CIMA BA1 · Chapter 11 · Question 6 of 11
Why are forecasts produced by extrapolation from a regression line generally less reliable than those produced by interpolation?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Extrapolation assumes the relationship continues outside the range of observed data, which may not hold
Explanation
Interpolation estimates values within the range of the data used to calculate the regression line. Extrapolation goes beyond that range, assuming the same linear relationship holds where it has not been observed, so the forecast is less reliable.
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