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Basic Question 7 of 7
Which of the following are NOT assumptions of linear regression?
II. The variance of the error term is the same for all observations.
III. The residuals are independently distributed.
IV. The error term is normally distributed.
I. There is a linear (straight line) relationship between the dependent variable Y and the independent variable X.
II. The variance of the error term is the same for all observations.
III. The residuals are independently distributed.
IV. The error term is normally distributed.
User Contributed Comments 5
| User | Comment |
|---|---|
| wtwaf | memory work? |
| DariSH | What about 2? is it an assumption? really? |
| ericczhang | Well that's a particularily strong assumption that's really only true in stuff like medical testing. |
| ybavly | what about 3? what does that even mean? |
| jpowers | Three means the expected difference between the observed value and the predicted value is zero. |
I used your notes and passed ... highly recommended!
Lauren
Learning Outcome Statements
explain the assumptions underlying the simple linear regression model, and describe how residuals and residual plots indicate if these assumptions may have been violated
CFA® 2025 Level I Curriculum, Volume 1, Module 10.