CFA Practice Question

There are 155 practice questions for this study session.

CFA Practice Question

In developing a simulation model, you should be concerned if you find that two variables:

I. have a strong, positive correlation.
II. have zero correlation.
III. have a strong, negative correlation.
A. I only
B. I and III
C. I, II and III
Explanation: A strong correlation can be either a positive or a negative correlation.

User Contributed Comments 1

User Comment
chriswwu I got the right answer but I am confused.
In a two factor simulation, I will simulate X, Y by taking their correlation (one of the inputs into the model) into account. What is the problem? Why would I be concern?
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