- CFA Exams
- CFA Level I Exam
- Study Session 2. Quantitative Methods (1)
- Reading 4. Introduction to Linear Regression
- Subject 6. The predicted value of the dependent variable

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**CFA Practice Question**

The results of the regressions using 200 observations on a variable Y against X are as follows:

intercept 3.6 | 2.1

slope 8.1 | 1.3

R square = 49%

If an observation on X indicates X = 5 the estimated value of Y would be ______.

Coefficient | Standard error

intercept 3.6 | 2.1

slope 8.1 | 1.3

R square = 49%

If an observation on X indicates X = 5 the estimated value of Y would be ______.

A. 44.1

B. 26.1

C. 40.5

**Explanation:**From the information given, the regression equation is Y = 3.6 + 8.1X + error term. The expected value of the error is zero. Hence, when X = 5, the estimated value of Y equals 3.6 + 8.1*5 = 44.1.

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**User Contributed Comments**
1

User |
Comment |
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krisscfa |
forgot intercept |