- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 5. Time-Series Analysis
- Subject 4. Unit Roots for Time-Series Analysis
CFA Practice Question
First differencing in time series analysis involves:
A. Taking the logarithm of the data.
B. Subtracting the previous observation from the current observation.
C. Dividing the data by a constant.
D. Adding a constant term to each data point.
Correct Answer: B
The objective of using first differencing in time series modeling is to remove trends or seasonality.
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