CFA Practice Question

There are 208 practice questions for this study session.

CFA Practice Question

Which of the following statements is incorrect?

A. Regression relationships are volatile.
B. As agents become aware of known regression relationships, the predictive power of the relationships gets stronger.
C. The classical assumptions of linear regression may limit the validity of the relationship.
Correct Answer: B

As agents become aware of known regression relationships, the predictive power of the relationships gets stronger. This is not true. As the public becomes aware of the relationship, they may change their behavior, which makes the previous relationship obsolete. All other statements are correct.

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