- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 2. Evaluating Regression Model Fit and Interpreting Model Results
- Subject 2. Joint Hypotheses Testing
CFA Practice Question
Which of the following statements is most accurate?
A. The best-fitting model is the regression model with the highest adjusted R2 and low BIC and AIC.
B. The best-fitting model is the regression model with the lowest adjusted R2 and high BIC and AIC.
C. The best-fitting model is the regression model with both high adjusted R2 and high BIC and AIC.
Correct Answer: A
A regression model with a high adjusted R2 and a low AIC and BIC will generally be the best fit.
B and C are incorrect. The best-fitting regression model generally has a high adjusted R2 and a low AIC and BIC.
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