Level II Quantitative Methods

Access to all Level II quantitative methods articles until the next Level II exam date

p vs. α

Posted by Bill Campbell III, CFA on December 9, 2015
Posted in: Level I Quantitative Methods, Level II Quantitative Methods.

Candidates galore have problems (nightmares, really . . . but let’s not rub it in) with p-values.  I’m here to tell you that understanding p-values is easy.  Seriously: easy. A p-value is nothing more nor less than a level of significance, just like α.  The best description I’ve heard is that α is the chosen […]

This article is for members only.  You can become a member now by purchasing a

CFA® Level I Quantitative Methods Membership, CFA® Level I Membership, CFA® Level II Membership

This will give you access to this and all other articles at that membership level.

R² vs. Adjusted R²

Posted by Bill Campbell III, CFA on July 2, 2015
Posted in: Level II Quantitative Methods.

There’s a lot more to R2 and adjusted R2 than appears in the CFA curriculum.  I’ll discuss what you need to know for the exam; the rest you can get from a statistics textbook if you’re interested. R2 Whether for a simple (i.e., single) regression or a multiple regression, R2 is the percentage of the […]

This article is for members only.  You can become a member now by purchasing a

CFA® Level II Membership

This will give you access to this and all other articles at that membership level.

Degrees of Freedom

Posted by Bill Campbell III, CFA on October 24, 2014
Posted in: Level I Quantitative Methods, Level II Quantitative Methods.

Suppose that, for reasons known only to yourself and your therapist, you need to know the average height of all giraffes in the world.  Desperately.  You face a number of obstacles, not the least of which is that there are estimated to be about 80,000 giraffes in the world, and giraffes are notoriously difficult to […]

This article is for members only.  You can become a member now by purchasing a

CFA® Level I Quantitative Methods Membership, CFA® Level I Membership, CFA® Level II Membership

This will give you access to this and all other articles at that membership level.

Durbin-Watson Statistic (Test)

Posted by Bill Campbell III, CFA on July 3, 2014
Posted in: Level II Quantitative Methods.

The Durbin-Watson (DW) statistic is used in a test for serial correlation of residuals (i.e., error terms) in several types of regression models: Simple regression models Multiple regression models Time-series trend models DW is not appropriate for testing for serial correlation of residuals in autoregressive (AR) models.  The CFA curriculum doesn’t specify exactly why DW […]

This article is for members only.  You can become a member now by purchasing a

CFA® Level II Membership

This will give you access to this and all other articles at that membership level.

Dummy Variables

Posted by Bill Campbell III, CFA on December 12, 2013
Posted in: Level II Quantitative Methods.

The idea of a dummy variable is fairly simple: it’s a variable that can take on a value of 0 or 1; it simply shows the absence (0) or presence (1) of some characteristic.  Nevertheless, there are some important rules you need to remember about dummy variables. How Dummy Variables are Used Imagine that you’re […]

This article is for members only.  You can become a member now by purchasing a

CFA® Level II Membership

This will give you access to this and all other articles at that membership level.