Financial Risk Manager Part 1

Explanation

The regression equation is given as:

$y_i = \alpha + \beta x_i$

Where:

• $y_i$ = dependent variable (foetal weight)
• $x_i$ = independent variable (gestation period in weeks)
• $\alpha = -4.60$ (y-intercept)
• $\beta = 0.2043$ (slope)

To estimate the weight at 31 weeks:

$y = -4.60 + 0.2043 \times 31$

Breaking down the calculation:

• First, calculate $0.2043 \times 31 = 6.3333$
• Then add: $-4.60 + 6.3333 = 1.7333$

Therefore, the estimated weight is 1.733 kg.

This regression model suggests that for each additional week of gestation, the foetal weight increases by approximately 0.2043 kg, starting from a baseline of -4.60 kg at week 0 (which is a theoretical intercept point, not meaningful in practical terms for this context).