- 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**

An analyst is currently reviewing the following regression analysis:

If the analyst expects the first, second, and third independent variables to be 8.5, 3.4, and 9.7 respectively, what would be the best estimate of the dependent variable using the regression model?

A. 26.71

B. 27.66

C. 33.16

**Explanation:**

Note, tha hat over the Y implies that this is only an "estimate" of the true value of the dependent variable.

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**User Contributed Comments**
3

User |
Comment |
---|---|

BB465 |
Why is the error term excluded from the calculation? |

pires100 |
BB465 I believe that unless otherwise stated in the question you are to assume (per the assumptions of the Linear Regression Model) that the expected value of the error term is 0. |

cminor |
I definitely see a 6 on coefficient #2 not an 8 |