August 2025 Flashcards
What is the BP test to detect heteroskedasticity
BP = R^2 (of Regression not adjusted R) x n with k df
What happens during serial correlation?
There are invalid coefficients and deflated standard errors and there are Type I errors
What do we use to detect multicollinearity?
There are conflicting t- and F-statistics and high VIF
SPE Rule for IFRS
Under IFRS, SPEs must be consolidated if they are conducted for the benefit of the sponsoring entity. Further, under IFRS, SPEs cannot be classified as qualifying.
If equity method is chosen over Acquisition what will be higher?
Net Profit Margin, ROE, ROA
If equity method is chosen over Acquisition what will be lower?
Sales, Expenses, Assets and Liabilities, SH Equity while NI is the same
What is the df for Regression and errors
Regression - K
Error - n-k-1
What is MSR
Mean Squared Regression - RSS/k
What is MSE
Mean Squared Error - SSE/(n-k-1)
What is SST
RSS + SSE
What is R2
RSS/SST
What is R2adj
1 - [ (n-1)/(n-k-1) x (1-R2)]
What is the Loss Expense & Loss Adjustment Expense Ratio
Loss expense and adjustment/ net premium earned
What is the Underwriting
Expense Ratio?
Underwriting expense/ net premiums written
What is the combined ratio?
Loss Expense & Loss Adjustment Expense Ratio + Underwriting
Expense Ratio
When you buy and sell protection with a CDS what does that mean about the underlying?
Buying protection - Underlying is worsening
Selling protection - Underlying is getting better
