CFA Level I · CFA Level I Exam · Introduction to Financial Data Science
An analyst wants to show how the frequency of individual words varies across a large set of central bank statements, so readers can quickly see which terms dominate. The visualization most appropriate for this purpose is a:
A word cloud is most appropriate. It shows words sized by how often they appear, letting readers see dominant terms in text at a glance. Scatter plot matrices and box plots are for numeric features and return distributions, not for word frequency.
- Aword cloudCorrect
- Bscatter plot matrix
- Cbox plot of returns
Explanation
A word cloud displays words with size proportional to frequency, which suits unstructured text. A scatter plot matrix shows pairwise relationships among numeric features, and a box plot of returns summarizes a numeric distribution, neither of which depicts word frequency.
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