Reading 11- LOS E (Part 1): Q7 include, following, class

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7.The assumptions underlying linear regression include all of the following EXCEPT the:

A)   disturbance term is normally distributed with an expected value of 0.

B)   disturbance term is homoskedastic and is independently distributed.

C)   independent variable is linearly related to the residuals (or disturbance term).

D)   dependent variable and independent variable are linearly related.

[此贴子已经被作者于2008-4-1 13:26:31编辑过]

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The correct answer was C)

The independent variable is uncorrelated with the residuals (or disturbance term).

The other statements are true. The disturbance term is homoskedastic because it has a constant variance. It is independently distributed because the residual for one observation is not correlated with that of another observation. Note: The opposite of homoskedastic is heteroskedastic. For the examination, memorize the assumptions underlying linear regression!

cfaedu

The correct answer was C)

The independent variable is uncorrelated with the residuals (or disturbance term).

The other statements are true. The disturbance term is homoskedastic because it has a constant variance. It is independently distributed because the residual for one observation is not correlated with that of another observation. Note: The opposite of homoskedastic is heteroskedastic. For the examination, memorize the assumptions underlying linear regression!