- CFA Exams
- CFA Exam: Level II 2021
- Study Session 2. Quantitative Methods (1)
- Reading 4. Introduction to Linear Regression
- Subject 3. The standard error of estimate and the coefficient of determination

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**CFA Practice Question**

For a collection of x,y data with r-value = 1, which of the following is false?

B. the linear regression line will have positive slope

C. the residual at each x-value is 0

D. the linear regression line with pass through the point, (mean of the x-values, mean of the y-values)

A. the variation in variable y due to variable x is 1%

B. the linear regression line will have positive slope

C. the residual at each x-value is 0

D. the linear regression line with pass through the point, (mean of the x-values, mean of the y-values)

Correct Answer: A

For an r-value of 1, the variation of the y-variable due to the x-variable is 1 or 100%.

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