STATISTICS MODELING AND FINANCE
PROFESSIONAL QUANTITATIVE FINANCE
PREP QUESTIONS AND ACCURATE
ANSWERS GRADED A+
●● Alternative data
Answer: Data that are generated from non-traditional sources, such as
social media and sensor networks.
●● Alternative hypothesis
Answer: The hypothesis that is accepted if the null hypothesis is
rejected.
●● Analysis of variance (ANOVA)
Answer: A table that presents the sums of squares, degrees of freedom,
mean squares, and F-statistic for a regression model.
●● Arithmetic mean
Answer: The sum of the observations divided by the number of
observations.
●● Artificial intelligence (AI)
,Answer: Computer systems that are capable of performing tasks that
previously required human intelligence.
●● Bayes' formula
Answer: The rule for updating the probability of an event of interest—
given a set of prior probabilities for the event, information, and
information given the event—if you receive new information.
●● Big data
Answer: The vast amount of information being generated by both
traditional sources and non-traditional sources.
●● Bimodal
Answer: A distribution that has two most frequently occurring values.
●● Bivariate correlation
Answer: Also known as Pearson correlation. A parametric measure of
the relationship between two variables.
●● Bootstrap
Answer: A resampling method that repeatedly draws samples with
replacement of the selected elements from the original observed sample.
●● Box and whisker plot
,Answer: A graphic for visualizing the dispersion of data across quartiles.
●● Cash flow additivity principle
Answer: The principle that dollar amounts indexed at the same point in
time are additive.
●● Central limit theorem
Answer: The theorem that states the sum (and the mean) of a set of
independent, identically distributed random variables with finite
variances is normally distributed.
●● Cluster sampling
Answer: A procedure that divides a population into subpopulation
groups (clusters) representative of the population.
●● Coefficient of determination (R2)
Answer: The percentage of the variation of the dependent variable that is
explained by the independent variable.
●● Coefficient of variation
Answer: The ratio of a set of observations' standard deviation to the
observations' mean value.
●● Conditional expected value
, Answer: The expected value of a stated event given that another event
has occurred.
●● Conditional variances
Answer: The variance of one variable, given the outcome of another.
●● Confidence level
Answer: The complement of the level of significance.
●● Contingency table
Answer: A table of the frequency distribution of observations classified
on the basis of two discrete variables.
●● Contingent claim
Answer: A type of derivative in which one of the counterparties
determines whether and when the trade will settle.
●● Continuously compounded return
Answer: The natural logarithm of 1 plus the holding period return.
●● Convenience sampling
Answer: A procedure of selecting an element from a population on the
basis of whether or not it is accessible to a researcher.
PROFESSIONAL QUANTITATIVE FINANCE
PREP QUESTIONS AND ACCURATE
ANSWERS GRADED A+
●● Alternative data
Answer: Data that are generated from non-traditional sources, such as
social media and sensor networks.
●● Alternative hypothesis
Answer: The hypothesis that is accepted if the null hypothesis is
rejected.
●● Analysis of variance (ANOVA)
Answer: A table that presents the sums of squares, degrees of freedom,
mean squares, and F-statistic for a regression model.
●● Arithmetic mean
Answer: The sum of the observations divided by the number of
observations.
●● Artificial intelligence (AI)
,Answer: Computer systems that are capable of performing tasks that
previously required human intelligence.
●● Bayes' formula
Answer: The rule for updating the probability of an event of interest—
given a set of prior probabilities for the event, information, and
information given the event—if you receive new information.
●● Big data
Answer: The vast amount of information being generated by both
traditional sources and non-traditional sources.
●● Bimodal
Answer: A distribution that has two most frequently occurring values.
●● Bivariate correlation
Answer: Also known as Pearson correlation. A parametric measure of
the relationship between two variables.
●● Bootstrap
Answer: A resampling method that repeatedly draws samples with
replacement of the selected elements from the original observed sample.
●● Box and whisker plot
,Answer: A graphic for visualizing the dispersion of data across quartiles.
●● Cash flow additivity principle
Answer: The principle that dollar amounts indexed at the same point in
time are additive.
●● Central limit theorem
Answer: The theorem that states the sum (and the mean) of a set of
independent, identically distributed random variables with finite
variances is normally distributed.
●● Cluster sampling
Answer: A procedure that divides a population into subpopulation
groups (clusters) representative of the population.
●● Coefficient of determination (R2)
Answer: The percentage of the variation of the dependent variable that is
explained by the independent variable.
●● Coefficient of variation
Answer: The ratio of a set of observations' standard deviation to the
observations' mean value.
●● Conditional expected value
, Answer: The expected value of a stated event given that another event
has occurred.
●● Conditional variances
Answer: The variance of one variable, given the outcome of another.
●● Confidence level
Answer: The complement of the level of significance.
●● Contingency table
Answer: A table of the frequency distribution of observations classified
on the basis of two discrete variables.
●● Contingent claim
Answer: A type of derivative in which one of the counterparties
determines whether and when the trade will settle.
●● Continuously compounded return
Answer: The natural logarithm of 1 plus the holding period return.
●● Convenience sampling
Answer: A procedure of selecting an element from a population on the
basis of whether or not it is accessible to a researcher.
