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Basic Question 0 of 10
An economist is interested in the possible influence of "Miracle Wheat" on the average yield of wheat in a district. To do so he fits a linear regression of average yield per year against year after introduction of "Miracle Wheat" for a ten year period. The fitted trend line is:
YHAT(j) = 80 + 1.5*X(j)
(Y(j): Average yield in j year after introduction)
(X(j): j year after introduction).
B. Do you want to use this trend line to estimate yield for, say, 20 years after introduction? Why? What would your estimate be?
YHAT(j) = 80 + 1.5*X(j)
(Y(j): Average yield in j year after introduction)
(X(j): j year after introduction).
A. What is the estimated average yield for the fourth year after introduction?
B. Do you want to use this trend line to estimate yield for, say, 20 years after introduction? Why? What would your estimate be?
User Contributed Comments 1
| User | Comment |
|---|---|
| darin3200 | B is very subjective. And most agriculture yields do actually maintain stable growth rates beyond 20 years. US corn yield since 1950 is y = 1.86x - 3616.2 with r-squared of 0.95. |
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Learning Outcome Statements
describe the implications of combining a risk-free asset with a portfolio of risky assets
explain the capital allocation line (CAL) and the capital market line (CML)
CFA® 2025 Level I Curriculum, Volume 2, Module 2.