Page 41 - FINAL CFA II SLIDES JUNE 2019 DAY 3

LOS 8.a: Formulate a multiple regression equation to describe the relation READING 9: TIME SERIES ANALYSIS
between a dependent variable and several independent variables and
determine the statistical significance of each independent variable.

Answer: the estimated intercept and slope parameters are:

The prediction equation:

st
Capacity utilization (first 1 Q 2013) predicted to be 81.914:

Note that: Result ≠ actual (82.4). Why?

Difference is the error (residual term) associated with that observation:

Error term can be:

• + or
• –ve

depending on the quantum of actual versus predicted!