- CFA Exams
- CFA Level I Exam
- Study Session 2. Quantitative Methods (1)
- Reading 5. Multiple Regression
- Subject 11. Serial Correlation

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**CFA Practice Question**

There are two remedial steps to correct for serial correlation. Select them from the list.

II. adjust the standard errors of the estimated parameters.

III. adjust the r-squared.

IV. adjust the estimated parameters.

I. adjust the t-statistics of the estimated parameters.

II. adjust the standard errors of the estimated parameters.

III. adjust the r-squared.

IV. adjust the estimated parameters.

A. I and II

B. II and III

C. II and IV

**Explanation:**II is also known as computing robust standard errors. Modifying the regression equation to eliminate serial correlation (IV) is an alternative but not recommended by the textbook.

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**User Contributed Comments**
1

User |
Comment |
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Allstats |
If it is not recommended by the textbook, how are we supposed to get it right? |