- CFA Exams
- CFA Level I Exam
- Study Session 2. Quantitative Methods (1)
- Reading 5. Multiple Regression
- Subject 5. Predicting the Dependent Variable in a Multiple Regression Model

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**CFA Practice Question**

A multiple regression analysis yields the equation y-hat

_{t}= -7.35 + 3.82 X_{1t}- 2.45 X_{2t}. If

- The value of the X
_{1t}independent variable is 4.2, and - The value of the X
_{2t}independent variable is 2.1.

What is the predicted value of the dependent variable?

A. 3.54

B. 13.84

C. 10.89

**Explanation:**The predicted value of the dependent variable is -7.35 + 3.82 x 4.2 - 2.45 x 2.1 = -7.35 + 16.04 - 5.15 = 3.54.

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