CFA Level I EXAMINATION SET 2026
SOLVED QUESTIONS GRADED A+
● Type II error in hypothesis testing. Answer: A Type II error is when
the null hypothesis is false but we do not reject it, possibly because we
have selected a small significance level to reduce the occurrence of Type
I errors.
● one-tailed hypothesis test. Answer: A test in which the null hypothesis
is rejected only if the evidence indicates that the population parameter is
greater than (smaller than) θ0. The alternative hypothesis also has one
side.
● correlation of determination. Answer: describes the fraction of
variability in y values that is explained by least squares regression on x
● correlation coefficient formula. Answer: A correlation coefficient is a
numerical measure of some type of correlation, meaning a statistical
relationship between two variables.
● nPr (Permutations) vs. nCr (Combinations). Answer: nPr
(Permutations) - Used when order matters in. nPr is finding all of the
permutations that exist within a given set for a given subset. (Factorials)
, nCr (Combinations) - Used when order does not matter. nCr, is finding
all of the combinations that exist within a given set for a given subset
when order doesn't matter
● Bayes Formula. Answer: Used to update a given set of prior
probabilities for a given event in response to new information;
(Updated Probability) = {(Probability of new information of a given
event) \ (Unconditional probability of new information)} * (Probability
of event)
● F Stat. Answer:
● standard error of the sample mean. Answer: The standard error of the
mean (SEM) measures how much discrepancy is likely in a sample's
mean compared with the population mean
● Probability Addition Rule. Answer:
● Central Limit Theorem. Answer: The theory that, as sample size
increases, the distribution of sample means of size n, randomly selected,
approaches a normal distribution.
● Required Rate of Return. Answer: minimum rate of return necessary
to attract an investor to purchase or hold a security. The required rate of
SOLVED QUESTIONS GRADED A+
● Type II error in hypothesis testing. Answer: A Type II error is when
the null hypothesis is false but we do not reject it, possibly because we
have selected a small significance level to reduce the occurrence of Type
I errors.
● one-tailed hypothesis test. Answer: A test in which the null hypothesis
is rejected only if the evidence indicates that the population parameter is
greater than (smaller than) θ0. The alternative hypothesis also has one
side.
● correlation of determination. Answer: describes the fraction of
variability in y values that is explained by least squares regression on x
● correlation coefficient formula. Answer: A correlation coefficient is a
numerical measure of some type of correlation, meaning a statistical
relationship between two variables.
● nPr (Permutations) vs. nCr (Combinations). Answer: nPr
(Permutations) - Used when order matters in. nPr is finding all of the
permutations that exist within a given set for a given subset. (Factorials)
, nCr (Combinations) - Used when order does not matter. nCr, is finding
all of the combinations that exist within a given set for a given subset
when order doesn't matter
● Bayes Formula. Answer: Used to update a given set of prior
probabilities for a given event in response to new information;
(Updated Probability) = {(Probability of new information of a given
event) \ (Unconditional probability of new information)} * (Probability
of event)
● F Stat. Answer:
● standard error of the sample mean. Answer: The standard error of the
mean (SEM) measures how much discrepancy is likely in a sample's
mean compared with the population mean
● Probability Addition Rule. Answer:
● Central Limit Theorem. Answer: The theory that, as sample size
increases, the distribution of sample means of size n, randomly selected,
approaches a normal distribution.
● Required Rate of Return. Answer: minimum rate of return necessary
to attract an investor to purchase or hold a security. The required rate of
