Financial Risk Manager Part 1

When the value of the independent variable is 0, the expected value of the dependent variable can be calculated using the regression equation:

[ E(Y | X) = b_0 + b_1 * X ]

Therefore, [ E(Y | 0) = b_0 ], which is the y-intercept or intercept coefficient. The intercept coefficient represents the expected value of the dependent variable when the independent variable is equal to 0.

A is incorrect. The slope coefficient represents the change in the expected value of the dependent variable for a one-unit increase in the independent variable. It does not provide information about the expected value of the dependent variable when the independent variable is equal to 0.

B is incorrect. The residual value is the difference between the actual value of the dependent variable and the predicted value of the dependent variable based on the regression equation. It does not provide information about the expected value of the dependent variable when the independent variable is equal to 0.

D is incorrect. Assuming that the intercept coefficient is not equal to 0, the expected value of the dependent variable when the independent variable is equal to 0 cannot be 0.*_