- CFA Exams
- CFA Level I Exam
- Study Session 2. Quantitative Methods (1)
- Reading 4. Introduction to Linear Regression
- Subject 1. Linear regression

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**CFA Practice Question**

Forecasters use regression to predict the volume of timber in a tree using easily measured quantities such as diameter. Let y be the volume of timber in cubic feet and x be the diameter in feet (measured at 3 feet above ground level). One set of data gives:

B. 90 cubic feet.

C. 60 cubic feet.

The predicted volume for a tree of diameter = 18 inches is:

A. 1050 cubic feet.

B. 90 cubic feet.

C. 60 cubic feet.

Correct Answer: C

The prediction equation multiplies the value of x = 1.5 feet by 60 and then adds the intercept which is -30 cubic feet.

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**User Contributed Comments**
8

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

z2274743 |
Are people in every country outside the US supposed to know that 18 inches is 1.5 feet? |

Janey |
I hope not |

Leese |
And for those who use the metric system? |

Tukker |
inch = 2,54 cm foot = 30,48 cm |

shiva5555 |
America is the only country that matters. Get used to it, you whiners. |

charomano |
CFA will consider differences among countries, so no worries |

IdAlmalki |
If x=1.5, then the equation should be as followed: y = 30 + 60*1.5 = 120 .. why the answer is "B" |

davidt876 |
you left off the negative sign in front of the 30 |