- 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**

Which of the following are true about the SEE (standard error of estimate)?

II. Based on squared vertical deviations between Y and Y'

III. Cannot be negative

I. Measure of the accuracy of the prediction

II. Based on squared vertical deviations between Y and Y'

III. Cannot be negative

Correct Answer: I, II and III

All the descriptions are correct for the standard error of estimate.

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**User Contributed Comments**
6

User |
Comment |
---|---|

mazen1967 |
y bar |

davidt876 |
@mazen: y hat you mean? Also can't the square root of a number be both negative and positive re: answer III? |

brave1986 |
its not the square root but the correlation coefficient raised to the power 2 |

davidt87 |
dude what? this is about SEE not the coefficient of determination. SEE = {E[(Yi - a - bXi)^2/(n-2)]}^(1/2) sq. roots can be negative or positive no? |

CFAJ |
the SEE is a measure of variability away from the estimated values so it would be always be a positive value cos you can't be like negative one foot away from a point if you know what i mean? you are just 1 foot away from that place |

dwalters |
Yea..think it should be Y(Hat) and not Y(Bar) |