- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 10. Simple Linear Regression
- Subject 5. Prediction Using Simple Linear Regression and Prediction Intervals
CFA Practice Question
For a data collection of x and y scores, if one data point is (30, 40) and the linear regression equation is y = -1.5x + 70 the residual for x = 30 is ______.
B. 40
C. 15
A. 30
B. 40
C. 15
Correct Answer: C
The residual for x = 30 is the observed value (40) minus the predicted value [y = -1.5(30) + 70 or y = 25]. Now, 40 - 25 = 15. So, the residual at x = 30 is 15.
User Contributed Comments 1
| User | Comment |
|---|---|
| danlan | residual = real y-calculated y |