IIBA Exam CBDA Topic 1 Question 14 Discussion

Actual exam question for IIBA's CBDA exam

Question #: 14
Topic #: 1

A data scientist is analyzing a dataset to determine if there is a strong relationship between two variables. A measure of covariance is done. Which of the following graphs indicate Zero Covariance between variables?

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Suggested Answer: C

Covariance measures the directional relationship between the returns on two assets. A positive covariance means that asset returns move together while a negative covariance means they move inversely. Zero covariance indicates that the returns on the two assets move independently of each other. In the context of a scatter plot, zero covariance is represented by a plot where the points do not show any upward or downward trend but are rather scattered randomly on the graph with no discernible pattern.

Graph 4 displays such a pattern where there is no apparent relationship between the variables on the x and y axes, indicating that there is zero covariance between them.

by Solange at Jun 20, 2024, 06:24 PM

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Adelina

5 months ago

I disagree with Chantell, I think the answer is B) 1 as the points in graph 1 are spread out evenly suggesting zero covariance.

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Chantell

5 months ago

I believe the answer is A) 2, because the points in graph 2 are clustered together showing a strong relationship.

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5 months ago

I'm going with option D. That graph looks straight out of a geometry textbook, just the way I like it.

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Juan

4 months ago

Yeah, option D shows no clear pattern. It's probably zero covariance.

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Mozell

4 months ago

I think it's option D too. The points seem to be scattered randomly.

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Jaclyn

5 months ago

Yeah, option D seems to show zero covariance between the variables.

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Armando

5 months ago

I think it's option D too. It looks like a perfect diagonal line.

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5 months ago

I think the answer is C) 4

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