Reading 11- LOS F (Part 1): Q9 performed, following, regarding, relative, standard

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9.a Carroll, CFA, has performed a regression analysis of the relationship between 6-month LIBOR and the U.S. Consumer Price Index (CPI). Her analysis indicates a standard error of estimate (SEE) that is high relative to total variability. Which of the following conclusions regarding the relationship between 6-month LIBOR and CPI can Carroll most accurately draw from her SEE analysis? The relationship between the two variables is:

A)   very strong.

B)   very weak.

C)   positively correlated.

D)   negatively correlated.

[此贴子已经被作者于2008-4-1 13:35:03编辑过]

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The correct answer was B)

The SEE is the standard deviation of the error terms in the regression, and is an indicator of the strength of the relationship between the dependent and independent variables. The SEE will be low if the relationship is strong and conversely will be high if the relationship is weak.