CFA Level 1 Regression Equation Answer

CFA Level 1 Regression Equation Answer

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Question

Suppose the least squares regression equation is Y' = 1202 + 1,133X. When X=3, what does Y' equal?

Answers

Explanations

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A. B. C. D. E.

C

Y' = 1202 + 1133(3) = 4601.

To determine the value of Y' (predicted Y) when X = 3 using the given least squares regression equation, we substitute the value of X into the equation.

The least squares regression equation is expressed as Y' = 1202 + 1,133X, where Y' represents the predicted value of Y, and X is the independent variable.

To find Y' when X = 3, we substitute X = 3 into the equation:

Y' = 1202 + 1,133(3)

Now we perform the calculation:

Y' = 1202 + 3,399

Y' = 4,601

Therefore, when X = 3, the predicted value of Y (Y') is 4,601.

The correct answer is C. 4,601.