Cfa level 2 2014 - confusion on scaling figures on log based multiple regression questions

CFA Level II
#1

Hey guys,

Im new to this forum. Cleared l1 this passing June…just started doing qm for l2…I need a bit of your help …while doing eoc of multiple regression I m getting confused on solution to question 3 and 4 on the ln stuff…In question 3 they scaled 100 million to 100 in ind variable for inserting in regression equation, while in question 4 900 million was scaled to 1000 I.e they used figure 900 000 for calculating LN why this inconsistency base on question 3 I used 900 as figure for ln but then my answer came wrong cos apparently I should have used 900000

Would appreciate anyone’s help :wink:

Ps: ill soon write my intro and be more active in the community

#2

I literally had the same issue a few days ago while doing those same problems… they seem to scale the million numbers down to the hundredths place for some reason… i would just continue to do so in the future as the solutions suggest

#3

Hey but in both questions they did it differently like once scaled 100 mn to only 100 while q4 they scaled 900 mn to 900 000 so the hundredth logic is not consistent so need to understand the reasoning and right approach

#4

Guys can anyone add their 2 cents here???

#5

You should post the question.

#6

check if the variable is define in what unit: millions? thousands?

for example ln(variable), where variable is define as millions

  • you will use ln (100)

if ln(variable), where variable is define as thousand

  • you will use ln (900,000)

I am not sure whats the question you are encountering, but judging from your qns, it could be just the definition of variables used

#7

Thanks bro I think what you are saying maybe right :wink: I’m talking about question no. 3 and 4 in one question they defined 100 mn and in another they defined as 900,000

#8

You need to check the definition of the variables mate. X Y or Z could be defined as Population in millions (say for ex) - so here you would use 100 instead of the population of 100m! Typically this is the cause of wrong answers as far as I remember quant. Good luck!

#9

no problem bro… Just remember to help out your juniors when u can once u complete this program :slight_smile: