- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 10. Simple Linear Regression
- Subject 2. Assumptions of the Simple Linear Regression Model
CFA Practice Question
Examine the following scatter plot. Any violated assumption(s) of the simple linear regression model?
Correct Answer: Linearity and Homoscedasticity assumptions are violated.
Linearity assumption is violated - there is a curve. Equal variance assumption is also violated, the residuals fan out in a "triangular" fashion.
User Contributed Comments 1
User | Comment |
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pandsisd | Can someone please explain the answer here ? |