CFA Practice Question

There are 208 practice questions for this study session.

CFA Practice Question

The following model was fitted to a sample of supermarkets to explain profit levels:

Y-hatt = 132.3 + 0.031 X1t + 0.089 X2t + et

where
Y-hatt = profits in thousands of dollars
X1t = food sales in tens of thousands of dollars.
X2t = nonfood sales in tens of thousands of dollar.

For a $30,000 increase in food sales, by how much would the predicted value of the dependent variable change?
Correct Answer: 0.093

The regression coefficient for X1 (food sales) is 0.031. If X1 increases by three units ($30,000), then Y-hatt will increase by 0.093.

User Contributed Comments 2

User Comment
danlan2 in sales in tens of thousands, $30000 is converted to 3 in X_{1t}
cfastudypl thanks danlan2. 0.031*3 = 0.093.
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