Examine the following residual by predicted plot. Which assumption is violated if we want to fit a linear regression model?

A. Linearity
B. Independence
C. Normality
D. Homoscedasticity

Correct Answer: D

This is an example of heteroscedasticity. It means that the variability in the response is changing as the predicted value increases. This is a problem, in part, because the observations with larger errors will have more pull or influence on the fitted model.