- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 1. Basics of Multiple Regression and Underlying Assumptions
- Subject 1. A Review of Multiple Linear Regression's Uses
CFA Practice Question
Which of the following could be a multiple linear regression model?
II. Yt = b0 + b1 X1t + et.
III. Yt = b0 + b1 X1t + b2 e(X2t) + et.
I. Yt = b0 + b1 X1t + b2 X2t + et.
II. Yt = b0 + b1 X1t + et.
III. Yt = b0 + b1 X1t + b2 e(X2t) + et.
Correct Answer: I only
II is a linear model, but not a multiple linear model. III has an exponential component.
User Contributed Comments 3
| User | Comment |
|---|---|
| ericczhang | Linear regressions only require that the parameters are linear, i.e. the b values are constant slopes that map the independent variables, which can be non-linear, onto the dependent variable. |
| davcer | also II is not multiple |
| johangw | Do b1 and b2 have to be linear? Or can it be like (b1)square in the multiple linear regression model? |