CFA Level 2 Quantitative Methods-Class 4 | Understand Multiple Regression and Underlying Assumptions

Welcome to Lecture 4 of Multiple Regression for CFA Level 2. In this crucial session, Sanjay Saraf Sir moves from theoretical understanding to the practical diagnosis of regression model violations using graphical tools. We specifically focus on how to detect issues like Heteroscedasticity, Non-linearity, and Serial Correlation just by looking at specific plots. Admissions for the CFA Level 2 Full Immersion Batch are now open. Enroll here: https://www.ssei.co.in/product/cfal2n... To know more about the program: Call our expert counsellors at +91 75950 53300 Or click the link to chat with us directly: https://wa.me/917595053300?text=Hi%20.... Timestamps: 0:00 - Introduction & Recap 02:15 - Diagnostic 1: Residual Plots 03:13 - Case 1: Ideal Scenario (Homoscedastic & Random) 04:02 - Case 2: Identifying Heteroscedasticity (Fan Shape) 05:56 - Case 3: Identifying Non-Linearity (Curved Pattern) 08:50 - Case 4: Violation of Independence (Clustering/Omitted Variables) 11:20 - Practical Example 1: Mid-Cap Stock Returns (180 Firms) 15:30 - Detecting Multicollinearity (Financial Intuition vs. Stats) 19:30 - F-test Significant but t-tests Insignificant (Classic Multicollinearity sign) 27:50 - Excel Exercise Explained: Creating a Q-Q Plot step-by-step 31:40 - Diagnostic 2: Q-Q Plots (Normality Test) 38:00 - Q-Q Plot: Ideal Scenario (45-degree line) 40:30 - Q-Q Plot: Fat Tails / Excess Kurtosis (S-shape) 44:50 - Q-Q Plot: Positive & Negative Skewness patterns 52:17 - Practice Question 1: Orion Wealth (Mutual Funds Regression) 01:05:30 - Practice Question 2: Real Estate Valuation Model 01:13:00 - Calculating Predicted Value 01:17:30 - Summary & Test Announcement This session simplifies statistical diagnostics by connecting them to intuitive financial logic, ensuring you are exam-ready for Vignette-style questions. 🌟 Catalyzing Careers, Transforming Lives 🌟 Sanjay Saraf Educational Institute (SSEI) is a leading coaching institute specializing in finance education. Learn. Grow. Succeed. 📞 Call/WhatsApp: +91 7595053300 📲✅