Reading 11- LOS F (Part 1): Q1 class, 2008, following, result

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1. X and Y are perfectly correlated, regressing Y onto X will result in which of the following:

A)   the standard error of estimate will be zero.

B)   the alpha coefficient will be zero.

C)   the regression line will be sloped upward.

D)   exactly half of the observations will plot above the regression line and half will plot below the regression line.

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The correct answer was A)

If X and Y are perfectly correlated, all of the points will plot on the regression line, so the standard error of the estimate will be zero. Note that the sign of the correlation coefficient will indicate which way the regression line is pointing (there can be perfect negative correlation sloping downward as well as perfect positive correlation sloping upward). Alpha is the intercept and is not directly related to the correlation.