CFA Practice Question

There are 208 practice questions for this study session.

CFA Practice Question

In regression with financial data, the most likely result of heteroskedasticity is that the estimated standard errors will too ______ and the t-statistic will be too ______.

I. small, large
II. large, small
III. small, small
IV. large, large
Correct Answer: I

The standard errors will be too small, causing the t-statistics to be large (appearing statistically significant).

User Contributed Comments 2

User Comment
PhiWong Consistent with question 4.
nsmwaura Leading to Type 1 error(Rejecting null hypothesis while its true)
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