Slope Coefficient

CFA Level II Quant
#1

Hey guys,

According to my readings the slope coefficient (^b1) can be calculated as Cov(x,y)/Var(x) when there is only one independant variable, but for the EOC #6D on page 323, it’s calculated as sum of (x - mean x)(y - mean y)/var (x).

Which is correct?

Thanks!

#2

Um . . .

Cov(X, Y) = [Σ(Xi – μX)(Yi – μY)] / n

Assuming you merely forgot to divide by n in your second formula, they’re the same.