Financial Risk Manager Part 1

Get started today

Ultimate access to all questions.

Explanation:

$\beta_1$ is the regression slope and represents the change in $p_t$ for every unit change in $t$ . The regression slope is always positive if the trend is increasing and negative if the trend is decreasing. Therefore, a positive $\beta_1$ means that as time increases, the participation rate increases.

Explanation:

Comments (0)

No comments yet.

An FRM exam candidate studies labor participation rate for males 18 years and over, and obtains the following linear model:
$p_t = \beta_0 + \beta_1 t$
Where $p_t$ stands for participation rate and $t =$ time in years.

The fact that $\beta_1$ (the regression slope) is positive means:

Other

Community

NNikitesh

Last updated: February 2, 2026 at 10:22

Participation rate decreases with increase in time

50.0%

Participation rate increases with time

50.0%

Time is the only explanatory variable

As males grow older, less and less of them engage in labor