CFA Practice Question

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CFA Practice Question

Suppose the following estimated regression illustrates the relationship between an individual's wage (Y) and her years of eduction (X): lnYi = 1.79 + 0.08 Xi

For an additional year of education, an individual's wage should increase by ___ percent.
A. 8
B. 8.3
C. 8.5
Explanation: e0.08 - 1 = 0.083

User Contributed Comments 2

User Comment
garazzo can someone explain please
Leonce Questions quite badly written but got a result :
ln(Y1)=1.79+0.08Xi
ln(Y2)=1.79+0.08(Xi+1)

ln(Y2)-ln(Y1)=ln(Y2/Y1)=0.08
Y2/Y1=E(0.08)
(Y2-Y1)/(Y1)=E(0.08)-1

(Y2-Y1)/Y1 being our change
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