CFA Level 1: Regression Equation | Test Prep

The Letter "b" in the Regression Equation

Prev Question Next Question

Question

In the regression equation, what does the letter "b" represent?

Answers

Explanations

Click on the arrows to vote for the correct answer

A. B. C. D. E.

A

The regression is written as Y' = a + bX. The letter "a" is the Y intercept and b is the slope of the line.

In the context of a regression equation, the letter "b" typically represents the slope of the line. Therefore, the correct answer is A. Slope of the line.

A regression equation is used to model the relationship between a dependent variable (Y) and one or more independent variables (X). It takes the form of Y = a + bX, where "a" represents the intercept (the value of Y when X is zero) and "b" represents the slope of the line.

The slope (b) indicates how much the dependent variable (Y) changes for each unit change in the independent variable (X). It represents the rate of change or the steepness of the line. If the slope is positive, it means that as X increases, Y also increases. Conversely, if the slope is negative, as X increases, Y decreases.

Option B, "Value of Y when X=0," refers to the intercept (a) in the regression equation, not the letter "b." The intercept represents the value of Y when the independent variable is zero.

Option C, "Any value of the independent variable that is selected," is not an accurate representation of what "b" represents. "b" specifically refers to the slope of the line and is a constant value in the regression equation.

Option D, "Y concept," does not provide a clear explanation of what "b" represents in the regression equation. It is not directly related to the concept of Y itself.

Therefore, the correct answer is A. Slope of the line.