- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 7. Introduction to Linear Regression
- Subject 6. Prediction Using Simple Linear Regression and Prediction Intervals

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**CFA Practice Question**

You are given the following regression equation:

% Sales Growth = 6.253 + 0.7 GDP growth rate

where S

_{b0}= 1.78, S_{b1}= 0.21, and SEE = 2.79.If the GDP growth for the period is expected to be -1.05%, what would be the estimate for percentage growth in sales?

A. 4.71%

B. 5.52%

C. 6.03%

**Explanation:**% Sales Growth = 6.253% + (0.7) x (-1.05) = 5.52%.

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