CFA Practice Question

There are 155 practice questions for this study session.

CFA Practice Question

If a model performs well on the training dataset but not on the CV dataset, it is likely to have
A. high variance error and high bias error
B. high variance error and low bias error
C. low variance error and high bias error
Explanation: The difference in error is variance. Variance is the variability of model prediction for a given data point or a value which tells us spread of our data. Model with high variance pays a lot of attention to training data and does not generalize on the data which it hasnít seen before. As a result, such models perform very well on training data but has high error rates on test data. The model likely memorizes the data (overfitting) and does not generalize to new data well.

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