CFA Practice Question

There are 208 practice questions for this study session.

CFA Practice Question

If all the data points in a regression lie exactly on a straight line, which of the following is (are) true?

I. The observed values of the dependent variable will equal the predicted values.
II. The R-square will equal 100%.
III. The slope coefficient will be 1.
IV. The residual error will be 100%.
A. I and II
B. I, III and IV
C. I, II and III
Explanation: Since there is no error in the regression, the R-square equals 1 (100%). The slope coefficient can be any real number, not necessarily 1. The residual error will be zero.

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