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CFA Level 1 Questions with Correct Solutions
1. What are the 4 types of measurement scales?: 1. Nominal Scales
2.
Ordinal Scales (Assigned to a category)
3.
Interval
Scales
(Relative
ranking)
4.
Ratio Scales (Equal differences between scale values)
NOIR
2. When do we use geometric and arithmetic means to analyze investment
returns?:
Arithmetic
Mean: To estimate next year's return
Geometric
Mean:
Measure
of
past
performance
3.
What
are
the
3
different
types
of
probabilities?:
1. Empirical Probability (Past data)
2.
Priori
Probability
(Formal
reasoning)
3.
Subjective
Probability
(Use
of
personal
judgement)
4.
What is the difference between time-series data and cross-sectional data?: -
Time-Series:
Data
taken
over
a
period
of
time
