The Chartered Financial Analyst (CFA) designation is the de facto professional certification for the financial industry. Employers encourage their prospective employees to complete the CFA exam. Daniella Campos, an HR manager at SolidRock Investment, is reviewing 10 job applications. Given the low pass rate for the CFA Level 1 exam, Daniella wants to know whether or not the 10 prospective employees will be able to pass it. Historically, the pass rate is higher for those with work experience and a good college GPA. With this insight, she compiles the information on 263 current employees who took the CFA Level I exam last year, including the employee’s success on the exam (1 for pass, 0 for fail), the employee’s college GPA, and years of work experience. A portion of the data is shown in the accompanying table. 

a. Estimate the linear probability model to predict the probability of passing the CFA Level I exam for a candidate with a college GPA of 3.80 and five years of experience. 

b. Estimate the logistic regression model to predict the probability of passing the CFA Level I exam for a candidate with a college GPA of 3.80 and five years of experience.

Transcribed Image Text:

Pass 1 0 ⠀ 0 GPA 3.75 2.62 2.54 Experience 18 17 ⠀ 4