CFA Practice Question

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CFA Practice Question

You are given the following regression equation:

% Sales Growth = 6.253 + 0.7 GDP growth rate

where Sb0 = 1.78, Sb1 = 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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