- 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
Which statement is false?
A. In simple linear regression, analysts try to observe the population parameter values b0 and b1.
B. The regression equation does not require that every (X,Y) pair for an observation fall on the regression line.
C. The lower the standard error of the estimate, the better the regression.
Explanation: A is false. Only b hat0 and b hat1 can be observed to estimate b0 and b1.
About C: The smaller the residual sum of squares, the better your model fits your data.
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