Ace the 2026 CAS MAS-1 Exam – Boost Your Actuarial Skills and Conquer Casualty!

High leverage describes observations with predictor values far from the center of the X space, which gives them the power to pull the fitted line toward themselves. Outliers, by contrast, are observations with large residuals—points that don’t fit the model well. So an observation can have high leverage without being an outlier (its Y is well predicted, even though its X is extreme), and an outlier can have low leverage (its X is near the center but its Y is far from the model’s prediction). They are related concepts but not the same, and high leverage does not by itself mean an observation is an outlier. Hence the statement is false.