- CFA Exams
- CFA Level I Exam
- Study Session 2. Quantitative Methods (1)
- Reading 5. Multiple Regression
- Subject 11. Serial Correlation
CFA Practice Question
The presence of serially correlated errors can indicate that
II. an incorrect functional form has been estimated.
III. an important explanatory variable has been omitted.
I. something systematic has been omitted from the model.
II. an incorrect functional form has been estimated.
III. an important explanatory variable has been omitted.
Correct Answer: I, II and III
The error term represents a summary of a large number of random factors that enter the relationship under study but are not measurable or have been omitted from the model for some reason.
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