So I’m back at the books and came across this one. Quant isn’t my strongest but I couldn’t get this one correct and especially not in 2 minutes. For those quant geeks out there. How do you process all the information and find the quickest way possible to answer this question? A variable Y is regressed against a single variable X across 24 observations. The value of the slope is 1.14, and the constant is 1.3. The mean value of X is 1.10, and the mean value of Y is 2.67. The standard deviation of the X variable is 1.10, and the standard deviation of the Y variable is 2.46. The sum of squared errors is 89.7. For an X value of 1.0, what is the 95% confidence interval for the Y value? A) −1.68 to 6.56. B) 0.59 to 4.30. C) 0.79 to 4.09. D) −1.83 to 6.72
Y = 1.3+1.14X When X=1 Y=1.3+1.14(1)=2.44 XBar=1.1, YBar=2.67, sx=1.1, sy=2.46 Sum of squared errors = SSE=89.7 N=24 (No. of observation). SEE^2 = SSE/(n-2) = 89.7/22 = 4.077 sf^2 = SEE^2 (1+1/n+((Xi-XBar)^2/(n-1)sx^2) = 4.077 ( 1+1/24+ (1-1.1)^2/(23.1.1^2)) = 4.248 sf = 2.061 t.025, 22 = 2.074 So 2.44 +/- 2.074(2.061) = 2.44 +/- 4.275 = -1.83, 6.72 Ans D
You got it right. So CP. When you see the original question how do you look at it to find out the quickest most accurate way to get it done. I spent a couple minutes just writing down the figures and tried to bs my way into the answer.
I did exactly the same… do the problems at the back of the CFAI chapter. plenty of problems of this type there – to get you in the groove. I just try to see what has been given and what do I require - and then try to remove unwanted data. In this case - the ybar, sy figures were not required. all the others were.
Thanks CP. I’m just getting back into the game and am definitely rusty. Sucked on quant last year on the L2 exam and it caused my downfall. Got to get it right this year.