on February 13, 2017 | Read Article


February 12

By Kaplan Schweser | Posted on February 12, 2017 | Read Article


February 11

By Kaplan Schweser | Posted on February 11, 2017 | Read Article


February 10

By Kaplan Schweser | Posted on February 10, 2017 | Read Article


February 9

By Kaplan Schweser | Posted on February 09, 2017 | Read Article


February 8

By Kaplan Schweser | Posted on February 08, 2017 | Read Article


February 7

By Kaplan Schweser | Posted on February 07, 2017 | Read Article


February 6

By Kaplan Schweser | Posted on February 06, 2017 | Read Article


February 5

By Kaplan Schweser | Posted on February 05, 2017 | Read Article


February 4

By Kaplan Schweser | Posted on February 04, 2017 | Read Article


February 3

By Kaplan Schweser | Posted on February 03, 2017 | Read Article


February 2

By Kaplan Schweser | Posted on February 02, 2017 | Read Article


February 1

By Kaplan Schweser | Posted on February 01, 2017 | Read Article


January 31

By Kaplan Schweser | Posted on January 31, 2017 | Read Article


January 30

By Kaplan Schweser | Posted on January 30, 2017 | Read Article


January 29

By Kaplan Schweser | Posted on January 29, 2017 | Read Article


January 28

By Kaplan Schweser | Posted on January 28, 2017 | Read Article


January 27

By Kaplan Schweser | Posted on January 27, 2017 | Read Article


January 26

By Kaplan Schweser | Posted on January 26, 2017 | Read Article


January 25

By Kaplan Schweser | Posted on January 25, 2017 | Read Article


January 24

By Kaplan Schweser | Posted on January 24, 2017 | Read Article


January 23

By Kaplan Schweser | Posted on January 23, 2017 | Read Article


January 22

By Kaplan Schweser | Posted on January 22, 2017 | Read Article


January 21

By Kaplan Schweser | Posted on January 21, 2017 | Read Article


January 20

By Kaplan Schweser | Posted on January 20, 2017 | Read Article


January 19

By Kaplan Schweser | Posted on January 19, 2017 | Read Article


January 18

By Kaplan Schweser | Posted on January 18, 2017 | Read Article


January 17

By Kaplan Schweser | Posted on January 17, 2017 | Read Article


January 16

By Kaplan Schweser | Posted on January 16, 2017 | Read Article


January 15

By Kaplan Schweser | Posted on January 15, 2017 | Read Article


January 14

By Kaplan Schweser | Posted on January 14, 2017 | Read Article


January 13

By Kaplan Schweser | Posted on January 13, 2017 | Read Article


January 12

By Kaplan Schweser | Posted on January 12, 2017 | Read Article


January 11

By Kaplan Schweser | Posted on January 11, 2017 | Read Article


January 10

By Kaplan Schweser | Posted on January 10, 2017 | Read Article


January 9

By Kaplan Schweser | Posted on January 09, 2017 | Read Article


January 8

By Kaplan Schweser | Posted on January 08, 2017 | Read Article


January 7

By Kaplan Schweser | Posted on January 07, 2017 | Read Article