- 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
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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