CFA Practice Question

There are 208 practice questions for this study session.

CFA Practice Question

You have obtained the following sample regression equation from 25 samples:

y-hatt = 2.304 + 3.412 Xt1 - 4.657 X2t

The estimated standard errors are 0.87, 1.23 and 1.78 for b0, b1 and b2, respectively. Construct a 95% confidence interval for β2.

Correct Answer: [-8.348, -0.965]

There are 22 degrees of freedom so the critical value of t for a 95% confidence interval will be 2.074 (the 5% probability will be split between the tails). Thus, the confidence interval will be [-4.657 - 1.78 x 2.074, -4.657 + 1.78 x 2.074] = [-8.348, -0.965].

User Contributed Comments 3

User Comment
headac where is 1.78 coming from? T table
nowornever its given as the estimated standard eror for b2
CFAJ how do we know this is a two tailed test?
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