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PRMIA Exam 8002 Topic 2 Question 77 Discussion

Actual exam question for PRMIA's 8002 exam

Question #: 77
Topic #: 2

[All 8002 Questions]

You are to perform a simple linear regression using the dependent variable Y and the independent variable X (Y = a + bX). Suppose that cov(X,Y)=10, var(X)= 5, and that the mean of X is 1 and the mean of Y is 2. What are the values for the regression parameters a and b?

Ab=0.5, a=2.5

Bb=0.5, a=1.5

Cb=2, a=4

Db=2, a=0

Show Suggested Answer

Suggested Answer: D

by Bettina at Apr 23, 2024, 07:46 PM

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Raina

10 months ago

Right, so a = 2 - 2*1 = 0. The correct answer must be D.

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Karma

10 months ago

Using the formula a = mean(Y) - b * mean(X). We have mean(Y) = 2 and mean(X) = 1.

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Harrison

10 months ago

So that rules out choices A and B. Now what about a?

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Raina

11 months ago

Yes, exactly. cov(X, Y) is 10 and var(X) is 5, so b = 10 / 5 = 2.

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Karma

11 months ago

Yeah, it's tricky! So, for b we need cov(X, Y) / var(X), right?

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Raina

11 months ago

I think the question is quite challenging, but I'll try my best.

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Linsey

11 months ago

So, the answer is A) b=0.5, a=2.5.

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Vernell

11 months ago

Yes, and the value of a is 2.5.

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Justine

11 months ago

I think the value of b is 0.5.

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