- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 10. Simple Linear Regression
- Subject 1. Estimation of the Simple Linear Regression Model
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.
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 |