Free GARP FRM Part I Quantitative Analysis Practice Questions
Practice 200 free Quantitative Analysis questions for GARP FRM Part I.
Sample Questions
Question 1
Easy
In classical hypothesis testing, a Type I error occurs when:
Solution
C is correct. A Type I error is the false rejection of a true null hypothesis. Its probability equals the chosen significance level . Failing to reject a false null is a Type II error, with probability .
Question 2
Medium
In the bias-variance tradeoff, increasing model complexity most likely:
Solution
A is correct.
As model complexity increases, the model fits training data more closely, reducing bias (the error from overly simplistic assumptions). However, the model becomes more sensitive to the specific training data used, increasing variance (the error from sensitivity to small fluctuations in the training set). This is the fundamental bias-variance tradeoff.
As model complexity increases, the model fits training data more closely, reducing bias (the error from overly simplistic assumptions). However, the model becomes more sensitive to the specific training data used, increasing variance (the error from sensitivity to small fluctuations in the training set). This is the fundamental bias-variance tradeoff.
Question 3
Hard
A simple linear regression uses 25 observations with SST = 450 and SSR = 360. What is the F-statistic for this regression?
Solution
A is correct.
For simple linear regression: SSE = SST - SSR = 450 - 360 = 90. df_regression = 1 (one independent variable); df_residual = n - 2 = 25 - 2 = 23. MSR = SSR / df_regression = 360 / 1 = 360. MSE = SSE / df_residual = 90 / 23 = 3.913. F = MSR / MSE = 360 / 3.913 = 92.0.
For simple linear regression: SSE = SST - SSR = 450 - 360 = 90. df_regression = 1 (one independent variable); df_residual = n - 2 = 25 - 2 = 23. MSR = SSR / df_regression = 360 / 1 = 360. MSE = SSE / df_residual = 90 / 23 = 3.913. F = MSR / MSE = 360 / 3.913 = 92.0.