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Quantitative Methods
Quantitative Methods
Medium
A portfolio manager builds a neural network with 3 hidden layers to predict monthly equity returns. The model achieves 62% accuracy on training data but only 49% on out-of-sample test data. The most likely issue is:
A
Overfitting — the model memorized training data noise rather than learning generalizable patterns
B
Underfitting — the model is too simple to capture the relationship
C
Data leakage — future information contaminated the training set
D
Survivorship bias — the training set excluded delisted firms
Select an answer to continue
Tags
#neural-networks
#overfitting
#model-validation
#training-test-gap
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CFA Level II — Quantitative Methods Practice Question | AcadiFi | AcadiFi