- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 7. Introduction to Linear Regression
- Subject 2. Estimating the Parameters of a Simple Linear Regression

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**CFA Practice Question**

Given the data {(1,5), (6, 15)}, the regression line is

B. y = (1/2)x + 10

C. y = 0.35x + 7

A. y = 2x + 3

B. y = (1/2)x + 10

C. y = 0.35x + 7

Correct Answer: A

Because there are only two data points, a straight line fits the data perfectly. For the two points, the slope is m = (15 - 5)/(6 - 1) = 2. Using the point-slope form we get: y - 5 = 2(x - 1) or y = 2x +3.

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**User Contributed Comments**
1

User |
Comment |
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davcer |
or simply substitute the values, (2*1)+3 =5 and (2*6)+3=15 |