### CFA Practice Question

There are 208 practice questions for this study session.

### CFA Practice Question

Which of the following statement(s) with respect to regression analysis are true?

I. Once a relationship is established between two variables, its exploitation will erode the findings of the regression.
II. If the relationship between two variables changes, only the regression coefficient in the equation will need to be changed.
III. Sometimes when one of the linear regression assumptions is not met, the regression results will not necessarily be deemed as invalid.
IV. A regression analysis may only be used for linear relationships.
A. I and III
B. III and IV
C. I, III and IV
Explanation: II is false because as the relationship between two variables changes, an entire new regression equation will need to be constructed.

IV is false because some non-linear relationships may be converted into a linear relationship by means of a mathematical transformation. So while a regression analysis assumes a linear relationship, it is possible to use regressions to analyze a non-linear relationship.