CFA Practice Question

There are 434 practice questions for this study session.

CFA Practice Question

Which of the following statements least accurately describes the interpretation of a F-statistic?
A. The F-statistic will increase as the sample size increases.
B. The F-statistic may be found as the ratio of the variance of the regression to the variance that is accounted for by the error terms.
C. The F-statistic may be found using the components of an ANOVA.
Explanation: The F-statistic is independent of the sample size. It's simply a ratio of two variances.

User Contributed Comments 11

User Comment
ThePessimist C is wrong too, because you need to take the MSR and MSE, not the full variance.
PhiWong Agree. I picked C as well. When N increases, the MSE should be reduced accordingly (DF=n-k-1) and accordingly make F-statistic increase.
volkovv PhiWong, I used the same logic and picked C as well. But now looking more at it, I think B is correct, meaning that statement B is false. If you look at an F-Table, you see that for an F-statistic, F(k,n-k-1), the larger the n, the lower the F-value.
creativemny Ok volkovv but the question doesn't ask about F critical it asks about the F statistic ((SSR/k)/(SSE/n-k-1)). All else equal the F Statistic would increase as MSE decreased.
Kostanm totally agree with creativemny
tom1980 C is right simply due to the possibility that K=N-K-1 therefore 2k=N-1, for example,if k=8 and n=17. and B is wrogn becasue SSE may increase more than the increase in N as a result of a possible decrease in F statistic. Hopefully that should explain
mazen1967 variance
shiva5555 uh, What is ANOVA?
daverco Analysis of variance
chriswwu Yes, I still think C is the right answer.
sumeetb Error is deviation and squared error is variance..So F stat being ratio of squared errors is a ratio of variances
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