The Chartered Financial Analyst (CFA®) designation is fast becoming a requirement for serious investment professionals. Although it requires successfully completing three levels of grueling exams, it also promises great careers with lucrative salaries. Susan Wayne works as a research analyst at Fidelity Investments. She is thinking about taking the CFA exam in the summer and wants to understand why the recent pass rate for Level I has been under 40%. She firmly believes that those who were good students in college have a better chance of passing. She has also been told that work experience helps. She has access to the information on 30 Fidelity employees who took the test last year, including their success on the exam (1 for pass, 0 for fail), their college GPA, and years of work experience. A portion of the data is shown in the accompanying table

Data for Case Study 17.3 Information on Individuals Who Took CFA Exam

Pass..................... GPA.................... Experience

1.......................... 3.64................................ 12

0.......................... 3.16..................................5

⋮......................................... ⋮.............................................⋮

0.......................... 2.64................................. 4

In a report, use the sample information to:

1. Analyze a linear probability model to explain the probability of success. Predict the probability of passing the CFA exam for a candidate with various values of college GPA and years of experience.

2. Analyze the logit model to explain the probability of success. Predict the probability of passing the CFA exam for a candidate with various values of college GPA and years of experience.

3. Which model is more reliable for predicting the probability of passing the CFA exam? Provide at least one reason for your choice.