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 CFA Level 1, Daniella wants to know whether or not the 10 prospective employees will be able to pass the CFA Level 1 exam. Historically, the pass rate is higher for those with work experience and a good GPA in college. With this insight, she compiles the information on 63 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 CFA_Data worksheet is shown in the accompanying table. 

a. Perform KNN analysis to estimate a classification model for the CFA Level 1 exam using the CFA_Data worksheet and score the 10 job applicants in the CFA_Score worksheet. What are the misclassification rates for k = 3, 4, and 5? 

b. What is the optimal value of k? Report the overall accuracy, specificity, sensitivity, and precision rates for the test data set (for Analytic Solver) or validation data set (for R). 

c. What is the predicted CFA Level 1 outcome for the first job applicant?

Transcribed Image Text:

Pass 1 1 # 1 GPA 3.20 3.75 # 3.21 Experience 11 15 ⠀ 6