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hellomath
07-24-2007, 05:41 PM
On Pg 4, y = a + b*x

case 1 => BL => b = 0
case 2 => BF => b = 1
case 3 => CL => a = 0, b <> 0 , b <> 1

On Pg 11,
L(x) = (x - E(X))*Cov(X,Y)/Var(X)+E(Y)
= b*x + a

where a = - E(X)*Cov(X,Y)/Var(X)+E(Y)
b = Cov(X,Y)/Var(X)


Still on Pg 11, it went on to say if
case 1 => BL => b < 1
case 2 => BF => b = 1
case 3 => CL => b > 1

I have two questions,
1) If b < 1, we use BL even though b <> 0?
2) If b > 1 and a = 0, we use CL?