CFA Practice Question

There are 208 practice questions for this study session.

CFA Practice Question

What is the approach to check for seasonality of a time series?

I. Graph the data and check for regular seasonal patterns.
II. Test whether the residuals have significant serial correlation by using the Durbin-Watson statistic.
III. Examine the data to see whether the seasonal autocorrelations of the residuals from an AR model are significant and whether the autocorrelations before and after the seasonal autocorrelations are significant.
Correct Answer: I and III

To correct for seasonality, add seasonal lags to your AR model. II is used to decide which AR model to use.

User Contributed Comments 2

User Comment
MasterD The Durbin-Watson statistic is used to test Serial Correlation (CFA L2, 2008 Vol 1 Pg 301)
akirchner1 Durbin -Watson can't be used for time series when the independent variable includes past values of the dependent variable.
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