Standard Error of Regression Line Estimate Calculation | CFA Level 1 Test Prep

Standard Error of Regression Line Estimate

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Question

Given the following four points: (-2, 0), (-1,0), (0,1), (1, 1) and (2, 3)

What is the standard error of the regression line estimate?

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Explanations

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A. B. C. D. E.

C

For this, you need to create tables with columns for X,Y,XY,X^2,Y' and Y-Y'. This will be as follows.

XYXY X^2 Y'Y-Y'

-2004-0.40.4

-10010.3-0.3

010010

11111.7-0.7

23642.40.6

Sum057100 -

N=5.

The regression equation is Y' = a + bX.

The standard error of estimate is

s = sq. root of [S(Y-Y')^2/n-2] where S stands for "Sum of." S = [0^2/3] = 0.

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